As operating budgets for Indiana cities and towns rapidly eclipse the revenues generated by local property taxes, municipalities across the state have struggled to find new sources of income.
The Indiana Association of Cities and Towns (IACT), an organization with a 112-year history of advocacy for member communities throughout the state, presented a potential solution to the Indiana General assembly earlier this month. The "Hometown Matters" plan would allow local governments to administer additional taxes and levies in an effort to stabilize and eventually reduce property taxes.
The Hometown Matters plan provides alternative revenue sources in the form of additional taxes, which would be implemented at the discretion of local governments. The proposal presented to the General Assembly lists local sales taxes, income taxes, food and beverage taxes and innkeepers' taxes as potential revenue sources. The plan also provides for the transfer of funds between local government departments.
IACT Deputy Director Andrea Johnson said her organization is currently looking for a legislator to sponsor the plan. She said she plans to prepare a bill before the next legislative session begins on Jan. 4, and hopes to see it passed by the end of the 2006 session.
"It's a short legislative session, and it's an election year. We have these things going against us," she said. "On the other hand, (legislators) know that property taxes are a huge issue in Indiana, and that something needs to be done. It won't be easy, but we have a good chance to pass it this season. That is our goal."
LaPorte, Ind., Mayor Leigh Morris, one of the municipal officials most closely involved with the Hometown Matters effort, explained the need for such a plan in an IACT press release.
"Hometown Matters seeks to create an environment for efficiency and cooperation among local governments and remove current roadblocks to cooperation," he said. "Local governments are in financial crisis-- or will be-- unless we make positive changes at the state level."
According to Brazil Mayor Tom Arthur, revenue from property taxes represents nearly all of the city's operating budget. But rising costs of operation can only be met by regular increases in property taxes. Arthur said the Hometown Matters plan would create new ways for municipal governments to keep up with rising expenses.
"It would give us a whole smorgasbord of options," he said. "We'd have the option to draw in some (additional) revenue, so our property taxes could stabilize or actually decrease."
Arthur said he feels a local sales tax would be a good fit for Brazil, though the final decision would be made by the City Council.
"I like the sales tax," he said. "People who don't reside in our city are using our parks, driving in our streets. Those people could be contributing to our revenues."