By Maribeth Holtz, Chronicle-Tribune
mholtz@chronicle-tribune.com

Less revenue for cities and towns is one result of property tax caps.

Local leaders haven't determined how they'll come to grips with the idea. 

"We're still not quite 100 percent sure," Jonesboro Mayor Jay Akers said of what less money would mean for the city. "We're tinkering on some layoffs, both in the street department and police; we're looking at equipment we don't use that possibly we could sell. ... We're doing everything we can besides laying people off, but this time around we may not have any choice."

Municipalities across Grant County would receive less revenue because of caps in property taxes approved by the General Assembly and signed into law this week by Gov. Mitch Daniels. While estimated revenues are not definite, by 2010 local municipalities could see between 1 percent and 22 percent less than they would have received if there had been no change to property taxes.

For Jonesboro, the change is estimated at about $19,600 less in 2009 and $42,700 for 2010 - roughly 10 percent of the budget.

Akers said he's considering all avenues before looking into staff cuts - including cuts in fuel cost by going to alternative fuels, or selling water department equipment that isn't being used.

Converse will likely see the deepest cut in the county. While the dollar amounts are lower - about $5,000 for 2009 and $10,200 for 2010 - that makes about 22 percent less revenue for 2010.

"That's huge," said Joe Lenon, president of the Converse Town Council.

The town may have to cut some services, Lenon said, but he's not sure because it hasn't been a discussion yet in the council.

"We just haven't even talked about that because we haven't looked at the numbers yet," he said.

For Marion, the final estimates are lower than those that were tossed around during the legislative session. Still, the city could see about $814,000 less next year and $1.8 million less for 2010 - about 6 percent of the city's budget.

While Marion Mayor Wayne Seybold indicated last month that public safety positions could be at stake, he's now waiting to see if the estimates are accurate and how to crunch numbers before making changes in personnel.

"I don't think it's going to be as drastic as we think it could be," Seybold said.

During the next few weeks, Seybold said, he will work with city Controller Cindy Wright and city accountant Bob Swintz to look at numbers. He said public safety would be the "absolute last place" they would go in their cutting process.

Seybold also said there will be discussions at City Council meetings regarding what can be shaved off for the future.

"It will have to be a debate at some point in what services we want to continue to provide," Seybold said.

Provisions in the property tax reform plan allow counties to increase income taxes, which would make for more money for the county and the municipalities. Taxing units also can go to a Distressed Unit Appeals Board if they need help, which could include temporarily lifting property tax bill caps.

Matt Greller, director of the Indiana Associations of Cities and Towns, said that board is made of gubernatorial appointees, so he's not sure exactly how much relief cities would receive through it - he calls that "the great unknown."

Greller also said whether counties should take up the income tax option depends on how hard they're hit.

"The real problem is that the urban areas are hit much harder than the rural areas," he said. "But the counties are the only ones that can implement local option income tax."

Greller said IACT will lobby next year for cities or towns to be able to increase income tax if counties don't.

Greller said, overall, property tax reform means direct monetary loss for local governments across the state.

"You're talking about hundreds of millions of dollars in cities and towns statewide," he said.

There also could be long-term effects in economic growth, Greller said. There are more strict guidelines in tax increment financing districts now, which makes cities have to jump through more hoops in offering such financial incentives to companies, Greller said.

While local officials will learn how to deal with that, Greller said another economic impact is on quality-of-life assets that may disappear because of less money.

One town, for example, may close their pool. Greller said it's important that Indiana stays in a high standard so that businesses already here want to stay and new businesses will want to come here.

"The quality of life is where I think you're really going to see your cuts," Greller said.

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