Little appetite to raise local income taxes
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To raise taxes or not to raise taxes — that is the question for Indianapolis city leaders as they head into the next budget cycle.
Why it matters: We're in the midst of financial uncertainty and heading toward possible recession.
- While cuts in services, particularly to social safety net programs, could be devastating to those who rely on them, local tax increases could strain already cash-strapped families and erase any property tax savings.
Driving the news: Lawmakers last month passed a property tax overhaul that will dramatically cut how much cities bring in from property taxes, a major source of revenue for Indy.
- That leaves local leaders to decide whether they want to cut services, try to find efficiencies within city government, raise taxes to make up the difference or some combination of the three.
What they're saying: "For right now, we're not talking about tax increases," Vop Osili, president of the Indianapolis City-County Council, said last week. "We're going to see what we can possibly do with minimal negative impact on our constituents."
Yes, but: "Money doesn't grow on the trees in our beautiful parks," Councilor Dan Boots told Axios, when asked whether the council would need to raise the local income tax.
State of play: Mayor Joe Hogsett has already told his department heads to start budgeting for cutbacks and said to FOX59 that he's "not interested in raising anyone's taxes, income or otherwise."
By the numbers: Property taxes are estimated to bring in roughly $475 million this year, accounting for about one-third of city revenue, a city spokesperson told the IBJ.
- A fiscal analysis from the state estimates that the property tax cuts, which will save the average homeowner $300 annually, will cut $1.5 billion from local governments over the next two years.
- Marion County is estimated to lose $43 million next year and another $33 million in 2027, compared with what it would have brought in without the new law.
Between the lines: In that property tax bill, lawmakers made changes to the state's local income tax system that sent a message: If you want to maintain services that property taxes once paid for, you can raise local income taxes to pay for them.
Council Minority Leader Michael-Paul Hart told Axios the city and council need to take a tough look at current spending and get more judicious in giving away property tax incentives before they consider raising local income taxes.
- "It's not very prudent to ask taxpayers to spend more money if we haven't reviewed how we're spending their money," he said.