MICHIGAN CITY | Voters on Tuesday soundly defeated a referendum seeking an increase in property taxes for Michigan City Area Schools.
A 17-cent increase in the tax levy was sought to close a budget deficit of more than $4 million. The increase would have impacted the average homeowner by more than $50 a year.
A total of 57 percent, or 3,498, votes were cast against the tax hike request compared with 43 percent, or 2,601, votes in favor of the referendum.
"I think people voted their conscience," resident Dave Biela said.
According to school officials, the district was left with about a $4 million budget deficit after already making $7.4 million in spending reductions during the past two years. More than 100 teaching, administrative and nonteaching positions already have been cut.
Officials said the shortfall resulted from declining state revenues and overspending during a time of miscalculated revenue projections, which were caused by a several-year delay in completing a countywide property tax reassessment.
Had the referendum been approved, money would have gone into the general fund for operating expenses, officials said.
Referendum supporters had cited the possibility of cutting more teaching positions and closing schools.
Former Coolspring Township Trustee Dennis Metheny said cuts should begin with eliminating several administrative positions. In the long run, the focus should shift to better fiscal management, he said.
He said there may be no choice but to close schools to fill empty classrooms that exist at the new but underused Pine and Lake Hills elementary schools.
The School Board decided against borrowing money to close the budget hole because of more than $91 million in outstanding bonds from mostly new construction.
"Now they're going to have to do something about filling them schools," Metheny said.
If personnel cuts are made, Biela suggested taking a look at eliminating only the veteran teachers with higher salaries through early retirement to minimize the impact on classroom sizes.
Areas where opposition was greatest included Pine Township, where the vote was 197-109 in favor of a tax hike.