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Ballard again targets homestead credit in latest budget proposal

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Mayor Greg Ballard will introduce a $1 billion budget for 2014 Monday night that chops the Marion County Sheriff’s spending and once again hinges on a complicated reshuffling of tax revenue.

Ballard’s administration is counting on the City-County Council to boost revenue by $11.5 million by eliminating the homestead property-tax credit, which is an income tax-supported subsidy that benefits some homeowners. (It’s different than the much larger homestead deduction.)

With three Republicans joining the Democratic majority, the council voted 18-11 on July 29 against a phased-in homestead credit elimination. Last year, council leaders rejected a similar proposal that was part of Ballard’s 2013 budget.

Council President Maggie Lewis, a Democrat, said she agreed to sponsor the proposal this time, but she’s not personally sold on it. “It’s budget time, and everything should be on the table,” she said.

Lewis said she also wants to look at one-time measures, such as tapping tax-increment finance revenue, an $80 million fiscal stability fund that helps the city maintain its AAA credit rating, or unspent Rebuild Indy money.

Ballard’s team anticipated a $55 million gap between revenue and spending for 2014. They caught an $8 million break because health insurance premiums stayed flat, and they’re looking for $32.5 million more in spending cuts and new revenue sources.

The rest of the gap would be covered by spending down $25 million of the current general-fund balance.

The proposed cuts are as follows:

— Not funding police and firefighter raises scheduled to take effect in 2014: $5.7 million

— Marion County Sheriff’s Office: $5.4 million

— Marion County Courts: $1 million

— Indianapolis Fire Department: $1 million.

Additional revenue would come from these sources:

— Eliminating the local homestead tax credit, along with expanding the Indianapolis Metropolitan Police Department property-tax district: $11.5 million

— Charging police and firefighters fees for personal use of their take-home cars: $1.4 million.

Lewis, who was briefed on the budget this week, said she’s concerned about the impact on cops, courts and the sheriff.

She thinks the administration should give police and firefighters their raises. “They signed that contract. I think they should honor that contract.”

Firefighters wouldn’t face layoffs as a result of the department’s budget cut. Chief of Staff Ryan Vaughn said the city will spend the next year studying opportunities for station consolidation, but there will be no layoffs. IFD has an incoming recruit class, which is expected to make up for retirements and reduce overtime expenses.

The deepest cut would fall on the sheriff’s office, an ongoing source of frustration for Ballard. Sheriff John Layton’s budget would go from $111.5 million this year to $108 million.

That includes $2 million that's earmarked for debt service on an emergency communications system, so unless the council finds a way to restore his funding, Layton faces about $5 million in cuts elsewhere. He couldn’t be reached for comment Friday, when Vaughn and Controller Jason Dudich presented an overview of the budget to IBJ.

In an interview Thursday, Ballard said he’s not concerned about the impact of budget cuts. “If people manage appropriately, you won’t see any drop in services,” he said.

The council is scheduled to vote on the budget Oct. 14. “I don’t think they’re going to try to play games with it like they did last year,” Ballard said.

Vaughn acknowledged, though, that he has no idea how the council will react to his third crack at eliminating the homestead credit.

The impact on homeowners ranges from zero for those whose bills are already at the constitutionally mandated 1-percent cap to more than $70, especially in parts of Washington Township. The impact varies in both Democratic and Republican council districts.

Vaughn thinks eliminating the homestead credit makes the county’s tax burden fairer because currently, anyone who pays income taxes but doesn’t own a home sees no benefit. “It’s literally paying my property-tax bill in Washington Township,” he said.

Eliminating the credit would generate $11.5 million in income tax if it’s coupled with an expansion of the IMPD taxing district. The district currently covers the old city limits, but Ballard’s administration is proposing to expand it to the entire county, except Lawrence, Beech Grove, Speedway and Southport.

The current IMPD property-tax levy, $35 million, would apply to a broader base, lowering the tax rate from 36.5 cents per $100 of assessed valuation inside the current district to 11.4 cents per $100. Whether homeowners inside the current district see their bills decline and those in the expanded area see bills rise will depend on whether they've already hit the 1-percent cap, Dudich said.

For the city, expanding the district lessens the impact of property-tax caps and would generate another $3 million a year, Dudich said. Other entities inside the old city limits, especially Indianapolis Public Schools, would see the same benefit, he said.

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  • Homes less affordable
    Yes, lets get rid of the tax break that makes home ownership affordable. Surely there is some other way to fund our police department.
  • What about TIFs?
    Yes, what about the TIF revenues? What are they? If we keep putting new projects in TIFs will never grow the property tax base. Why not get a project at the Market Square site that can be developed with free land, but without an $18 million taxpayer subsidy so that its property taxes can go into the general fund to fill some gaps?
  • City Accounting is just lone Major financial defalcation.
    It is criminal for the Ballard administration to ask rank and file taxpayers for anymore money. 1st and foremost START BY reporting 100% of the revenues and stop funding TIFS! Put all assessed valuation of real estate back in --in support of the general fund. Then when you have excess funding consider more TIFS only continue to pay down the current TIFS. Complete lack of integrity not to properly report all tax revenues. Stop with the crony capitalism.
  • OK
    This guy beat who on what??? Thanks IMPD, this is all the luv you get.

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  1. Now if he'd just stay there...

  2. Daniel - what about the many US citizens who do NOT follow what the Bible teaches? The Hindus, Jews, Muslims and others who are all American citizens entitled to all rights as Americans?? This issue has NOTHING to do with "What the Bible says..." Keep all Churches separate from State! Pence's ongoing idiocy continues to make Indiana look like a backwards, homophobic state in the eyes of our nation. Can't we move on to bigger issues - like educating our kids?

  3. 1. IBJ should link to the referenced report. We are in the age of electronic media...not sharing information is lazy. Here is a link http://www.in.gov/gov/files/Blue_Ribbon_Panel_Report_July_9_2014.pdf 2. The article should provide more clarity about the make-up of this panel. The commenters are making this item out to be partisan, it does not appear the panel is partisan. Here is a list of the panel which appears to be balanced with different SME to add different perspectives http://www.in.gov/activecalendar/EventList.aspx?view=EventDetails&eventidn=138116?formation_id=189603 3. It suggests a by-pass, I do not see where this report suggests another "loop". 4. Henry, based on your kneejerk reaction, we would be better off if you moved to another state unless your post was meant as sarcasm in which case I say Well Done. 5. The article and report actually indicates need to improve rail and port infrastructure in direct contradiction to Shayla commentary. Specifically, recommendation is to consider passenger rail projects... 6. People have a voice with their elected officials. These are suggestions and do not represent "crony capitalism", etc. The report needs to be analyzed and the legislature can decide on priorities and spending. Don't like it, then vote in a new legislature but quit artificially creating issues where there are none! People need to sift through the politics and provide constructive criticism to the process rather than making uninformed comments in a public forum based on misinformation. IBJ should work harder to correct the record in these forums when blatant errors or misrepresentations are made.

  4. Joe ... Marriage is defined in the Bible ... it is mentioned in the Bible often. Marriage is not mentioned once in the US or Indiana Constitution ...

  5. Daniel - Educate me please: what does the Bible have to do with laws? If the government wasn't in the business of marriage to begin with, then it wouldn't have to "define" marriage at all. Marriage could be left as a personal, religious, or otherwise unregulated action, with no ties to taxes, legal status, etc. Then people could marry whomever they want, and all this silliness would go away. Remember to vote Libertarian in November.

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