The city of Gary may join Merrillville in deciding to reduce the amount of money it is committing to the proposed South Shore Line commuter rail expansion.
At Tuesday's City Council meeting, the council introduced a resolution that would reduce the amount it contributed from its share of the County Economic Development Income Tax from no less than 7.5 percent to 5 percent. For calendar year 2017, it would mean the contribution would be reduced from an estimated $347,308 to $231,538.
The resolution was sent to the city's Finance Committee for discussion at 5:30 p.m. March 28.
The resolution states the city's assessed valuation has been predicted to drop by about $100 million and speaks of the city being in "grave financial conditions."
Council President Ron Brewer, D-at large, noted the city saw a large drop in its tax collection last year and that was a "wake-up call" of the city's financial difficulties. According to city officials, Gary saw its property tax revenues drop by more than $1.65 million between 2015 and 2016.
LaVetta Sparks-Wade, D-6th, said the 5 percent proposal is a soft number and council members are thinking of reducing the city's contribution even more. She said some members want to eliminate the contribution entirely, but she doesn't think that will happen.
Earlier this month, the Merrillville Town Council, citing financial reasons, voted to reduce its annual pledge from 22 to 8 percent.
U.S. Rep. Pete Visclosky, D-Merrillville, said after Merrillville's vote the reduction would be overturned in court. Visclosky could not be immediately reached for comment regarding Gary's proposal.
Brewer said the city will be ready for a court challenge if one is made.
In addition to the city's financial difficulties, Sparks-Wade said President Donald Trump's federal budget proposal does not contain the federal matching funds needed for the project.
The entire project, she said, is "in danger of not being started."
The Gary City Council on Tuesday also approved by a 7-0 vote, with two members absent, a resolution opposing House Bill 1144 that establishes South Shore rail transit development districts. Council members raised concerns the establishment of the districts would take control of development out of the city's hands and the financial impact would be too great.
The legislation allows the Regional Development Authority to borrow money for property improvements within the districts. Growth in local property and income tax revenues in the districts would be used to repay the transit-oriented development debt.