EDITOR’S NOTE: In February 2010, LaPorte Mayor Kathy Chroback delivered the annual State of the City address to fellow officeholders, city employees and citizens. WNLP has posted the State of the City in its entirety, in six parts, under the Local Government category. Here is part 1 of 6.
To city council members, citizens of LaPorte, department heads and my fellow city employees … Good afternoon.
Chroback
Thank you to the Chamber of Commerce for sponsoring this luncheon and for the opportunity to present the 2010 State of the City.
I stood here one year ago and talked about the challenges that we faced, not only as a community but as a country. The downturn of our economy has hit hard. Here in the city of LaPorte and across LaPorte County, major employers have struggled to keep the doors open, some have downsized, even decreased payroll just to remain open. Big business is not alone. Our local retailers have felt the pinch, and some have not survived. The unemployment rate has hovered around 11%, but this figure is not a true reflection of how many in our community are unemployed. Those who are fortunate to remain employed have felt the pinch with lower wages and higher insurance costs.
The city is not immune; both the services we provide and the quality of life that we pride ourselves on are feeling the impact of the economy. My hope, this afternoon, is to give you a summary of where we’ve been, the challenges we face and my vision for our future.
Looming over us are two immediate and troubling issues: the unresolved reassessment of 2006, and the uncertainty of how the tax caps will affect local governments.
Issue No. 1: The Unresolved Reassessment. Since 2006 assessed values of all properties have been based on the market value and because of the inability to complete the reassessment, only provisional tax bills have been issued. Without a true assessed value of real property and a current tax rate, tax bills for 2007, 2008 and 2009 cannot be reconciled. It is imperative that our tax collection system in LaPorte County return to the May and November payment schedule. Because of the inability to receive tax revenues on schedule, the city has been forced to borrow money, both locally and through the Indiana Bond Bank. Since 2007, the city has paid $224,446.61 in interest payments. The inability to collect our tax revenue in a timely manner has cost every citizen in our city. This is money that could have otherwise been used to cover the cost of services, to hire police officers or firefighters.
Issue No. 2: Property Tax Reform and State-Imposed Tax Caps, as ordered by the State Legislature in 2008. Our state elected officials set tax caps for property owners at 1% of homeowners’ assessed value, 2% of rental and agricultural property, and 3% of business and industrial property. It is uncertain just what impact this will have on the city and all other communities across the State of Indiana, but our best estimate places lost tax revenue for 2010 at $1.2 million.
Another troubling aspect is the decision that will come in the form of a referendum this fall. The decision to permanently affix the 1-2-3 caps on tax rates to our state’s highest document, The Constitution, could have a devastating impact. It is not yet known what the impact of these caps have had on every city and town in our state. There certainly is nothing wrong with a freeze of property taxes, but making this property tax policy an amendment to our Constitution is a mistake that will take years to fix. Simply put, these caps will reduce revenues to all municipalities thereby reducing operating budgets. Cities and towns across the state have yet to assess the damage of the caps and it will take some time before we have a true picture of the total effects of the caps. By the time we know the effect, it will simply be too late. Rushing this amendment into the Constitution in November will impact municipalities, including schools and libraries, for years to come all across the state in ways we can’t begin to know at this time. We must get the message out that freezing property taxes permanently will strangle communities and cause program and service cuts across the board.
It has been said that the imposed tax caps will require local governments to be more frugal with tax dollars, more efficient with services rendered and more lean with budgets passed. The level of government services depends on tax collection which funds operating budgets. As revenues continue to shrink, it becomes impossible to continue to provide services at the level to which we have all been accustomed. The matter is just compounded by delinquent property taxes and mortgage foreclosures.
It sounds like a broken record, but our greatest challenge, as we move into 2010, will be to provide service at a level that is acceptable while staying within our budget. Services have already been cut and we are certain that there is more to come. We just don’t know at this time where cuts will be made. Educating the public on the effects of the caps and how lost revenue will limit our ability to provide essential services is key. We are keeping a close eye on all expenditures through my office and the Office of the Clerk-Treasurer. We’ve initiated a new internal policy last year whereby every purchase made within the city, whether small or large, must be pre-approved.
Without current values, setting a budget for 2010 was difficult. The Finance Committee used the last state-approved budget, which is 2007, and then reduced it by an estimated $1.2 million, the amount that is projected the city will lose. The city is under a salary freeze, staffing has been reduced and all purchases must have prior approval. I give credit to all departments and employees for keeping a thumb on our spending and I thank them for their patience, cooperation and understanding. This has not been an easy time, that’s for sure, but closely scrutinizing our budget has been a good exercise as we try to find ways to continue to provide the needed services with reduced revenue. Our budgets are cut to the bone, with many departments at minimal staffing.
READ THE REST of the 2010 State of the City under WNLP’s Local Government category.
