Most homeowners would join police officers and firefighters in chipping in to close a $65 million shortfall under Indianapolis Mayor Greg Ballard's proposed 2013 budget.
But while the officers' and firefighters' contributions may mean forgoing 3 percent raises, the cost to property taxpayers on average would be small: about $22 a year -- not from a tax hike, but from eliminating the homestead tax credit. About 60 percent of homeowners benefit from that credit.
Besides those two moves, the Ballard administration's plan to close the gap in the estimated $600 million city/county general fund budget relies mostly on tapping the few remaining reserves. About $51 million would come from a rainy day fund, department and agency reserves, and a Downtown economic development fund that also helped close this year's gap.
The mayor on Monday will present his roughly $1 billion overall budget to the City-County Council. The general fund, which pays for day-to-day expenses such as salaries, is the largest component and the trickiest to balance.
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In Ballard's city/county budget plan, the day-to-day estimated $600 million general fund is up 5 percent from $569 million this year.
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As of Friday -- after the arrival of more reliable property tax projections based on this year's countywide reassessment, which caused a delay -- Spalding said the budget gap stood at nearly $65 million.
The administration opted to take care of most of that by tapping $20 million from a rainy day fund. It was filled earlier this year with $30 million received after the Indiana Department of Revenue discovered it had shortchanged local governments on county income tax money. Ballard's proposal would leave $10 million untouched.
Another $21 million would be tapped by draining remaining reserve balances from various parts of the general fund budget.
And $10 million would come from a Downtown economic taxing district that captures some property taxes to support new development. The city portrays this as a reimbursement for past city spending on roads, sidewalks and other infrastructure that benefited that area.
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The remaining money to close next year's deficit would come from ending the homestead tax credit.
Doing away with it is estimated to save $8.1 million. That credit is different from the far more lucrative homestead deduction, which wouldn't be touched.
The tax credit reduces the average bill on a taxpayer's primary residence by about $22. But the administration calls the credit outdated in the era of property tax caps. That's because 38 percent of homeowners see no benefit since their property tax bills already have been cut by the cap, set at 1 percent of a home's assessed value.
According to the administration, because of tax caps, the tax credit cost the city $13 million this year while providing only $4.5 million in actual tax relief. The state earlier ended a similar state-funded credit following adoption of property tax caps four years ago.
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