Local officials are warning that property tax cuts proposed by Gov. Mitch Daniels could come with painful social costs.

"Property taxes pay for police, fire, parks, street lights and traffic signals," Munster Town Manager Tom DeGiulio told The Times editorial board during a discussion of tax reform impacts on Lake County Wednesday.

The Republican governor wants to limit tax bills to 1 percent of assessed value for homeowners, 2 percent for landlords and 3 percent for businesses. Some $252 million in tax savings to property owners would be subtracted from county, township, municipal and school budgets. Legislation to make that plan a reality is moving through the General Assembly.

Whiting Mayor Joseph Stahura said his city, which depends heavily on the BP Whiting refinery taxes, is a worst-case scenario waiting to happen.

Following the tax cuts and state-mandated payments of old debt, liability insurance and police and fire pension funds, "I'm left with about $1 million for my entire operation, police, fire, street department and administration," Stahura said.

Stahura said it costs the city $1.9 million per year for police protection, $1.6 million for fire protection and $600,000 to repair streets.

He said he already has cut the payroll by 22 percent in the last three years.

"I'm up to a challenge, but what is being proposed is beyond a challenge. It's probably unachievable," Stahura said.

Highland Clerk-Treasurer Michael Griffin said no one is disputing that cost cutting and more efficiency must be achieved among the county's 19 municipalities, but large cities must spend more to support large populations of low-income residents with whom most suburban communities don't have to contend.

"Even if they were streamlined, they are going to be more costly because they have the burden of supporting the social costs we don't," Griffin said.

Lake County Council President Christine Cid said the property tax crisis is the result of a state policy to shift the tax burden from industry to homeowners.

"Why are industries given so many breaks? The threat is that they are going to leave. Don't we want the homeowners to stay too?" Cid asked.

DeGiulio said communities will be forced to reduce repairs to important infrastructure.