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City, county say local government is prepared for 2020 fiscal cliff

NOW: City, county say local government is prepared for 2020 fiscal cliff

SOUTH BEND, Ind. --- The city controller for the City of South Bend said on Monday the city is prepared for a $1.8 billion loss of revenue from property tax cap exemption. 

 The circuit breaker law places a cap on property taxes for the following:

-      Homesteads (1 percent of net assessed value)

-      Rental homes (2 percent of net assessed value)

-      Commercial property (3 percent of net assessed value)

Currently, the city receives taxes due to property tax cap exempt tax rates, which could range from hundreds to thousands of dollars. Daniel Park, the city controller for the City of South Bend, said the city will only receive revenue from the fixed percentages based on the type of property.

“Property taxes in St. Joseph County will truly be capped at one percent, two percent, and three percent,” Parker said. “We won’t get that a little bit extra that was exempt from that cap.”

On Monday, the South Bend Common Council’s personnel and finance committee hosted a forum on the circuit breaker law and how it affects the budgeting process. Karen White, chair of the personnel and finance committee, said there’s a lot of misinformation being shared about the city budget.

“One would think that it’d be very easy but it’s not,” White said. 

Budgets for the South Bend Police Department, Fire Department and Department of Public Works makes up more than two-thirds of the 2019 budget. These three departments and others are set to be impacted by the loss of property tax revenue.

Parker said cost-saving strategies including a soft hiring freeze will keep the city prepared for any expected loss like the 2020 fiscal cliff. 

“What it means is that we are re-evaluating as people are leaving the city, we are re-evaluating and making sure that that position is continuing to be in line with the priorities of the city,” he said.

Mike Hammann, St. Joseph County city controller, said the county should also be able to weather the fiscal cliff ‘pretty easily.’ Hammann said, in 2018, the county relied on more than $54 million in property tax revenue. 

Much of the revenue is used to fund county government services, which includes, the sheriff’s department, county jail, health department, and much more. Hammann said this year the county will see a loss of $1.8 million.  

Joseph Luten, the newly appointed citizen member of the personnel and finance committee, said transparency in the budgeting process is key. He said hearing more about strategies in place to offset loss helps clearly see the priorities of city leaders.

White said moving into the 2020 budget process it’s important for the common council to set priorities. She said her priority is investing in neighborhoods. 

“We have been pushing quality of life issues and making sure that our neighborhoods are strong, they’re clean, and that they’re safe,” she said. “That our citizens have what they need to live a decent life in our community.”

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