Putting off the pain

October 2, 2008

I don’t want to write anything too detailed about Mayor Tom Henry’s first proposed budget either here or on the editorial page until I’ve had a chance to talk to him. He’s coming to see us Friday afternoon.

But the most obvious thing about it is that it puts off the hard decisions. It’s estimated the city will get about $2.1 million less in property tax revenue in 2009 because of changes the state made, and about $9.5 million in 2010, and there will be losses every year after that. Sooner or later, the city has to find new sources of revenue and/or cut spending. This proposed 2009 budget doesn’t really do either.

There are two schools of thought on that. The Journal Gazette thinks it’s a sound budget “given the challenging fiscal situation.”

Former Mayor Graham Richard and Roller deserve much of the credit for the city’s lean budget and for having the foresight to create and maintain a rainy-day fund to help the city through economic lean times. The fiscal challenge is great, yet the city should be able to maintain service to citizens with negligible cuts.

But Fort Wayne Politics thinks it’s a “completely unacceptable budget” because it will just make the 2010 budget that much harder to do — “. . . if they can’t cut the budget by 1% or 2% this year then how in the world are they going to cut it by 7-9% next year?”

Let me take a stab at what’s going on here. From day 1 Mayor Henry has tried to fight the effects of HEA1001 by suggesting tax increases instead of spending cuts. If the current budget passes I don’t think there’s any doubt that come next year we will face significant cuts in services. At that time the mayor will push heavily for an increase in the income tax – an idea he floated earlier this year.

I wouldn’t mind a little less reliance on property taxes and a little more on income taxes. The more diverse the city’s revenue stream, the more flexible the city can be and the better off taxpayers are in general. But to merely go on spending the same amount, just replacing property tax revenue with a like amount of income tax revenue, isn’t exactly in the spirit of what the state had in mind. The idea was for government to get leaner.

If Mayor Henry and City Council members want to make the case for the income-tax option — raising some of the money lost from property taxes — they’ll have a much more convincing case if they accompany the proposal with serious, substantive cuts in current spending.

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3 Responses to “Putting off the pain”

  1. mark Says:

    Leo-

    Since you are meeting with the Mayor, may I suggest some questions pertaining to the City budget issue?

    1. What is the status of the property tax assessment appeals of Glenbrook and Jefferson Pointe, and what would be the consequences for the City if they prevail.

    2. We, and the rest of the country, are in a housing market decline. What are the projections for reductions in assessed property values for the next few years?

    3. Recent media reports suggest that the Redevelopment Commission may buy the old Dimension Ford property and gift it to the Parks Department. The same report indicates there “probably are” environmental issues with the property. Are we testing before buying and who will pay for the clean-up, the Parks Dept or the Redev Comm.?

    4. Pat Roller, testifying before City Council, stated that the consulting group of former City employees, hired in the last hour of the Richard’s administration, were important to the budget and could save 5 or 6 million. We are now 9 months into the contract. What savings have they created?

  2. Bob G. Says:

    Makes me wonder who (already) spent that multi-million dollar “payback” the city is to receive in the next several years from that utility company?
    Anyone remember the details with that?
    I want to say it was $9 mil…or something close to that.
    Hey, Leo…check the archives, ‘K?

    😉

  3. Leo Morris Says:

    Thanks, Mark. We’ve been asking No. 2 of County Council incumbents and challengers. They’re all VERY worried that the credit crunch will really affect the county’s revenue stream.


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