INDIANAPOLIS | In a stark reversal of the stampede of federal bailouts, Gary officials are looking to city businesses for a $30 million lifeline.
Mayor Rudy Clay and about a dozen other Gary leaders made a pitch Monday to the state's Distressed Unit Appeals Board for relief from new property tax caps.
The city, its bus agency, sanitary and storm water districts and the Gary/Chicago International Airport together stand to lose about $36 million this year to the tax caps, which are set at 1.5 percent of assessed value for homeowners, 2.5 percent for landlords and 3.5 percent for businesses.
Gary officials asked the state panel to leave the homeowner and landlord limits alone but raise this year's cap on business taxes to 5.5 percent. The proposal would force Gary businesses, including U.S. Steel, to pay about $31 million more in taxes this year, while city government would need to make only about $5 million in budget cuts.
"We want to make sure they're doing everything they can to cut before asking taxpayers for more, whether it's homeowners or businesses," said Ryan Kitchell, chairman of the appeals board and director of the state Office of Management and Budget. "I do think that if everywhere else in Lake County has a cap of 3.5 percent for business and the cap for business in Gary is 5.5 percent, that's certainly going to further impede any business that's considering where to locate."
Members of the appeals panel probed for details about the city's budget-cutting efforts throughout Monday's hearing, which spanned more than six hours and also drew several disgruntled taxpayers to Indianapolis.
Clay told the panel he "inherited a real financial nightmare" and the city has shed more than $30 million in spending since he took office in April 2006.
"If you add it all up, this administration has cut approximately $1 million a month since I became mayor," he said.
The tax caps are projected to sap $30.3 million from Gary's budget this year, which would roughly cut in half the city's property tax collections. City officials, backed by consultants, council members and a local minister, asked for four years to cope with the full brunt of the tax caps, a move they say would stave off hundreds of layoffs.
But several residents, including members of the Miller Citizens Corp., a taxpayer advocacy group, argued against any relief for the city.
"In this economic environment you cannot pile more taxes on the citizens," said Douglas Grimes, president of the Miller Citizens Corp. "The people aren't going to go for it."
