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2008 Budget Presentation
Mayor Bart Peterson
August 6, 2007
I appreciate the opportunity to be with you tonight to talk about our war against crime and our fight to lower property taxes for the people of our city. These are both complex and challenging problems, but the history of our great city is to face major challenges head-on and to prevail. We will prevail again on these issues and we will continue the remarkable success story of the City of Indianapolis.
I was given a quote from a Minneapolis Star Tribune columnist the day after the tragic bridge collapse in that city that is particularly relevant at this juncture in our city’s history: “[W]e are years behind a dangerous curve when it comes to the replacement of infrastructure that everyone . . . agree[s] is one of the basic duties of government.”
The clear lesson from Minneapolis, and the destruction wrought on New Orleans from Hurricane Katrina, is if you don’t invest in the basics – whether it is bridges, levies, or, in our case, public safety – you will pay a price someday.
Together, we have a history of facing up to the challenges that modern American cities confront. In a bi-partisan manner we committed to fix our sewer system to end the medieval practice of discharging raw sewage into our creeks and rivers after it rains. We invested in our storm water drainage system and will complete hundreds of drainage projects over the next several years to improve the quality of life in our neighborhoods. Tonight I ask all of you to reach down and find that same spirit of cooperation to fix yet another neglected problem of the past – woefully inadequate funding of public safety. We must pass a budget that helps us win the war against crime!
At the same time, we face a property tax crisis. People are angry and I share their anger. The lives of too many people in our city have been turned upside down by this travesty. People have seen the dreams of a lifetime – sending a child to college, retiring or staying retired, even staying in their home – appear to crash down around them when they opened that fateful envelope. With this budget, our taxpayers will see a significant reduction in the property taxes collected by city and county government. With a couple straightforward steps, which I will describe in a minute, the state can reduce the tax bill further.
Looking back over seven years, I am proud of my administration’s record, in partnership with the Council, of fiscal responsibility. In this budget, the total amount of property tax collected by the city, in an apples-to-apples comparison, will be lower than it was the year I took office. We have cut $83 million dollars out of approved budgets the last four years, and together with members of the Council, two weeks ago I announced another $13 million in budget cuts along with a City and County hiring freeze. Those parts of Indianapolis Works that have already been implemented – the police merger and the Washington and Warren Township fire mergers – are saving nearly $20 million a year for our taxpayers.
Tonight we continue our battle against property taxes. The budget I am proposing holds the line on overall spending even as it
includes all the components of our anti-crime package. The total amount of property taxes to be collected for city and county government and state mandates is cut by $50 million – that’s an 11% reduction. And, one result of the income tax vote two weeks ago is that, by law, all government taxing entities in Marion County – libraries, townships, the cities of Lawrence, Beech Grove and Southport, the Town of Speedway, and others except schools, which the state legislature chose to treat differently – are prohibited from increasing property taxes for at least two years.
Indianapolis has become a big city. With that growth comes social and economic change. Our public safety and criminal justice systems have not kept up with that change. In this budget I am setting forth a plan to fix a criminal justice system that has been stuck back in the 1970s, and to support an escalated war against crime.
We will pay off the unfunded pension liability for retired police officers and firefighters that has wreaked havoc on our crime-fighting budget for decades. Our retired public safety heroes deserve it, and it is simply the right thing to do!
We will permanently fund the new criminal courts, the huge increase in jail beds, the investments in the crime lab, the additional prosecutors and all the other dramatic improvements we have made in recent months that ended the early release of dangerous criminals from the Marion County Jail. So much has happened in the last year it is hard for some to remember that often as many as 500 criminals a month were being released from the jail because of jail overcrowding until we ended it exactly one year ago today. We will not go back to those days!
This plan makes clear we are coming after the criminals with everything we have. We will add one hundred new officers to the Indianapolis Metropolitan Police Department force, we will increase the department’s capacity to train new recruits, we will fund crime prevention and early intervention, we will add more jail beds to lock-up those who habitually commit smaller crimes, and we will provide more resources for our crime lab investigators.
Why now? Well, if not now, when? Have we forgotten the community’s pain over the news of a family of seven murdered in their home? Do we remember the child taken from her bus stop and raped? The downtown office worker abducted in a parking garage and raped? When we contemplate a half a billion dollars in unfunded pension liabilities for police officers and firefighters in Indianapolis, has the memory of Enron and so many other corporate scandals that destroyed the pensions of hundreds of thousands of people faded away so quickly?
We know what to do to effectively fight the war against crime. What we have already done is working, thanks to the untiring efforts of Sheriff Anderson, Chief Spears and the men and women of the Indianapolis Metropolitan Police Department. Finishing the job is a test of our resolve. It is time to show that collective resolve by passing our crime-fighting budget!
I want to thank the City and County department heads and elected officials who understood the very difficult constraints we faced in putting together this budget, and our City Controller, Bob Clifford, and our Office of Finance and Management staff for their tireless efforts on the budget, on the crime-fighting package and on property tax analysis these last several months. They have worked together as a team with the outstanding Council staff in a very difficult fiscal environment. And I want to thank our terrific city and county employees, who once again are being asked to do more with less. They always rise to the occasion and they deserve the gratitude of everyone whom they serve.
