MERRILLVILLE | Decisions made by town leaders about 30 years ago have come back to hurt the municipality financially.
When Merrillville became a town in 1971, it had one of the lowest property tax rates, Town Council President Joseph Shudick said. Town leaders at the time decided to freeze the tax rate and keep expenses down to make Merrillville an attractive place to locate.
"Whoever thought things would have blossomed like they did?" Shudick said.
He said he thinks early town leaders didn't need to keep the tax rate low to help the municipality grow, but he believes they "thought they were doing the right thing."
In addition to the frozen low tax rate, the town suffers financially because of increasing operational costs and late tax bills. And Unlike many other communities, Merrillville doesn't have municipal water or sewer departments, which could generate additional funds through user fees to help bolster the town budget.
The financial burdens recently led the Town Council to rescind raises given to town employees last year and cut longevity pay so Merrillville can stay in the black at the end of the year.
Town leaders also have started to explore becoming a distressed municipality. Under a process Gary was first to test this year, local governments that lose at least 5 percent of their property tax collections to new tax caps can seek relief from the Indiana Distressed Unit Appeals Board.
Merrillville financial adviser Jim Bennett said he thinks the state panel would have Merrillville hire a firm to review all town operations -- as was done with Gary -- if town leaders decide to proceed with becoming a distressed community.
Bennett said the review might find the town has cut everything it can, which could lead to state officials authorizing tax cap relief for the municipality. The state panel, appointed by Gov. Mitch Daniels, also could order more spending cuts.
Town Councilman Richard Hardaway, chairman of the Budget and Finance Committee. said he is confident the review would show Merrillville has cut what it can without hurting essential services. He also thinks the town could withdraw a distressed unit application if the expected outcome would not be beneficial for Merrillville.
Shudick said councilmen have made tough fiscal decisions to improve town finances, including a 2007 decision to privatize emergency medical services. He thinks the town will be able to "weather the storm."
