City Budget: No Tax Hike for Fort Wayne Residents

By Rachel Martin

October 16, 2012 Updated Oct 18, 2013 at 11:37 AM EDT

FORT WAYNE, Ind. (www.incnow.tv) – After proposing to raise property taxes to balance the 2013 city budget, Fort Wayne City Council came up with a way to eliminate the property tax hike all together.

After weeks of proposals, Fort Wayne residents will not see their taxes go up to balance the city's budget after all. Tuesday night, City Council took a preliminary vote and agreed not to raise property taxes.

Councilman Dr. John Crawford (R – At-Large) had a new proposal in which would freeze property taxes this year and use money from the cash reserves. Crawford says the cash reserves would go from $13.8 million to approximately $12 million, which is “really not that much different.” This way, he says, the city will be better prepared for future economic struggles.

“Our cash balance will drop somewhat, but still not what I consider a dangerous level. Next year’s budget will be very very tough and we probably will have some property tax or other tax increases next year,” said Crawford. “We got there by using several million dollars in cuts, and the Mayor’s proposed using interest from the Legacy Fund—if we need it.”

For 2013, residents are already facing a number of tax hikes with the water rates, sewer rates, tree tax, and FWCS building renovation plan.

“So we’re going to hold the line this year and not raise property taxes,” said Crawford.

According to Mayor Tom Henry, the concern began when the State told the City it would be facing a $12 million property tax cut due to the tax cap. The administration budgeted for that $12 million, but it turned out to be a $15 million cut instead.

To compensate for the $3 million shortfall, the Mayor proposed several options: to utilize the State’s allowable 2.8 percent tax levy for 2013, and take $3 million from a city fund, or add the 2.8 percent tax levy with the “banked” 2.9 percent levy from 2012 for a combined 5.7 percent tax levy.

“Cutting the levy is not something any other taxing unit in Allen County or anywhere else is discussing. This really is an issue that just Fort Wayne is talking about,” said City Controller Pat Roller.

City Council originally proposed using money from the Legacy Fund, a fund that’s supposed to be used for project investments, but Monday night Mayor Henry proposed using approximately $3-4 million in interest from the Legacy Fund instead of taking directly from it.

“This one seemed to address most of the issues. It addressed my issue of not going into the principle Legacy, it addressed some of the Council members concerns of not wanting to consider two different levies,” said Mayor Henry. “It put us in a position to pay off the interest if our cash reserves exceed 10 percent. It also meets the needs, wants and desires of a number of citizens.”

Mayor Henry went on to say that he considers the Legacy Fund money “sacred” and does not want to use it for “operations” but instead as an investment for the city.

“It is not taxpayer’s money. It was money paid into Utility that was negotiated not once, but twice as a lease arrangement with Indiana-Michigan [Power],” said Mayor Henry.

But Crawford sees it differently.

“To me the Legacy Fund is not sacred money and it can be regarded as an auxiliary cash balance. We won’t touch it unless we need it, but if we do need some when there’s something unexpected it could be used for certain things,” said Crawford. “If everything goes as expected, if the cash balance turns out exactly like the Controller projected, we won’t need to touch it at all this year.”

Council will make their final vote on the 2013 budget next Tuesday. The City plans to present their final recommendations for the Legacy Fund Tuesday, Oct. 30.

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