Daniels: Tax caps are working

BY PATRICK GUINANE, Times of Northwest Indiana
pguinane@nwitimes.com

INDIANAPOLIS | Looming state property tax caps are forcing Lake County leaders to consider long overdue spending cuts, Gov. Mitch Daniels said a day after the city of Gary canceled a $25,000 photography contract with the mayor's son.

"It has to happen. Lake County has the most overtaxed taxpayers in the state on a property tax basis," the Republican governor said Thursday. "Everybody knows there are nonessential -- just to be kind about it -- contracts, and the caps are absolutely about forcing government to finally put the taxpayers first and get rid of some of what is unnecessary."

The Gary Board of Public Works and Safety shed $77,000 Wednesday night by terminating two legal contracts and ending Rudy Clay Jr.'s tenure as city photographer. The mayor's son had been paid about $12,500 this year to snap photos of city events and still holds a $30,000 photography contract with the Gary Sanitary District, city spokeswoman LaLosa Burns said Thursday.

Gary Mayor Rudy Clay did not care to comment Thursday on the governor's remarks, Burns said. The beleaguered city is attempting to close a $13 million budget deficit for the remainder of this year, with the mayor proposing 20 percent pay cuts for city employees.

Burns said she didn't know whether the suggested pay cuts would remain in place next year, when Gary must slash spending by an estimated $36.7 million to comply with the tax caps Daniels ushered into law this spring. The caps will provide relief to taxpayers, including homeowners, by restricting the revenue that flows to local government.

"I think you have heard this conversation among most of the major cites. I hear it happening in the surrounding communities, as well as on the county level," Burns said. "We are in a position now where we do have to institute cutbacks and consolidations in order to meet budgets that have been placed before us."

East Chicago, which stands to lose $18 million next year to the tax caps, trimmed 75 jobs from its notoriously heavy payroll in June and announced plans to consolidate twice weekly garbage collection to once a week.

Hobart is contemplating a $10 monthly trash collection fee. And the Lake County Council, which is eyeing $15 million in 2009 budget cuts, imposed a county government hiring freeze last month.

The austerity measures all are linked to the property tax overhaul state lawmakers approved in March. The legislation is expected to reduce homeowner property tax bills this fall by an average of at least 25 percent in Lake County.