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Marion divided on taxes

BY Lucas Robinson - lrobinson@chronicle-tribune.com

Local officials appear no closer in agreeing on how to move forward with regard to increase city revenue.

Marion requires more money or a tighter budget to keep the city financially viable and political divides on the city council could make budget negotiations difficult once they begin later this year. Viable options at this moment seem to include some form of raising taxes or diminishing the city’s ability to provide public services.

Of the options laid out by the city’s financial adviser Umbaugh & Associates, possible tax increases could take the form a wheel (vehicle) tax, food and beverage tax or introducing a Local Option Income Tax (LOIT).

If the city were to follow Umbaugh & Associates plan to the letter, according to City Controller Julie Flores, Marion would have $19,000 left in it’s general fund by the end of 2019. It seems unlikely the city would adopt the entirety of the financial adviser’s plan.

City Councilman Steve Henderson remains stalwart in his stance of being “opposed to raising any taxes at this point.”

Henderson instead pointed to ongoing efforts by him and City Council member Lynn Johnson to see if excess revenue generated by the city’s many tax increment financing (TIF) districts could go towards the city’s budget rather than paying off TIF bonds.

“We cannot move forward until we fix the TIF areas,” Henderson said, referencing the numerous questionable activities with TIF districts made up of companies like Dollar General and Cafe Valley.

Other officials have repeatedly deemed taking advantage of that revenue as legally impossible.

“I know it’s not possible reading the bond documents,” Flores said on the issue of TIF revenue.

City Councilman Alan Miller stated the plan regarding TIFs is “just not going to happen.”

“It’s a nice idea, I admire them (Henderson and Johnson),” Miller said. “... but it’s a pursuit that’s just not going to generate any revenue.”

Miller, who had been on the council during the Seybold years when many TIF districts were initiated, expressed regret for the council’s role in generating the many problems stemming from TIFs.

“I think we all would acknowledge we were moving to fast,” he said, “and I think we’ve learned our lesson.”

With the route to revenue through TIFs less and less possible, the city is left to consider the options outlined by Umbaugh & Associates. Of those, it is a wheel tax and a local option income tax garnering the most viability with officials.

According to Flores, the financial adviser’s plan suggested a nearly 1.3% increase in local income tax over two years. If implemented, per the financial adviser, the city would be able to generate nearly $5.4 million in additional revenue.

“That’s definitely what needs to be done,” Flores said. “If that (local option income tax) was raised, that would raise the revenue by quite a bit.”

Yet an increase in local option income taxes would involve political actors stretching beyond Marion.

Such a levy would have to be approved with the cooperation of other municipalities in the county and the Grant County Council.

“Doing anything at all with the LIT would involve cooperation from Gas City and County Council to pull that off,” Miller said.

Of the other options given by Umbaugh & Associates, Miller remarked he had heard only in “casual conversation” some support for a wheel tax by other city council members.

Henderson confirmed the only option that would make him pliable on the issues of taxes is the wheel tax, yet he emphasized “I don’t even like it.”

Though the prospect of raising taxes is unlikely to draw enthusiasm from local taxpayers, Flores noted that grassroots opposition to tax hikes is what introduced property tax caps to the state of Indiana. It is arguably restrictions on property taxes which is denying the city large swaths of revenue. This has in turn fueled the ongoing budgetary situation. It is estimated that property tax caps, also known as circuit breakers, cost the city of Marion nearly $4 million in 2018 alone.