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News-Sentinel.com Your Town. Your Voice.

Mixed messages don't make tax-hike proposals bad, merely premature

When Mayor Tom Henry outlined plans for the city's riverfront development project, some of the funding sources for the $20 million first phase and later stages were undetermined. A new "Regional Development Tax" could help fill the void. Others, however, say low taxes are the best way to promote economic growth. (File photo by Kevin Leininger of The News-Sentinel) <br />  
When Mayor Tom Henry outlined plans for the city's riverfront development project, some of the funding sources for the $20 million first phase and later stages were undetermined. A new "Regional Development Tax" could help fill the void. Others, however, say low taxes are the best way to promote economic growth. (File photo by Kevin Leininger of The News-Sentinel)
 
Jason Arp
Jason Arp
Eric Doden
Eric Doden
Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.The Associated Press
Wednesday, February 01, 2017 09:01 pm
 Tuesday's meeting of the Allen County Income Tax Council was so loaded with information its hoped-for two-hour curfew couldn't contain it all. There were enough charts graphs and numbers to make an accountant's head explode. But if organizers' intent was to pave the way for an increase in one or more of the taxes discussed, all the glitz and expertise in the world may not be enough to overcome the mixed messages sent. Individually, each of the speakers at the glitzy new Ash Brokerage headquarters seemed unimpeachable. Collectively, however, they may have left the 165 or so in attendance — which included more than 30 public officials from throughout Allen County — more confused at the end than at the beginning.

There was Greater Fort Wayne Inc. CEO, who as former head of the Indiana Economic Development Corp. was one of the architects of the state's Regional Cities program, suggesting the way to improve wages and grow the population in northeast Indiana is to invest in projects that will appeal to the "talent" needed to attract good jobs: projects like riverfront development, a new downtown arena, the Columbia Street "Landing" and conversion of the vacant General Electric campus into residential and commercial space.

One way to help pay for such things, he said, would be for City Council to enact a new regional development tax — he called it the "Riverfront Tax" — that could provide a local match for $42 million in Regional Cities funds earmarked for northeast Indiana. The countywide tax of 0.05 percent would generate about $4.5 million annually. Doden said that between 2010 and 2015 Allen County lost a net of nearly 3,000 people to migration, taking with them $222 million in income that resulted in $3 million in taxes. Most new jobs must be filled by new residents, he added.

On the other hand, City Councilman Jason Arp insisted "communities with the lowest cost of doing business do best" when attracting jobs." To that end, he resurrected the proposal defeated by City Council last year that would eliminate taxes on new business equipment, which generates about $51 million per year countywide — revenue Arp believes would be offset by other taxes generated by the resulting economic growth. If not, some have suggested higher income taxes could make up the shortfall.

Then there was City Councilman John Crawford, R-at large, suggesting council might want to consider increasing the current local income tax of 1.35 percent (the maximum amount would be 3.75 percent) as a hedge against possible changes in state law, the impact of property tax caps and a court case that could dramatically reduce property taxes paid by "big-box" stores and other commercial businesses.

Former city councilman and current Fort Wayne Community Schools Board member Mark GiaQuinta, attorney for the Allen County assessor and a participant in the lawsuit before the Indiana Supreme Court, said $121 million in tax revenue is at stake in the case. If the stores prevail, some of their taxes could be shifted to property owners not already capped (1 percent of assessed value for homes), but governments would lose income that could not be shifted under the caps. That means some homeowners, farmers and businesses could face increases in both income and property taxes. Assessed value has also been creeping up, increasing taxes even for homeowners previously at the cap.

And there was County Commissioner Therese Brown talking about the possibility of increasing local vehicle taxes in part to compensate for the impact more fuel-efficient cars have had on gas taxes right before city Director of Intergovernmental Affairs Stephanie Crandall reported on plans to increase state taxes used to repair roads.

It's always wise to plan for a potential crisis in advance, and Crawford and the other participants should be commended for their anticipatory prudence. But property tax caps have made local governments more interconnected than ever and, as Tuesday's sometimes dueling interests indicated, increases to various taxes should not be considered in a vacuum.

Would targeted tax increases promote or stymie growth? Should anything be done before the court and the Legislature do whatever they are going to do? Are local governments financially healthy and doing all they can to limit spending? Are our schools doing enough to prepare students for the local work force? These and other questions demand a thorough, bipartisan and objective review before any tax increase taxes proposed, let alone passed. As former City Councilman Tim Pape asked Tuesday, "What evidence is there that (raising taxes to pay for projects) will raise wages?"

Somebody should be eager to provide the answers.

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.

  

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