Now, I’m going to take a few minutes to set the record straight on the property tax debacle the entire state is facing, but which is particularly acute here in Marion County. If the people we serve are to understand what happened here and how, realistically, it can be fixed, they need to know the facts. There have been too many politically charged myths masquerading as facts the last five weeks.
First, the total amount of property taxes to be collected for all local government entities – schools, libraries, townships, the cities of Lawrence, Beech Grove and Southport, the town of Speedway, the City of Indianapolis and Marion County – went up by about 10% in 2007. Of that increase, about half came from schools and most of the rest was attributable to child welfare services and juvenile incarceration – two state-run programs for which Marion County taxpayers are billed. The impact of the increase in city and county government spending on your property tax bill, the part the Council and I are responsible for, was less than 3%.
Even with the increases in school spending and state-run programs, “local government spending” was not the primary cause of tax bills that increased by 75%, 150% or even 300%. How could it be if local government’s property tax collections went up only 10%? Nevertheless, tonight’s budget reflects my strong belief that we must do whatever we can to help lower the property tax burden for our people. All the institutions in Marion County with taxing authority must follow our lead and cut property tax-supported spending and lower the amount of property taxes they collect!
If “local government spending” was not the primary cause of the huge tax bill increases, what was? We know now that the bills were simply wrong. The failure by the elected township tax assessors to reassess business property caused homeowners to be charged not only for higher assessments on their property, but to pay for part of businesses’ share of the tax bill! It was a classic double-whammy.
But that’s not all. The consequences of a number of state government policy decisions over the years all hit this year: first, the court-ordered switch to a market-price system for assessing taxes; second, a delay of six years between reassessments; third, the use of property value trending for the first time this year; fourth, the elimination of the inventory tax on businesses which furthered the tax burden shift from business to homeowners; fifth, the decision in 2005 to freeze state property tax replacement credits – the primary source of state property tax relief since the Otis Bowen era; and sixth, a change in the state school funding formula to put more of the cost of schools on local property taxes. None of these steps was taken because governors and legislators wanted to see your taxes skyrocket, but the cumulative effect – hitting all in one year – has been devastating across the state.
Armed with these facts, we can make intelligent decisions about short-term property tax relief and long-term reform. There has been much talk of local government reform. No one has been a stronger advocate for local government reform than I have! Perhaps some of our opponents in the legislature are now in the mood to listen. But, I will not allow the state government to escape responsibility for its policies! I challenge the state tonight to step up and fix the problem that only it can fix! And I commit the City of Indianapolis and Marion County to be partners in finding solutions. We must work together, across party lines, in the interests of those we all serve.
A couple of the steps the state can take are obvious and have been endorsed by the governor and many state legislators from both parties. The state should pass the remainder of our Indianapolis Works plan. Consolidation of the remaining fire departments in Marion County, along with consolidation of township assessors and trustees, will save over $20 million dollars a year in property taxes – every year! And consolidating assessors will promote uniform and consistent property tax assessments across the county. The last vote on a consolidation proposal in this Council was more broadly bipartisan. Now, we need every member of this Council on board with Indianapolis Works as we go back to the legislature!
The state should take over the cost of child welfare services. Marion County officials have no control over how the money is spent in these programs, or the outcomes, yet their citizens are given a bill each year and expected to pay it out of their property taxes. If the state took them over, there would be a reduction of $70 million in Marion County property taxes every year!
These are the easy steps – and they would have a huge impact. Some have suggested that the City-County Council and I should raise income taxes even more and use the money to reduce property taxes dollar for dollar. No one will ever be able to convince me that we need more taxes when all the state legislature has to do is take these simple steps to cut property taxes by $90 million!
There are others reform measures that will require difficult policy decisions and trade-offs. The fundamentals of long-term property tax reform are not a mystery. Many other states have figured out ways to reduce the impact of property taxes and establish a system that is more fair and has more credibility with their citizens.
At the same time, we will continue our work here in Marion County to find ways to lower property taxes. The efficiency commission we are developing in partnership with the Greater Indianapolis Chamber of Commerce will focus on all the local authorities that have the ability to levy property taxes. We will work continually for greater efficiency in city and county government, but, in the end. we are less than one-third of your property tax bill. Everyone must be forced to work just as hard in the interests of the taxpayers who fund their operations.
I look forward to working with the state on long-term property tax reform and I look forward to working with all of you to deliver a budget to the people of Indianapolis and Marion County that is fiscally responsible and provides the services our people need and deserve.
We must fight hard on the issues of property taxes and crime. But we must remember, neither of them defines Indianapolis. Our job is to ensure that our great city continues its remarkable progress. The “Star of the Snowbelt,” as we have been described, has only begun to show its true potential. Our future is bright. It will be advanced by the greatest citizens anywhere. We must represent them well. This is our time to show what we can do.
Thank you.
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