FORT WAYNE – The increase in local income taxes approved in June has made for a big increase possible in the city budget proposed for 2014, with only a tiny increase in property taxes.
This (budget) truly reflects the needs, the wants and the desires of the citizens of Fort Wayne, Mayor Tom Henry said in unveiling the proposal Thursday. The budget will be introduced to the City Council on Tuesday, and the council expects to begin debating it Oct. 1.
City Council members this year approved raising the local option income tax from 1 percent to 1.35 percent. The measure designates 0.25 percent for property tax relief that will add a new credit to every property owners bill, and 0.10 percent to public safety, sending new revenue to every taxing body in the county that provides public safety, including the city, county and some towns and townships.
The property tax relief portion will also, thanks to complicated tax calculations, result in more property tax revenue for entities such as schools and the library. The credit on property tax bills will offset the property tax hikes the city plans, including taking the maximum increase allowed by the state, plus the increases allowed in past years but not taken. There is also a new property tax, called the Cumulative Capital Development Fund.
It all means more property tax money for the city that will enable $10.3 million in new spending on capital improvements.
But despite all the property tax increases, people who own $100,000 homes in the city limits should see the city portion of their property tax bills increase only about $12, or a dollar a month. Because of property tax caps, the owners of $150,000 houses will see their bills go up about $2 a year; the owner of a $50,000 house will see about a $4-a-year increase, officials said.
Of course, the property tax increases need to be approved by the City Council, which signed on to what officials called an unofficial gentlemens agreement that they would OK the increases in return for the administration accepting a lower income tax hike than they had asked for.
The public safety portion of the income tax will bring in $4.7 million in new revenue that the city will use to pay for new police officers and firefighters.
The total budget proposed is $147 million, up from $136 million for 2013. The increase, officials said, is all due to the hike in spending on streets, roads, parks and police and fire made possible by the income tax hike. Without those increases, Controller Pat Roller said, the budget would have increased only 1 percent.
That was also due in part to $5 million in spending cuts, including big changes in benefits for city employees, and moving the cost of fire protection infrastructure – hydrants and oversized water lines – to a fee on City Utilities bills instead of being paid for out of property taxes.
Officials stressed that the new spending is going for capital items, such as streets and parks, promised during the income tax debate.
The operating budgets did not receive anything extra, Roller said. All additional money was for capital improvements.
City Councilman Tom Smith, R-1st, who chairs the councils finance committee, said that at first glance, he was pleased with what he had seen in the budget.
It looks very good to me, Smith said. There are massive infrastructure repairs, yet the taxes are going up only a dollar, maybe $2 on your house.
Henry said it was a relief to finally have some money to work with and to be able to make the kinds of investments Fort Waynes quality of life requires.
Its always been an attempt to maintain, to do more with less, Henry said. We were always trying to adjust the budget to deal with less money.
The cash reserve the city will have on hand – about 7 percent of its budget – is lower than Roller is comfortable with, she said, but is made up for by reserving $3 million from County Economic Development Income Taxes that can be used if needed and because in a true crisis the Legacy Fund, which is money from the lease and sale of the citys old electric utility, could be tapped.