City Council Weighs Options to Creating Revenue

By Rachel Martin

March 26, 2013 Updated Mar 26, 2013 at 11:09 PM EDT

FORT WAYNE, Ind. (www.incnow.tv) – Should City Council raise property taxes or income taxes? Or how about cutting the budget, possibly cutting services? These are the decisions Fort Wayne City Council is faced with when it comes to creating more revenue.

Tuesday night, Council Members heard a presentation from Larry DeBoer, an Agricultural Economics Professor from Purdue University and a state tax expert, who explained all the potential options.

One option is to raise the property tax, but many homeowners in Fort Wayne are already at their cap. DeBoer says because of that, any changes made will not effect the amount those people will pay, thus not create much revenue.

“If the city were to raise the property tax rate, mostly what would happen is the city and the county and the school corporations would receive less revenue, not so much of the taxpayers paying more,” he said.

Another option would be raising income taxes by one and half percent. DeBoer says that could create more revenue, depending on who or where the council chooses to impose the tax.

“The income tax does tend to raise additional revenue for the city. There’s an income tax for public safety that could be considered. There are income taxes for property tax relief that go just to homeowners or to homeowners and landlords, or to all property taxpayers across the board. That will reduce the tax payment and push some people below their caps. Other people wouldn’t be pushed below their caps depending on the way that they deliver the property tax relief.”

The City has also proposed cutting its budget by $5 million. Deboer says that would save some funds, but possibly cause cuts to city services.

“Are we talking police, are we talking fire? Are we talking parks, roads? Think of all the city services that are provided. What could be cut, what can be cut? If raising taxes are difficult decisions, cutting the budget is equally difficult,” he said.

The final option includes annexing area around the airport, the Buckner Park area, and areas to the North and Northeast. Annexing land could add to property tax revenue or cost the City more money by updating roads and adding services.

“It’s really a profit-loss sort of thing. Does the additional revenue raised exceed the additional costs? The new property tax caps means the additional revenue raised is likely a little bit less. Instead of paying the additional amount of property tax, people will pay the full amount of the property tax up to their caps, which is less that it used to be,” said DeBoer.

All this is in response to the property tax cap law enacted in 2009. Since then, Fort Wayne has lost $53 million in revenue with $14 million alone in 2013.

Council members say there is a lot to consider before making a final decision on how to fix the deficit. Council says they don’t plan to make any final decisions before June.

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