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Indianapolis 2015 budget would use reserves

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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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  • Response to Preston
    Current law states income taxes are paid to the county of residence not county of income source. The most likely scenario would be some alteration of the income tax distribution formula so money earned in Marion co. would go to Marion Co by residents of other counties would partially be distributed to Marion co. as opposed to now where the entirety is held by the resident's county.
  • Tax problem
    I don't have a problem with higher taxes, since it is obvious that our city is not adequately funded. And Ballard doesn't want to admit it, but he has increased taxes indirectly by 1) selling assets and spending the money, 2) letting now private entities increase user fees which were previously capped, 3) by spending reserves, and 4) by heavy dependence on TIFs. At the end, these are all indirect tax increases since someone will eventually have to pay for them. It's mathematics. You put property tax caps ("tax cut"), but you don't cut expenditures (justifiably so), so you increase taxes indirectly.
  • Commuter Tax: What Does This Mean?
    Could someone please explain the concept of a "commuter tax?" I will admit, I live in Fishers, and my "office" is downtown Indianapolis, but I seldom go into my office. There are times I may only pop into my physical office once or twice per month, which usually includes lunch or dinner at a downtown establishment. Are you considering setting up toll booths at key locations, or perhaps just taxing everyone in the so-called donut counties to subsidize Marion County's unprecedented budget situation?
    • Acknowlegding the Problem is the First Step
      It's encouraging to see the Mayor's budget citing the serious gap between costs and revenue (and IBJ reporting on it). Whether solving it by cutting spending or raising revenue, the problem must first be openly acknowledged and understood. You can't fix a problem you don't know you have...or expect the public to go along with any tough solutions. Given this acknowledgment of a budget gap, now after we've moved past the Great Recession an tax collections have recovered some, it seems likely that the City hasn't had a truly balanced budget for quite some time...likely back into the Peterson years. With this acknowledgment, you have to wonder whether the 2007 income tax increase (that sealed Peterson's defeat) fully closed the real budget gap.
    • Government Too Big
      Local, city, state and federal governments are bloated bureaucracies already. The different factions of government take trillions of dollars out of the economy and you people think it is needed. Essential services are police and fire and road repair, nothing else is essential and until people realize this, we will keep throwing money away on cricket fields and parking lots and other monstrosities. Republican or Democrat...the spending must stop!
    • Pre-school is not a waste
      According to a variety of studies as addressed in this article: http://www.washingtonpost.com/blogs/answer-sheet/wp/2013/02/28/research-on-preschool-setting-the-record-straight/ Panacea? Absolutely not. Useful tool to address issues that affect quality of life in a city? Yes.
    • Waste.
      Preschool is useless. Free babysitting and quite profitable for providers, though.
      • Cannot afford to be a city
        Lets not attack the major for spending increases. We need to increase spending in many areas if we are to make our city a place people want to live. Not one city department is properly funded and our compensation scales are grossly inadequate. We need better parks, more police, better road maintenance, better planning, much better management and excellent public transportation. All these things take money and we must make these investments in order to compete in todays economy.
      • commuter tax
        The commuter tax isn't a tax increase and would not have an effect on Marion county residents. This would simply be the people who don't live in Marion county but work in Marion county would pay their fair share.
      • Taxes & Fees
        Ballard continues to push to raise the local income tax, the property tax, tried to raise the food and beverage tax, the alcohol tax successfully raised hundreds of fees charged businesses, eliminated the sunset on the wheel tax, eliminated sunsets on other taxes, pushed to increase the car rental taxes (which have been shown to hit locals the most), increased hotel taxes, admissions taxes, etc. Now he is pushing for a commuter tax. He was also for a tax increase for expanded bus service. But the biggest tax of all is his increasing TIF districts (so he has more money to hand out to his contributors) which drain down general property tax revenue that fund basic services and creates the pressure for higher taxes. Then you have the problem of his borrowing money from future generations to fund current needs, including his latest debacle referred to as Rebuild Indy II in which he proposes to fund repaving of road over a 25 year period. If that's not enough you have Ballard's constant push to sell off Indy's assets, including the idiotic parking meter deal and the "sale" of the water company that has resulted in much higher fees. I am a Republican and I've never seen any Mayor of either party who was more supportive of tax and fee increases and borrowing against the future than Greg Ballard. Ballard has not a fiscally conservative bone in his body. He is the worst kind of big spending, big taxing liberal.
      • 32M for DMD?
        No mention here of the 32 million for DMD!? What is that funding for?.....it seems a little heavy compared to the other amounts being tossed around for the other departments. $32 million increase!!?? in a nonessential employee department. May be some of them could double as police?
      • hmmmmm
        Let's see, 16 million to Simon, 12 million to consultants on possible new justice center. Hmmmm, 28 million
      • George: got some data?
        I'm not a big Ballard fan, but I'm pretty sure this assertion is simply not true: "You've raised more taxes and fees than any Mayor in history." A commuter tax is a logical way for people who benefit from services currently only paid for by Marion County residents to nominally contribute to the costs incurred.
        • Taxes
          Tell us George what taxes he has raised? Prior to the education/ crime plan, ( which has not passed the county council) he has had zero tax increases that are not related to tourism.
        • Too much corporate welfare
          If only the mayor wasn't throwing tax money left and right at campaign contributors and revolving-door friends ... this wouldn't be necessary.
        • Tax. Tax. Tax
          Commuter tax. Public safety income tax. Elimination of the homestead credit. Borrowing from the reserves. What happened to the $30 million in fluff you promised you were going to eliminate from the budget when you were first elected? You've raised more taxes and fees than any Mayor in history. I know this is hard to understand - reduce your spending!

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