INDIANAPOLIS | Gary officials will go before the state's Distressed Unit Appeals Board today to request relief from property tax caps that threaten to force more than $30 million in city budget cuts.
The hearing -- the first for the newly created state panel -- is scheduled for 9 a.m. in the 9th-floor conference room of 1 N. Capitol in Indianapolis.
Gary, its bus agency, sanitary and stormwater districts and airport face a combined shortfall this year of $36.6 million, analysis prepared by a city consultant shows. The city, which has outlined $8 million in 2009 spending cuts, stands to lose $30.3 million to the tax caps.
State lawmakers last spring joined Republican Gov. Mitch Daniels in creating the caps, which will limit annual property tax bills to 1 percent of assessed value for homeowners, 2 percent for landlords and 3 percent for businesses.
But every dollar in taxpayer relief created by the caps is a dollar denied to local government, and Gary faces the most severe shortfall in the state. The library district of Beech Grove, an Indianapolis suburb, is the only other taxing unit scheduled to make an appeal.
The Distressed Unit Appeals Board can, for one year at a time, adjust the caps upward, which would mean more revenue for Gary and higher taxes for city property owners. The board also can order a percentage reduction in the savings taxpayers are to receive, which would have the same effect as tinkering with the tax caps.
Ryan Kitchell, director of the state Office of Management and Budget and chairman of the appeals board, has said local officials must prove they've done everything in their power to cut costs before the board would ease the tax caps.
Gary wants four years -- until 2012 -- to cope with the full brunt of the caps. And city officials say even then they might not be able to make ends meet without additional revenue from a proposed Lake County income tax.
Gary Mayor Rudy Clay has said the city will be forced to layoff hundreds of workers, including police and firefighters, if it does not get relief from the state appeals board.
