City-County Council Democrats are pitching a 2014 budget alternative that would close an $8-million gap left by the majority party's refusal to go along with Mayor Greg Ballard on eliminating the homestead tax credit.
"At the end of the day, it's a property-tax increase and people are telling councilors they don't want to absorb it," said John Barth, the council vice president.
The Democrats' proposal calls for pulling money from the city's IT-services agency and the parking-meter fund, both of which are projected to have multi-million dollar balances at the end of 2014.
Barth unveiled the proposal Monday afternoon, as Republicans were preparing to bring the homestead tax credit elimination before the full council for a last-ditch vote. Ballard's $1 billion budget hinges on eliminating the tax credit, a move that would raise property taxes in some areas but would also mean a big boost in income-tax revenue.
The measure was defeated in a committee earlier this month on a 4-3, party-line vote. Barth said Democrats have been working on an alternative regardless. He wasn't sure Monday whether Ballard would accept it.
Ballard's chief of staff, Ryan Vaughn, has been unable to sway Democrats on eliminating the homestead tax credit, despite introducing a companion measure that would mitigate the tax-revenue impact on Indianapolis Public Schools and offering to spend $7 million out of the city's $80 million fiscal-stability fund on the Indianapolis Metropolitan Police Department.
"To us, the homestead credit is done, and you have to deal with the consequences," Barth said. The Democrats instead want to pull $3.1 million from the Information Services Agency, which was counting on the money for long-term capital projects, and $4.5 million from the parking-meter fund, which is projected to end 2014 with $5.8 million.
Typically the parking-meter fund is spent on public works, but Barth pointed to a provision in the city code that gives the council the right to transfer any "unneeded balance" to the general fund.
Along with eliminating the homestead tax credit, Ballard has proposed expanding the boundaries of the IMPD taxing district to capture the entire county. That could mean a property-tax increase for homeowners outside of Center Township, if they aren't already hitting the state-mandated property-tax cap. The move would also offset the impact of eliminating the homestead tax credit on IPS.
The IMPD taxing district expansion is on the agenda Monday evening, and Barth said he expects it to pass. He hopes Ballard will take that as a compromise and leave the additional $7 million for IMPD on the table.
Republican Councilor Marilyn Pfisterer said her caucus hoped to revive the homestead credit elimination Monday. "I don't understand this vociferous opposition," she said of the majority party.
Pfisterer acknowledged that there's been opposition from schools, but she said they have back-up funding sources from the state. IMPD, meanwhile, would take an $8-million hit next year if the budget isn't level-funded.