.05% INCOME TAX INCREASE – COUNCILMANS CORNER

The City Administration has presented a framework of fiscal ideas calling for a 0.5% income tax increase raising local income taxes for both city and county residents by 50%. We announced at the last City Council meeting our opposition to the proposed LOIT increase and provided an alternative framework of ideas to deal with the City’s structural deficit and neglect of its core responsibilities including police, fire, roads, and parks.

A 0.5% hike in LOIT is a big deal. It would reduce the average Fort Wayne working family’s take-home pay by $200 or more a year. Put another way that means working another day each year to pay for it. Raising income taxes should only ever be an option of last resort.

On February 15, 2012 in his State of the City Address, Mayor Henry declared, “Our City finances are strong. The state of our City is strong.” Within thirty days of that statement, the Administration had formed the Fiscal Policy Group charged with changing the narrative to explain that the City is out of money leaving its core responsibilities neglected. Now, to obtain the LOIT, the other options besides LOIT available to us are being understated.

The challenges are clear and real. The City has a $6.5 million structural deficit, circuit breakers limit property tax revenue, cash reserves are low, and streets, parks, police, and fire have suffered neglect. Commendably, all parties seem serious about tackling these challenges.

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The solutions can come from a combination of the following:
Spending cuts (Fiscal Policy Group presented $6.4 million)
Expiring debt obligations ($2.7 million improved cash flow)
Reductions in debt principle ($21.6 million annually)
Increasing property values, growth coefficient ($6.2 million currently “banked”)
New State funding ($2.1 million annually for streets)
Other revenues coming online ($+/-3 million- PILOT, Legacy annuity and interest)
Balance transfers (cash reserves bolstered by $3.5 million CEDIT uncommitted)
Structural reforms (for example, common wage policy)
As we presented to Council, these solutions are sufficient to balance the budget, replenish cash reserves, fund new police and fire academy classes, increase street repairs, purchase new fire trucks, and provide more parks maintenance funding. These solutions ensure the City’s budget live within its means, and pass on a well maintained City to our next generation.

The call has been to panic and raise LOIT. Raising income taxes is always a “convenient” solution; a fiscally responsible plan is always more difficult. Let’s take positive, responsible steps first.

We don’t support a LOIT increase because it will hurt hardworking families and is not merited.