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Police, fire unions ask: Where did all the 'extra' money go?

Tax increase led to city budget 'switcheroo,' state lawmaker says

Tuesday, March 11, 2014 - 12:01 am

When City Council raised the local income tax by 0.35 percent last year, officials said it would provide an additional $4.7 million per year for public safety needs. And that appears to be true, technically.

But police and fire union leaders say the administration of Mayor Tom Henry has used the windfall to transfer property tax funds from their budgets for other uses – potentially undermining their departments' ability to protect and serve.

It's an assertion supported by a state representative who has filed legislation intended to prevent a similar budgetary “switcheroo” in the future.

With negotiations on new police and fire contracts well underway, it's hardly unusual for union leaders to seek more money for their members, and both the Patrolmen's Benevolent Association (which about 360 rank-and-file officers) and Fort Wayne Firefighters Local 124 are doing just that. The city is offering most of its employees raises of about 2 percent, but the PBA is seeking a raise of 2 percent in the first year and 4 percent in the second and third years. In addition to the 2 percent, firefighters want staffing increased from 95 per day to 99.

My purpose is not to take sides in the contract talks but to point out that the unions believe that they – and the public – have not received the tax increase's promised benefits.

“It appears that the city took money out of our budget when they added the income tax increase, so that we're no bigger than we were before,” said PBA President Sofia Rosales-Scatena, who noted that the police was reduced by about $3.47 million this year and replaced with the Local Option Income Tax (LOIT).

“This begs the question if this fund was really necessary in light of no real additional staffing costs to the city. The mayor's administration stated that this funding was due to budget shortfalls due to decreased property values. They have also maintained that road and street budgets are in a negative ledger, but there is a sizable increase in the street budget for 2014, she said.

No one suggests the alleged budgetary sleight-of-hand is illegal, and City Councilman Marty Bender, R-at large, who is also a deputy police chief, said Council members were told from the start that the increase in income taxes could make more cash available for other uses. “Money is fungible,” he said.

“There has not been any misuse of LOIT funds,” city spokesman John Perlich said. “The state has approved the city's 2014 budget, and we have followed the rules completely.” He declined to elaborate.

But State Rep. Bob Morris wants to change those rules.

Morris, R-Fort Wayne, has filed legislation that would prevent governments from transferring money from one line item in order to replenish it with LOIT. “It was never intended to do what is happening in Fort Wayne,” Morris said.

“It's like being double-taxed, a maneuver around the law.”

The promised police and fire training classes made possible by LOIT are underway, but Rosales-Scatena said the failure to keep Fort Wayne Police salaries competitive may already be having an impact, as four of 22 cadets have already dropped out and will not be replaced – with one being unable to meet physical requirements. Fort Wayne's base police salary of about $49,095 ranks 34 in Indiana, she said, noting that reversing the city's near-record homicide rate in 2013 will require effective policing.

“We don't want to seem ungrateful (to taxpayers), but we are falling behind,” she added. To attract top recruits in the future, she said, that must change.

Again, I take no position on either union's contract proposal. But they do raise a legitimate concern about the use of LOIT, especially since City

Council has recently had to take a total of $800,000 from the Board of Works and Parks Department to correct a “miscalculation” in the fire budget.

The issue is not whether the money is being well spent, but how and where it is being spent, and whether the reality matches the expectations that were encouraged in order to win the tax increase in the first place.

“(The city) needs to be up-front with the public,” Bush said.

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.