Lake County mayors: Let us levy own income taxes

Mayors Rudy Clay of Gary, Brian Snedecor of Hobart and George Pabey of East Chicago met with key legislators and representatives of Gov. Mitch Daniels at the Statehouse.

The mayors worry their cities will face financial crises if unfunded property tax caps take effect, slashing their budgets.

Clay said he asked House Ways and Means Committee Chairman William Crawford to give individual taxing units the power to levy an income tax to offset cuts in police department and fire department budgets because of the tax caps.

Giving cities the power to tax within their own borders is especially important in Lake County, Clay said, because county officials have thus far not enacted a county income tax.

"We want to give property tax relief, but we need to have the capability to maintain these key services," Clay said.

Crawford, D-Indianapolis, said he believes the idea is worth considering.

"We are still working toward an agreement," Crawford said of the ongoing legislative negotiations for a property tax relief package.

Central to Daniels' property tax overhaul plan were property tax caps of 1 percent of assessed value for single family homes, 2 percent for rental properties and 3 percent for businesses.

Taxing entities' budgets would be cut by whatever amount would have been collected from taxes in excess of the caps.

Cities with high tax rates like East Chicago and Gary would see particularly large cuts.

Senate Republicans have proposed an appeal board for "distressed units" which lose more than 5 percent of their budgets to the caps.

The board could agree to phase in the caps, or remove existing debt obligations from the cap calculations.

But Sen. Earline Rogers, D-Gary, said it makes sense to give "distressed units" a chance to help themselves with a local tax.

"Clearly, public safety cuts are an area of concern," Rogers said.

Hobart's city budget could suffer a $3.2 million shortfall under the cap, Snedecor said.

He believes his constituents would rather pay a small additional municipal income tax than suffer cuts to essential services.

"I don't think our residents would oppose that kind of tax, if it was targeted for public safety, maintaining police and fire protection," Snedecor said.

Pabey said he also asked legislative leaders not to allow a proposed extension to the South Shore commuter rail line to be resurrected at the end of the session.

The plan appears headed for a summer study committee, but Pabey and others opposed to the $1 billion project in its current form worry it will find its way into another bill.