Monday, February 24, 2014

IBJ Reports Indy Mayor Wants to Lure High Earners to Boost Taxes

From the Indianapolis Business Journal:

Indianapolis Mayor Greg Ballard is acknowledging for the first time that efficiency alone can’t solve the city’s budget deficit.

In fact, his chief deputy has spent the past six months explaining to community and business leaders variations of this message: “We simply cannot cut our way out of these revenue problems. We need to attract people to live here because that’s where they pay their income taxes.”
Vaughn Chief of Staff Ryan Vaughn
Those were the words Chief of Staff Ryan Vaughn used in a recent presentation to IBJ that previewed the mayor’s Feb. 27 state-of-the-city address, which promises to be heavy on initiatives aimed at making the city a more attractive place to live.

Attracting new residents is the goal of almost every city, but it’s urgent to Ballard because he faces yet another budget deficit, projected to be $40 million in 2015. Meanwhile, expenses for public safety and criminal justice continue to grow. They consumed 92 percent of the general fund in 2013, up from 84 percent in 2011.

That leaves little room for investing in roads, parks and other “amenities,” Vaughn’s presentation notes.

Although the economy is improving, Indiana’s property-tax caps mean that a major source of revenue probably will remain flat, Vaughn said. The other major source of revenue is local income tax, but the base of earners isn’t strong or growing fast enough.

A large portion of Indianapolis households, 27 percent, earns $25,000 a year or less, and middle-income earners are migrating out of the city as they approach child-rearing years. Only about 17.5 percent of households earn $50,000 to $75,000.

Marion County’s total population has grown steadily since 1980, from 765,233 to 903,393 in 2010, but only outside the urban core.

Center Township’s population declined over the same period 32 percent, from 208,624 to 142,787.

The city could raise its income-tax rate, but at 1.62 percent it’s already higher than in most suburban counties, Vaughn said. While Ballard will work with the Indiana Legislature on securing another source of revenue, such as a commuter tax on those who live in the doughnut counties but work in Indianapolis, Vaughn said the immediate focus is on growing the income-tax base.