BY BILL DOLAN, Times of Northwest Indiana
bdolan@nwitimes.com
The collapse of the proposed Lake County income tax last week should leave cities, towns and township government units at a loss for revenue next year.
"Now the cities and towns will come under the wrath of the state," Lake County Commissioner Roosevelt Allen Jr., D-Gary, warned minutes after the County Council let the 1 percent income tax on county residents die by veto.
Allen said the county has more to be concerned about than all local government units -- other than schools -- being slapped with a property tax levy freeze in 2008.
"I'm concerned about being shut out of any benefit from whatever favorable tax legislation comes out," Allen said.
The Legislature mandated early in 2007 that if Lake remains the only county without an income tax, it would forfeit the annual increases allowed in property tax collections to adjust for inflation -- an estimated $17.2 million in 2008.
Three quarters of those losses will be felt in county government and the cities of Gary, East Chicago and Hammond, according to a fiscal analysis released by the Lake County Council. Suburban communities will have to absorb the rest.
Commissioner Gerry Scheub, D-Schererville, said the county already has frozen its 2008 budget to last year's level. There will be no layoffs -- but also no pay raises other than to police, corrections officers and union members of the county Highway Department.
Scheub said he, like Allen, fears further punitive measures against Lake County.
"If they pass some legislation to reduce property taxes, are they going to include us?" Scheub said. "I don't think so. But if they do, then it is up to us to respond by cutting costs."
Gary Mayor Rudy Clay said his city will struggle on.
"We already have cut $13 million out of our budget without laying people off," Clay said. "No other city in the country our size could have done that, so we will have to keep wrestling with this octopus until it gets tired."
Hobart Clerk-Treasurer Deborah Longer said her city passed a frozen budget earlier in 2007 because of uncertainty regarding the income tax, what the new mayor's administration would need and whether the state would approve a larger 2008 budget.
Outgoing East Chicago City Councilman Anthony Copeland, D-at large, said the Pabey administration passed a 2008 budget that is $2 million more than last year. Because he is leaving office, Copeland declined to speculate on how the city will reconcile that with the potential $2 million loss because of the levy freeze.
County Councilman Larry Blanchard, R-Crown Point, said the levy freeze shouldn't be seen only as a negative.
"It will be tough on units experiencing growth like Winfield, but it's real property tax relief that people will see in 2008," he said.