The city of Valparaiso is considering how to make up for lost revenue, due to the state's property tax overhaul.
The city could lose almost $6.4 million dollars over the next three years, according to estimates from the state's Legislative Services Agency. But City Administrator Bill Oeding says the actual numbers could be much different, depending on property assessments and whether the Porter County Council changes local income tax rates.
"Senate Bill 1 has been the talk of city hall now and municipal governments for four months," Oeding told the city council Monday. "And, like it or hate it, we've got it, and so we've got to figure out what we're going to do with it and how we're going to make it work in the city."
Now, the board of works will consider hiring municipal advisor Baker Tilly to prepare a three-to-five-year comprehensive financial plan. It would include a countywide parcel-by-parcel impact analysis, TIF update and potential revenue options.
"Some of this isn't going to be easy," Oeding added. "In fact, some of it's going to be very hard to do, but it's things we're going to have to do because we have to follow Senate Bill 1."
The city will have the option to implement its own income tax of up to 1.2 percent, starting in 2028. But at the same time, it would lose an estimated $3.5 million dollars in annual income tax revenue from the county.
Mayor Jon Costas said Valparaiso's budget is in better shape than most cities', and rapidly growing assessed value could reduce the city's losses. "We're seeing increases of 50 to 80 percent on multi-family and business properties, so that's positive," Costas told council members.
Still, council member Robert Cotton worried residents would spend more on income tax hikes than they'd save on property taxes. Cotton criticized state officials for approving tax reform without a clear picture of its impact. He then took aim at Mayor Costas for not signing a council resolution opposing Senate Bill 1, even though the bill was already passed by the time the city could have sent it to lawmakers.
"You put your partisan loyalty over the interests of the local taxpayers, in essence," Cotton told Costas. "That's what it sounds like to me."
Costas said he didn't think the resolution was helpful, after Governor Mike Braun won last year's election by promising property tax relief.
"Are we getting into motives, now?" Costas replied to Cotton. "I'm just saying I don't think it's a good resolution. Reasonable people can differ on this."
