high schools would boost the per capita tax burden to among the highest in the state, the study found.
A $40 million jail and high school renovations totaling $221 million would take the existing tax burden of 3.9 percent of personal income from 49th among the state’s 92 counties to 18th highest at 4.47 percent.
More ambitious plans to construct new high schools and a so-called “mega jail” would result in the state’s 10th highest tax burden at 4.88 percent. Estimates are based on a 20-year bond at 4 percent interest for a jail and a slightly higher rate for schools, also for 20 years, because of the state’s mechanism for financing education facilities that requires establishing a school building corporation.
Costs vs. personal income
“In our view, which taxes get increased … is less relevant than this reality: there is only so much that we can afford,” the economists wrote.
Vigo’s per capita personal income of $34,992 ranks in the bottom third of the state at 70th. “Our conclusion is that the people of Vigo County are capable of taking on more debt and capable of paying the taxes necessary to pay that debt,” Guell and Christ said. Capability, they explained, is defined by what other counties are doing.
But the economics professors suggest taxpayers may not be able to afford the most expensive options: a more than 400-bed jail costing about $60 million and new high schools totaling $382 million. Debt service on the lowest cost options, including a more basic jail and school renovations, would cost taxpayers $22 million per year while taxes would rise by $37 million per year to finance debt on a plan that includes a larger jail and new schools, the study found.
Such a combination means Vigo would go from one of six counties with the least amount of local public debt to having the highest debt in the state.
Call for collaboration
“In light of the realities that this analysis highlights, we think it is imperative that area leaders meet to collectively discuss the general tax-increase needs facing this community,” Guell and Christ said.
Such a meeting should include at least the Vigo County School Board, County Council and County Commissioners, they said.
“Because we have ignored issues in this examination that ought not be ignored for long, the Terre Haute mayor and City Council should also take part in these discussions,” the authors said.
Guell and Christ suggested officials agree to cap new taxes at $20 million to $25 million and divide the revenues. At that level, Vigo’s effective tax rate would rank near the top of the state’s low income counties.
“Anything beyond that would put us significantly beyond that of any other similarly situated county,” Guell said.
“That is not to say pushing our way to some new burden of what a community can bear isn’t feasible, only that we don’t think that’s likely,” Christ added. “If it were not problematic … then some other county would probably already have done it.”
The last thing the community needs is for each taxing body to go it alone, the professors said.
“Had the County Council voted for a tax increase last month to finance a new jail, they would have effectively imposed new constraints on what the School Board is likely to sell to the community. That approach to community leadership seems unacceptable to us,” they wrote.
Agreement on needs
“Our high schools are showing their age, and even the students recognize that their school facilities are falling behind those of other similar communities,” they wrote. “Our jail problem will not go away. The Hulman Center project represents an opportunity to contribute to an ongoing boom and revitalization of our downtown area. The current police station is an embarrassment.”
The study made note of a proposed downtown convention facility, which the Capital Improvement Board has estimated at about $15 million, as well as a new $9.1 million city police station. But the authors said a convention center now seems unlikely and the police station was not included in calculations because it is small compared with the other projects.
City and county officials said a convention center would be financed via existing economic development income taxes and no new taxes would be needed.
Mayor Duke Bennett said his administration plans to finance a police station using that same source.
However, City Councilman Earl Elliott, who chairs the council’s finance committee, favors a referendum on funding the project via property taxes.
Joint statement
County Commissioners Judy Anderson, Jon Marvel and Brad Anderson, Mayor Duke Bennett and Vigo County Schools Superintendent Danny Tanoos issued a joint statement in response to the study. “Our community is at a crossroads for change,” the statement said, describing the analysis as a “thoughtful narrative matched with data that make us think about competing priorities. For that, we appreciate their insight, expertise, and timely opinions. We…understand we must navigate the priorities thoughtfully.”
The statement cited court orders to address jail overcrowding and “dilapidated” conditions and the city’s long term storm water control plan; said a new police station is a priority; a convention center “proves to bring economic promise;” and aging high schools are barriers for creating the best educational environments for students. “You’re right, it is time to invest,” the statement said. “It is our fiduciary responsibility to the taxpayers to find the most reasonable financial solutions and reduce the long-term impact. It is also our responsibility to investigate all funding opportunities available in order to secure the lowest cost of borrowing to our taxpayers. This process takes time and effort from professional advisers, and most importantly, knowledgeable input from the community.” The statement did not indicate whether the commissioners, the mayor and superintendent would support a joint meeting.
“We’re already working collaboratively,” Mayor Bennett said in a phone call in advance of the statement.
Leaders of the Terre Haute and Vigo County councils have indicated support for such a meeting.
“Any time you mention collaboration, it sounds good on paper but it takes leadership to have that happen,” said Karrum Nasser, president of the City Council. “If there’s anything I can do to make that happen … I’d be more than happy to do it.”
County Council President Bill Thomas said he is “100 percent” in support of such a meeting. “At the end of the day, we’re a community and we all need to work together to move this community forward,” he said. Lisa Spence, newly selected president of the Taxpayers Association of Vigo County, said the study is a valuable contribution to the discussion of building projects. The group agrees taxing bodies need to work together and had earlier made a similar call.
“While we appreciate that this report is focusing on whether the community can reasonably support the additional tax burden of these projects, it is important to note that it does not attempt to address whether the projects themselves are warranted at the current estimated costs,” Spence said. “In the case of the jail, the Taxpayers Association supports an independent study [even if it costs a small amount of money] to determine whether the level of expenditure being proposed is even necessary,” she said.