Interesting letter to the city employees from the Mayor

This is from the SouthBend Forum website quoted as appeared.
http://southbendforum.com/vb/showthread.php?t=4206

> Mayor 3/14/2008 4:49 PM >>>
Dear City Team Members,

The news out of Indianapolis regarding House Bill 1001 is not as positive as I had hoped. Speaker of the House Pat Bauer tried to include several items that would have lessened the impact on our revenues. Some made it. Others did not. My biggest frustration is that the bill does not provide local government the authority to enact a Local Option Income Tax that would replace the revenues lost to the property tax caps. But the picture is not totally bleak. There are some options to reduce the amount of lost revenue.

I have fully supported property tax reduction efforts, but always felt it was imperative that any reform should ensure that cities and towns, schools, counties and libraries have sufficient revenue to provide the services that our residents and businesses want. I value the work that you do for our community and will continue to fight for resources to keep providing these services.

Here are the current projections by the Legislative Services Agency: In 2009, the property tax supported units of government in St. Joseph County would lose $16 million in revenue due to the property tax caps. In 2010 the total loss would amount to $34.6 million. For South Bend Civil City the loss in 2009 is projected to be $9.4 million; growing to $18.8 million in 2010. The difference between the two years is because the property tax caps phase in over the two years, reaching 1% for Homestead properties, 2% for other residential properties and 3% for business properties in 2010. $18.8 million is 27.5% of the property tax revenue we receive and comes to about 16% of our budget.

The bill does provide some options to reduce the lost revenue. If we enact an additional 1% Local Option Income Tax (LOIT) in St. Joseph County for property tax relief and an additional 0.25% LOIT for public safety, LSA projects that South Bend's revenue loss would drop to $4.1 million per year. Further, there is still 0.2% Economic Development Income Tax available for our County, which could address the remaining shortfall. However, to enact any of these local taxes would take positive votes from two of three councils: St. Joseph County, South Bend and Mishawaka City Councils. As I said during my State of the City address, I will be a strong proponent for enacting the revenue streams we need to keep South Bend moving forward.

My frustration with the legislation is that we could have made South Bend whole, and all the other taxing units in St. Joseph County, with a much lower local income tax if they had left the original language in the bill allowing revenues from that tax to be used to replace money lost to the caps. Some members of the legislature were adamantly opposed to this approach. It could have saved our residents money.

I know that there has been concern about what these lost revenues mean for programs and services that we provide - and for jobs. I believe that we will be able to work through this. I will keep you informed as we get more information on this bill. These are preliminary numbers and we will try to get a better handle on the impact for South Bend. Over the years you have helped us to find cost savings and to deliver services effectively. We will continue to look for ways to improve efficiency. I will continue to fight for you and for the services we provide for our residents and the greater South Bend region. I ask for your continued commitment to your job and your fellow employees. And I welcome any thoughts you have on ways to do our jobs better or to find cost savings.

I am excited about the progress that we are making. We had a record year for construction last year - and expect an even better one this year. We are transforming our economy and our community. We will keep moving forward. Thank you for the work that you do.

Mayor Steve Luecke