INDIANAPOLIS -- Gary City Hall will need to cut at least $6 million more from its budget when 2012 arrives, a fact not lost on the people who heard its final five-hour presentation Friday before the Indiana Distressed Unit Appeals Board.
Mayor Rudy Clay and his team say the city can't afford to do that now, so they're asking the DUAB for help collecting an extra $11.1 million from taxpayers this year. That would prop its budget levy up to $41.1 million. If the DUAB denies Gary's request, that levy will be knocked down to $30 million.
Gary must operate at that lower level next year, regardless, and Controller Celita Green said the city has a plan to cover $5 million of that gap. This is the last year the DUAB can help by raising local property tax caps, so the city must find a way to make up the rest by then.
"The day is fast approaching that you must live within the revenue source that our current statute provides," Bruce Hartman of the State Board of Accounts told them.
Gary's property tax collection rate hovers around 70 percent, though, meaning next year's cut could be even more drastic than $6 million. Green and DUAB staff member Cris Johnston said the situation has already hurt Gary's ability to borrow from the Indiana Bond Bank in anticipation of property tax receipts.
The Bond Bank offers loans to Hoosier governments so they can pay their bills before tax revenue arrives. Communities with stellar collection rates may borrow up to 80 percent of their tax levy, but Gary's collection rate has fallen too low for that.
"They don't know how much to lend the petitioning units in Gary," Johnston said of the Bond Bank.
The DUAB helped Gary in 2009 and 2010 by raising local tax caps, and the hearing Friday unfolded much like those of the past. Clay and his team argued they've made cuts suggested by their fiscal monitor, but a contingent of Gary residents said the DUAB should turn them down.
Resident Richard Barnes said property owners want to be treated like any other taxpayers in Indiana where the caps are enforced.
"We're requesting equality," Barnes said.
DUAB board members, meanwhile, told Clay and his team to "break the mold" as they seek a budget solution. They zeroed in on topics like consolidation of services with the county, spending by the City Council and economic development.
Corporation Counsel Susan Severtson said Gary hasn't been able to consolidate some services with Lake County because county officials weren't interested in doing so. The DUAB suggested turning to not-for-profit agencies to cut costs on services like animal control.
City Council Vice President Kyle Allen was questioned about council spending. Allen said the council has eliminated its grants and subsidies budget, cut up its credit cards and reduced travel. Still, he took some grief over council members' salaries of $27,530 each. Kyle Babcock, a DUAB board member and Warsaw City Council member, said he is paid $4,800 for his public service.
"We didn't get paid anything near that," Mark GiaQuinta, a DUAB member and former Fort Wayne City Council member, said of the Gary council members' salaries. He suggested Gary should consider the importance of symbolic cost-cutting measures.
Boasting of under-the-radar economic development, Clay and staff pointed to U.S. Steel's plan to build a new coke substitute facility in Gary, the renovation of the Dalton Arms apartment building with tax credits and the demolition of more than 100 abandoned homes using federal grant money.
Babcock asked Clay about plans for a museum honoring late pop singer and Gary native Michael Jackson. Clay said Jackson Family Foundation president Simon Sahouri is in Gary.
"There is work in progress," Clay said.
Fees will generate income
Gary expects to make up $5 million of its budget gap next year by capturing revenue from a levy the Gary Sanitary District is expected to release next year. GSD, the Gary Stormwater Management District and the Gary Public Transportation Corp. also appeared before the DUAB on Friday seeking tax cap relief.
GSD Director Rinzer Williams III said his agency will propose a stormwater fee to replace that levy. He said staff is considering a fee of $7, but that number could change.
GSD customers can also expect trash fees to go up. Collection on that fee since its adoption in July 2009 has been especially low because of a legal challenge by the Miller Citizens Corp. A judge ruled in that case last month and Williams said he hopes residents will begin paying that fee. He said he has no way to enforce collection.
"We really need the help of the (Indiana Utility Regulatory Commission) to give us some enforcement mechanism," Williams said.
GiaQuinta caused a stir when he said he represents trash hauling company Republic Services Inc. as an attorney. GSD outsourced trash collection to Republic subsidiary Allied Waste in 2009 before it adopted the trash fee and GiaQuinta said plaintiffs in the MCC's lawsuit are cutting off their noses to spite their faces.
He later denied his position on the DUAB creates any conflict of interest.
"What I do isn't going to affect it one way or another," GiaQuinta said.
GPTC General Manager Daryl Lampkins, meanwhile, found himself trying to explain why his agency was able to survive in 2010 without an appearance before the DUAB but is now saying it needs help to operate in 2011. Lampkins said GPTC was able to use federal stimulus money to survive last year.
"That goes away," Lampkins said.
The DUAB adjourned Friday without making a decision on any petition. It typically takes months to render a verdict.