The year after an unusually hostile City Council criticized nearly every major expenditure – and more than a few minor ones – council members and representatives of the Henry administration are having a welcome sit-down this evening to take a broader look at the citys finances.
To their credit, they are looking at the citys financial future as well, with an emphasis on maintaining, if not building, a healthy surplus. Such an emphasis under Mayor Tom Henry, as well as with former mayors, allowed the city to avoid the type of painful spending cuts that officials in other Hoosier cities had to make because of property tax caps.
Advisers offering their views will include City Controller Pat Roller as well as experts who will lend nonpartisan voices to the discussion. They include John Stafford, director of the Community Research Institute at IPFW and one of the citys foremost experts on local government financing; and Larry DeBoer, a professor of agriculture economics at Purdue University and an authority on Indianas property taxes.
In some ways, officials and experts are still learning the complex ways property tax caps affect local budgets. But without question they have resulted in revenue cuts for many local governments, and those cuts will continue.
With city spending on track to exceed revenues for 2012, the city will most likely have to dip further into its tax reserves, a practice that is unsustainable for the long term. Council members can use this evenings meeting to begin a much-needed discussion that will have to be ongoing and cover a number of issues, including:
City staff. Wages and benefits are by far the biggest part of the city budget. Are city residents willing to make do with fewer police officers? How long can workers go without raises?
City services. Perhaps not next year, perhaps not in 2014, but flat revenues will eventually mean fewer services. Can the city afford to continue leaf pickup or other services residents have come to count on?
Infrastructure. Roads and streets need constant attention, but state gasoline tax money that helps finance repairs and reconstruction is dropping.
Revenues. Should the city have additional user fees? Is it time to seriously consider raising local income taxes, as many other Indiana cities and counties have done?
Legacy Fund. Can the city preserve the expected $75 million from the lease and sale of City Light for capital expenditures? Should the fund be tapped for operating expenses?
The city – just like the federal government – faces difficult choices. Perhaps some efficiency can be found and fat cut from the city budget, but the budget is already relatively lean. At some point, residents must pay more or expect less.
Council members and city officials are right to take a step back from debating individual expenditures and take a broader look at city finances.