By THOMAS B. LANGHORNE and BRYAN CORBIN, Evansville Courier & Press staff writers

langhornet@courierpress.com, corbinb@courierpress.com

Sounding the alarm about possible budget shortfalls that would cause deep cuts in services, area government officials brought their campaign against Gov. Mitch Daniels' property tax relief plan to Evansville on Monday.

Mayor Jonathan Weinzapfel estimated the city could lose $3.3 million in property tax revenue in 2009 and $3.4 million in 2010, almost 6 percent of the city's property tax levy.

"A cut of $3.4 million in 2010 would represent 43 police officers or 45 firefighters, or in the alternative we could close the zoo and eliminate bus service in order to make up the difference," the mayor said at an 11 a.m. news conference at the Civic Center.

Afterward, Weinzapfel said he and other local officials are open to alternative taxing options "to make sure we're providing superior government services in the most efficient way possible."

Versions of Daniels' plan involve caps, or "circuit breakers," on property taxes that would limit them to no more than 1 percent of a residential home's assessed value. For rental property, the cap would be 2 percent, and for business property, the cap would be 3 percent.

In the Indiana House version of the plan - House Bill 1001 - being considered in the state Senate, the 1 percent, 2 percent and 3 percent caps would be created by a change in statute.

In the Senate version now before the House, Senate Joint Resolution 1, the caps would be enacted by an amendment to the state constitution, a process that would take at least three years.

The lobby for municipal officials, the Indiana Association of Cities and Towns, also is warning that the revenue shortfalls created by the caps could lead to devastating cuts in police and fire protection and other essential services.

While counties can consider adopting local county-option income taxes to make up the shortfall, the association wants that replacement revenue to be automatic.

"We want to replace (lost revenue) to be able to keep our services intact, and we're asking the state to automatically impose that tax upon a county," said Ann Cottongim, associate executive director of the Association of Cities and Towns.

"However, let the county choose what source, whether it's a payroll tax, an income tax, a sales tax, a food and beverage tax - what tax base their area supports best to replace that lost revenue. It's not a one-size-fits-all solution."

Local government officials said the state's property tax crunch isn't primarily caused by spending, but rather a combination of events.

They cited a six-year delay by the Legislature in implementing a new trending process which dictates that property assessments be updated annually based on sales of other neighborhood and area property; phase-out of the inventory tax on businesses and a shifting of that burden to homeowners; and state reductions of property tax replacement credits.

David Bottorff, executive director of the Association of Indiana Counties, said higher homeowner tax bills don't mean local government spending has increased.

"If the homeowner's tax levy increased 40 percent, our levy didn't increase 40 percent," Bottorff said.

Officials also said their taxing units are operating as frugally as possible.

"We're already using over $600,000 in Economic Development Income Tax money just to balance our county general fund," said Gibson County Council President Tony Wolfe. "We're using rainy day funds to buy an ambulance and buy three sheriff's cars because we cannot pull them out of the general fund."

Lloyd Winnecke, a Vanderburgh County councilman who is running for County Commissioners, said it is "frustrating for those who work in Indianapolis to say the problem's at a local level."

"If you sit through any of the budget hearings, either the city or the county, in Evansville or Vanderburgh County, you would know that our local elected officials are very frugal," Winnecke said. "We're looking at how much copy paper a certain office uses."

The news conference in Evansville came as mayors from other cities testified to the Indiana House Ways and Means Committee at the Statehouse about the effect of the property tax relief plan.

Testifying first was the newly elected Republican mayor of Indianapolis, Greg Ballard, who was swept into office in November on a wave of voter anger over the Marion County property tax crisis.

Ballard testified in favor of the caps. But when asked by Ways and Means members how he would make up the shortfalls in the consolidated Indianapolis-Marion County budget of between $40 million and $45 million, Ballard repeatedly said he had only been in office for five weeks and didn't have all the answers.

"Everything is on the table," he said.

Asked if he would cut police officers, Ballard said he opposed that. Ballard also is opposed to increasing the local-option income tax.

"I will tell you that will not play well in Marion County after last year. I would do almost anything to not do that," Ballard told lawmakers.

But when the new mayor asked lawmakers to consider having the state cover Indianapolis' unfunded police-and-fire pension liability, which would save approximately $25 million a year, several lawmakers reacted with surprise.

"You also said you want the tools to mitigate these losses, and you don't have the slightest idea what tools you want," state Rep. Dennis Avery, D-Evansville, said.

"I'd like to have every tool available at my disposal. Whether I'd use them or not is another story," Ballard replied.

House members did not vote on the proposal Monday. More hearings are scheduled. The Legislature's deadline to pass property tax legislation and adjourn is March 14.

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