Fort Wayne Mayor Tom Henry has dropped a proposal to raise the property tax rate by 5.7 percent, and is now asking that the City Council approve a tax hike of 2.8 percent, while also borrowing $3 million to $4 million in interest income from the city’s Legacy Fund.
It’s all part of balancing act to ensure the city has a financial pad equivalent to 10 percent of its annual budget in case of emergencies.
The state limits the amount that various government entities can raise property taxes. Last year Fort Wayne’s limit was 2.9 percent, but the council rejected the entire increase.
This year, the maximum increase is 2.8 percent.
By not raising property taxes last year, the city was allowed to “bank” that 2.9 percent increase for a future year.
Henry had originally proposed enacting both last year’s and this year’s tax increases, in part to counter the reduction in revenue created by the property tax caps mandated by the state constitution.
Under the mayor’s new proposal, the 2.9 percent increase that was unused last year will remain banked so it could conceivably be used in the future.
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With a 2.8 percent property tax increase, city officials said, a person with a $100,000 house would pay about $11 a year more in property taxes, if that person has not reached the 1 percent tax cap.
It is still difficult to predict exactly how much the city will bring in through property taxes because property values change and many homeowners have homestead and other exemptions.
The city won’t know until March exactly how much it will raise in property taxes.
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The council will debate the budget tonight during its scheduled meeting.
