City Council members have two paths to solving the city budget crisis, but the administration Tuesday said one path – which avoids an income tax hike – is fraught with problems.
Councilmen Russ Jehl, R-2nd, and Mitch Harper, R-4th, two weeks ago proposed an “alternative framework” for plugging the gap between the city’s expenses, the amount of revenue it expects and the amount of cash officials want to have as reserves. Mayor Tom Henry’s administration says there’s an $11 million gap, and on Tuesday presented its response to the Jehl-Harper proposal.
Jehl said afterward both proposals have much in common.
“I think we’re relatively close, and I especially appreciate them laying the numbers out,” Jehl said.
Harper said he appreciated the administration acknowledging they have the city’s best interest at heart and that their proposal moved the discussion forward.
Jehl and Harper proposed making up the difference with a combination of spending cuts, property tax increases and using Community Development Economic Income Tax, or CEDIT, money, and money from the Legacy Fund, created by the lease and sale of the city’s old electric utility. Henry is proposing the same spending cuts, a smaller property tax increase and a new local option income tax, which would raise local income taxes in Allen County from 1 percent to 1.5 percent.
Tuesday, City Controller Pat Roller addressed the Jehl-Harper proposal, pointing out where the two sides agreed and differed.
She said it appears the Jehl-Harper idea would spend more of the CEDIT money than is available, leaving a deficit, and would eat into the main body of the Legacy Fund, which was meant to be used for transformational projects rather than operations.
John Stafford, director of the Community Research Institute at IPFW, told the council both plans have similarities, but the issue is sustainability. The Harper-Jehl proposal may have the political benefit of not raising income taxes, but does not appear to solve the city’s long-term problem of increasing expenses and falling revenues, he said. Jehl said there may be a misunderstanding in the city’s take on his CEDIT proposal.
The one bright spot in the debate also compounds the problem: Everyone agrees more spending is needed on parks, police and fire protection, and street repairs.
Finance Committee Chairman John Crawford, R-at large, said next week the council must decide how much to spend on those items and how much of a cash reserve the city needs. On June 11, he said, the council will begin debate on how to pay for those, choosing between the mix of options before them.
Officials had wanted a final vote on June 25, but some council members had been planning to be out of town; if necessary, the council will hold a special session July 2 to decide the question.
