City budget and City Government and Local Government and Government & Economic Development and Government

Indianapolis 2015 budget would use reserves

August 18, 2014

Raising the prospect of service cutbacks or layoffs, Mayor Greg Ballard's top aide made the case for a commuter tax in a briefing on the proposed 2015 budget, which would spend just over $1 billion.

For the third year running, the city would fund its budget by dipping into reserves. Chief of Staff Ryan Vaughn said Monday afternoon that's because the city hasn't found a way to cover the ongoing deficit between revenue and expenditures, which is projected at $37 million and would be reduced to $25 million by the end of 2015.

"You have to address the taxing structure," or make changes in service, such as picking up trash every other week or lengthening the turnaround time on pothole repair, Vaughn said. He was referencing the city's plan to ask the Indiana General Assembly to approve a commuter tax on people who live outside Marion County but work in Indianapolis. In Indiana, local income taxes are paid to the county of residence, and Marion County has a net inflow of about 200,000 commuters a day.

"Either we're going to make some drastic reductions in personnel and services, or we find some additional sources," City Controller Jason Dudich said, echoing Vaughn. He projects that the city's tax-supported fund balances would fall from $83.5 million this year to $55.4 million by the end of 2015. That would leave fund balances below an ideal threhold of about 10 percent of expenditures.

Ballard was scheduled to introduce the budget to the City-County Council at a 7 p.m. meeting Monday. He did not attend the afternoon media briefing led by Vaughn and Dudich.

The mayor's proposed 2015 budget is 3.5 percent larger than the just-under $1 billion adopted for the current year. It includes contracted raises for police and firefighters, state-mandated raises for court staff and public defenders, sheriff's deputy raises and increases funding to the Department of Code Enforcement for new illegal dumping and unsafe building programs.

To cover the projected deficit, the mayor is proposing to spend down fund balances by $28 million. Most of that money, $25 million, will be for the general fund.

The city will also benefit from a one-time windfall of $34 million, which is the result of the Marion County Auditor cracking down on homestead fraud. That money will not be directly spent by the city but will contribute to fund balances.

Not included in the budget proposal is a hike in the public safety income tax from 0.35 percent to 0.50 percent. If the council agrees to that tax increase by Sept. 22, as required by law for it to take effect next year, Dudich said the mayor will propose an amendment to the 2015 budget that would include hiring more police officers.

The tax hike, which is projected to generate $29 million a year, would also cover ongoing budget deficits at the Indianapolis Metropolitan Police Department and Marion County criminal justice agencies.

Ballard would agree to sunset the public safety income-tax hike if a new commuter tax benefitting Marion County is adopted.

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