And they have the same opportunity for a fundamental review.
We've said this often, but it can't be repeated too many times: Instead of continuing the same old tax-and-spending debates, Indiana officials need to examine the fundamental assumptions of government to determine if they want to keep offering the same services in the same manner. The latest opportunity for that investigation comes with Republican gubernatorial candidate Mike Pence's call for a 10 percent cut of Indiana's 3.4 percent individual income tax rate.
And local governments, it should be obvious, need to make the same
examination. The Fort Wayne City Council just received a task force report suggesting that the city will likely have a yearly deficit of between $3 and $6 million from 2013 on and also faces a more than $60 million backlog of street repairs. With every problem there is imbedded an opportunity, right?
The way they present their cases, it sounds like state and city have the opposite problem.
With severe cuts in place in most state programs and a somewhat rebounding economy, Indiana has a surplus of more than $2.15 billion. That gives Pence and Democratic opponent John Gregg the luxury of competing with each other on who can offer Hoosiers the most attractive tax cuts. Gregg has suggested eliminating the corporate income tax and the sales tax on gasoline. Pence might reduce the sales tax as well as the income tax.
City officials, on the other hand, are talking about whether to raise taxes and which ones to raise. A new local income tax is a possibility, and there is the old reliable standby property tax. Fees for services are being considered, as well as complicated schemes involving a variety of options.
But the city has a surplus, too: Cash reserves have been dipped into and fell from about $25 million in 2009 to about $17 million last year. But it also has $75 million from the light-lease settlement. You can call that a “legacy fund” if you want, but it still represents uncommitted funds that can be used for anything.
So the state and city really have all the same options about what services to cut, how and how much citizens should be taxed, and how much rain there has to be before a “rainy day fund” is tapped into so the hard choices can be postponed.
But unless there is an examination of whether services should still be offered just because they always have been, the picture won't be complete, and it's unlikely the right choices will be made.
“Our citizens have kind of grown to expect certain services, City Controller Pat Roller told the council this week. “The question is, what are citizens willing to pay for?” That is exactly the right question to ask.