By Andy Grimm, Post-Tribune staff writer
Gary is not alone among Indiana cities facing deep budget cuts with residents seeing reductions in city services, as well as in their tax bills.
House Bill 1001, passed this spring, caps property taxes at 1 percent of a home's assessed value for homeowners, 2 percent on rental properties and 3 percent on commercial property. It will reduce tax bills, but it also will create a revenue shortfall equal to half Gary's 2008 budget.
Mayor Rudy Clay announced a 20 percent pay cut for all city employees, among other reductions meant to make up for a projected $13 million shortfall for this year. Another revenue dip of $36 million is projected for 2009 and $45 million projected for 2010.
In Hammond, Mayor Thomas McDermott Jr. announced the removal of the city Environmental Department from the city budget. The move comes less than a year after he shut down the city Health Department -- in five years, he has cut five departments from the tax rolls.
This fall, he is considering getting rid of the city bus service but, facing a revenue dip of "merely" 19 percent, his concerns are more muted than in other major cities.
"We're going to be able to live within 1001, I'll say that ... you don't hear me complaining about 1001," he said. "The politician in me wouldn't complain taxpayers are going to see their tax bills cut in half. But be careful what you wish for."
In South Bend, Mayor Steve Luecke said despite several rounds of staff reductions during his 12 years in office, the city will cut 53 firefighters and 40 sworn police officers -- 15 percent of the city workforce -- to meet an expected $21.3 million cut in property tax revenue next year.
Even municipal pools are no longer open seven days a week, and by the time the full effect of HB 1001 is felt in the summer of 2010, Luecke said, they may not open at all.
"We cannot survive without additional revenue from some other source, probably in the form of an increase to the income tax," Luecke said.
"People are wanting us to continue to provide those core, key services to the community. If (a revenue increase) doesn't happen, we will see cuts to muscle and bone in government, not just fat. I think we're already there."
State Rep. Jeff Espich, D-Uniondale, was one of the most vocal advocates of the tax cap and making it part of the state constitution, a measure that will go before the General Assembly next year.
While he has read the headlines outlining massive cuts and dire scenarios for other cities, he said he has yet to see where actual city services have been impacted.
"The point was to give property tax relief to homeowners, and you can't do that without reducing the cost of government," Espich said. "I for one would not take my vote back for anything. People are seeing bills that are 30 percent lower."
Espich points out that cities such as Gary can appeal to the state to raise their taxes above the cap levels to preserve essential services.
"If the system doesn't work, if government fails the people ... then I am certainly willing to look at something, at changing, coming back," he said. "I honestly just want to see a demonstration of good faith. I want to see a demonstration that they are truly trying to make government more efficient."