INDIANAPOLIS | Gary Mayor Rudy Clay issued a statement Wednesday summing up his city's financial woes and explaining why he is seeking an exemption from new state property tax caps.

"If Gary is not afforded relief from the state at this time, the city will be unable to guarantee adequate public safety since we will immediately be forced to drastically reduce the scope and size of our public safety apparatus," Clay wrote. "The city of Gary is not asking for a handout from the state and other taxpayers but simply an opportunity to develop our city and enhance Northwest Indiana without having our fiscal hands tied behind our backs."

Gary officials went before the state's Distressed Unit Appeals Board last week to request four years to cope with the full brunt of the tax caps. A city consultant estimates the caps will sap about $36 million this year from the city, its bus agency, sanitary and stormwater districts and Gary/Chicago International Airport.

Clay notes that police and fire protection services consume about $31 million of the $65 million general fund budget the city had prior to the tax caps.

Gary officials have asked the state appeals panel to temporarily increase the limits on business taxes so that the city and its sister agencies would need to make about $5 million in budget cuts this year while city businesses would pay about $31 million more in property taxes. Gov. Mitch Daniels has dismissed the ideas as "a good way to ensure the very last job leaves Gary."

The tax caps are set at 1.5 percent of a property's assessed value for homeowners, 2.5 percent for rental property and 3.5 percent for businesses. Next year, the caps drop to 1 percent, 2 percent and 3 percent respectively.

Ryan Kitchell, chairman of the appeals panel, has said he will push city officials to adopt every possible cost-cutting measure before the board would relax the tax caps. A second hearing on Gary's petition is expected to be scheduled in the coming weeks.