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COLUMN

Tom Henry proves he's smarter than Barack Obama when it comes to budgets

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The Fort Report

This week's show will feature Ken Neumeister of the Associated Builders and Contractors and Mike Avila of the AFL-CIO, who will discuss Indiana's common-wage law. The episode will premiere at 5:30 p.m. Saturday on Comcast Channel 57 and FiOS Channel 27 and later at www.news-sentinel.com.

Washington could learn from Fort Wayne's response to fiscal crisis, but won't

Saturday, March 16, 2013 - 12:01 am

It's easy enough to pick apart the series of possible spending cuts and tax increases Mayor Tom Henry outlined last week -- read on for proof – but there's no doubt it was a serious proposal, crafted by serious people from both political parties, intended to prevent a potentially serious budget problem.

For the federal government, that problem arrived $16 trillion ago and grows worse by the second but remains unaddressed thanks to a bipartisan charade intended to feign concern while avoiding or preventing meaningful action.

In Washington, D.C., where any smaller-than-expected increase in spending is ceremonially blasted as a cut sure to kill infants and the elderly, House Budget Committee Chairman Paul Ryan's 10-year fiscal plan was declared dead on arrival by the White House. After all, the Republican Ryan proposed spending only $41 trillion instead of the currently project $46 trillion, or an annual increase of just 3.4 percent compared to 5 percent.

Ryan would do that by eliminating Obamacare and making dramatic changes to Medicare, both politically unlikely, and even then would not produce a balanced budget or begin to reduce the total debt the end of the decade.

Senate Democrats, meanwhile, proposed a plan that would boost spending by 62 percent over the same period while calling for $1.5 trillion in additional taxes the GOP-controlled House won't support.

So no deal is imminent, and President Obama seems not to care. “We don't have an immediate crisis in terms of debt . . . My goal is not to chase a balanced budget just for the sake of balance,” he reasoned -- if that's the right word.

Whatever the strengths and weaknesses of the options Henry outlined, he and the 14 members of his “Fiscal Policy Group” at least deserve thanks for crafting ideas that have already attracted a degree of bipartisan support and for doing so while there is still plenty of time to avoid the catastrophe Washington seems to have embraced.

Unable to print money, Henry and other Indiana government officials must cope with state law that capped property taxes at 1 percent of a home's assessed value and has reduced city revenues by $53 million since 2009. No one should feel sorry for bureaucrats simply because they have less of other people's money to spend, but that reality does pose a real dilemma: To maintain services, Henry said, he must either cut spending or increase revenue.

The task force has suggested both: Local income taxes could rise, fees could be added to utility bills and new areas could be annexed, imposing yet another tax increase on new city residents. Henry wants to reduce annual operating expenses by $5 million, in part by adjusting employee benefits to more closely align with the private sector.

But questions will – and should – abound.

Annexation can be politically difficult, influence economic development and actually cost the city money in the short term while reducing revenue for the county, which is also affected by property tax caps (although Henry said the county could still come out ahead through an income-tax increase).

Will city employees, especially those represented by unions, willingly give up benefits now that Henry has taken the threat of layoffs off the table?

Statewide surveys have indicated that many Fort Wayne officials are paid as much or more than their peers in other cities. Should the public pay more so that can continue?

Will the city needlessly continue to overspend on projects by adopting union-level minimum wages for its construction projects under the state's common-wage law? (Shameless plug: The law is the focus of this week's "Fort Report.")

In the end, I suspect Fort Wayne will do what Washington should do but won't: Adopt some form of modest tax increase in exchange for real budget cuts. Many answers are needed before that happens, and a series of public meetings will be scheduled for that purpose.

But surely Fort Wayne – often derided as backward and reactionary – is demonstrating itself to be far more open-minded and forward-thinking than our federal elite, led by a supposed genius who isn't smart enough to know you can't keep on spending other people's money even they don't really have.

This column is the commentary of the writer and does not necessarily reflect the views or opinions of The News-Sentinel. Email Kevin Leininger at kleininger@news-sentinel.com, or call him at 461-8355.