City Council members already vexed by the mix of tax policy questions facing them found the situation even more complicated Tuesday night.
After hearing a presentation on a survey that showed Fort Wayne residents are happy with the services they get from the city and don’t want to see them cut – but also aren’t excited about new taxes to pay for them – the council heard a presentation on new taxes.
Because of the property tax caps enacted in 2009 that limit taxes on owner-occupied homes to 1 percent of the value, the city has lost $53 million in revenue. The amount it will actually collect in property taxes this year will be $8.4 million less than it collected in 2007. Officials said they have reached the point where they simply cannot cut anymore: Either services will have to be eliminated or scaled back, or taxes will have to increase to pay for them.
One option being considered is increasing income taxes. State law allows a 0.25 percent increase in local income taxes if it comes with another 0.25 percent increase that goes toward property tax relief. That would put Allen County’s local income tax at 1.5 percent, about in the middle of what surrounding counties charge.
Local income taxes are decided by the County Income Tax Council, but that body’s makeup is set by population, so the city of Fort Wayne holds a majority and can make decisions that affect all of Allen County and every taxing body in its borders. Raising the income tax, along with other changes contemplated, would raise about $31.5 million countywide, with about $17.6 million going to the city of Fort Wayne, depending on how the property tax relief is distributed.
There could also be property tax increases officials have not discussed much yet, including $1 million a year closer to the maximum the state allows and a new property tax called the Cumulative Capital Development Fund, which would generate about $1 million a year.
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