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Winners & losers

By Jim Sack

Fort Wayne Reader

2013-03-15

Before the brawl begins let’s give a round of applause to Mayor Tom Henry and Controller Pat Roller. Like no other city in Indiana and few others in the country Fort Wayne is well along in reform of our fiscal underpinnings.

At the behest of Mayor Henry and the support of Controller Roller, a pride of local politicians — the Fiscal Policy task force — have gathered regularly to create the framework for the coming public debate. They have been advised by some of the leading names in Indiana economics.

Recently, the group announced an overview of their recommendations that will be further explained and debated in a sequence of public events, including a series of televised sessions at common council.

That is the good news; we are taking steps to reform well ahead of catastrophe. But everyone should be on their toes and add their voice as we reform our tax code.

The resultant rewrite will affect your life, reach into your pocket book and become the basis for the next forty-years of Fort Wayne’s prosperity or Detroitization. We all know the combination of management and money can either pave the path to success or the road to hell.

There will be winners and losers.

The task force has so far offered general tax reform ideas. Many of us, but not all, will be asked to pay more taxes. Services may well be cut. Accounting schemes are planned to pull rabbits out of hats.

All of this is to solve what is called a "structural deficit." Costs exceed income. Property taxes, long the principle source of city finances, have been capped by the state legislature. Other sources of funds, such as the gas tax, have dropped. Consequently, more taxes and more cuts are coming.

To date the city has saved money by delaying maintenance. We are some $60 to $70 million behind in street repairs and falling a further $10 to $15 million behind each year; we are twenty or more officers short of a full FWPD; we are short a platoon of fire fighters; pavilions in the parks are roofless, a few thousand ash trees need to come down and be replaced; and every department head can cite another score of major problems that impact on the quality and extent of services provided by our city.

Most councilmen agree there is very little waste left to squeeze out of city government.

So, after a year, the Fiscal Policy task force has offered an array of changes to taxation in Fort Wayne that they promise will result in more police and firefighters, repair some of streets, make some repairs in the parks, and generally balance the city budget. Now, the catch: how to pay for it. And herein is where the battle or brawl will be joined: who will pay and how much? Not unlike the national debate.

Employees of the city are expected to take a significant hit in work rules and insurance costs.

LOIT is coming. It is the new Local Option Income Tax. The percentage you will pay, if you receive a paycheck, is proposed at .50%. Half of that, however, may go to property tax relief, so you may get some back…if you own a home. Maybe not. LOIT would appear on your paycheck next to CEDIT and COIT, not to mention the other dozen deductions.

Water hydrant maintenance will shift from property taxes to water bills. That moves the $3 or so from the city debit ledger and on to City Utilities receivables. It is an accounting move for the city, property tax relief for some and an increased water bill for others.

Something called the Cumulative Capital Improvement Fund has also been proposed. The questions concern its source of funding (probably you), how much more will it add to your tax bill and how will it be used?

Annexation is also on the table, to a degree. The mayor was asked at a news conference if GM was included. Taken a bit by surprise, he offered a fleeting grin, search for a response and then gave one of those roundabout, mind-numbing soliloquies that did not answer the question.

The City is afraid of GM lest it move, and the Fiscal Policy committee was stocked with business-friendly officials who feel more comfortable squeezing new taxes from wage-earners than from their CEO friends. That is why there was a representative of the Chamber of Commerce involved in making recommendations, but no one representing wage-earners. This was all about management vs. labor, one member told me.

That may also be why the abatements and TIFs were not addressed. TIFs — tax incremental financing districts — are areas where the taxes are diverted from the general fund that pays for roads and police to ”reinvest” within the TIF. Harrison Square is the best example. Abatements are tax breaks to companies in exchange for jobs. Hundreds of millions have been lost to the general fund in exchange for jobs, few, if any of which can be shown to have materialized.

In other words, CEOs have a seat at the table — you are on it.

There is another irony. Much of this hand-wringing discussion is a result of council cutting the tax levy over the past years by what amounts to some $6 million, roughly the amount of the "structural deficit." In essence, council caused the "structural deficit.” By cutting the levy they did not save you a dime in taxes, but rather those same $6 million “saved” were instead apportioned to other taxing districts in Allen County, such as county government, New Haven, Huntertown and the others.

So, the fight over who should pay has begun. The Chamber and the other economic development groups will try to protect their clients and burden you. You are an easy target: no one on the Fiscal Policy task force represented you, and paychecks are a convenient medium of exchange.

Those who are compensated in different ways may actually pay less in taxes.

If there is to be fairness Vera Bradley, GM, Parkview, Lutheran, who are quick to beg abatements, should also contribute more in taxes.

So, let the brawl begin, and make sure your voice is heard. After all, it is your money, and your city, too.