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Legislators talk taxes with council |
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Wednesday, 26 March 2008 |
By TJ HEMLINGER
Staff writer
The Columbia City Common Council met with the city’s two state legislators Tuesday night to discuss the legislature’s recent efforts to control property taxes.
State law now caps property taxes for homeowners at 1 percent of assessed valuation. The loss in revenue is being offset by an increase of one cent in the state sales tax, which will be reflected in utility bills as well as at the cash register.
City officials are worried that cuts in revenue will mean a cutback in city services or the institution of a local income tax.
“The only way to tax less is for government to spend less,” state Sen. Gary “Doc” Dillon, R-Pierceton, said.
Mayor Jim Fleck said, “Three-quarters of our revenue comes from utilities, and utilities charge sales tax. I don’t see a reduction for the majority of our citizens. The majority of homes (in Columbia City) cost less than $100,000, and they don’t pay much property tax to begin with.”
Dillon said, “Most of our constituents don’t like property taxes.”
Fleck said, “We’re worried because we don’t know how to predict our budgets.”
Dillon said, “The system is changing. I don’t think anyone can predict (the consequences).”
State Rep. Dan Leonard, R-Huntington, said, “Columbia City is one of the best (cities) in the state. It has been very frugal.”
He added that there is a 3.8 percent growth factor calculated into a city’s levy.
Fleck said, “If there’s a gap, that can be filled (by the county) with a local option income tax.”
Leonard said, “The total budget is funded by other than property taxes.”
Dillon added, “This is something new and different. We’ll have to keep in touch. We can’t look down the road and see what’s going to happen.”
But Fleck said, “That’s one of the things that’s so frustrating is we’re the ones who have to deal with the unknown.”
Leonard said, “All we can do is give an estimate.”
City clerk-treasurer Rosie Coyle said, “It will take us a couple of years to work it out.”
Dillon agreed, saying, “Property taxes are a very certain, predictable form of revenue. We’re shifting away from that.”
Leonard said cities and towns will get a 3.8 percent increase every year plus an increase in assessed valuation.
“It’s difficult to tell someone on a fixed income that they have to pay 7 percent more (because of an increase in property taxes) when they don’t have the income.”
He added that between 25 percent and 30 percent of every sales tax dollar comes from out-of-state residents.
“Basically this bill shifts responsibility to the counties,” Leonard said.
Counties can adopt an income tax or cut their budgets.
“It’s the people who spend the money (the county council) who have the option to raise the tax,” Leonard said. “It puts more control on people who spend the money.
“Property taxpayers pay 15 percent of the school’s general fund, and the state picks up the rest,” he said, adding that the money comes from income taxes, corporate taxes and gaming income. “That money funds 85 percent of a school’s general fund.”
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Last Updated ( Thursday, 27 March 2008 )
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