2003 Comprehensive Annual Financial Report

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services) and general government functions (elected officials, Legal Department and Administration and Finance Department). Approximately 74% of the General Fund's 2003 total revenue was derived from ppro erty taxes. the public safety and general government functions constituted approximately 4177 of the General Fund's 2003 total expenditures. South Bend, like many other cities, has public safety at the top of its priority list. In order to shift part of the financial burden for these services away from the City's homeowners /property owners, new sources of revenue need to be identified. In an attempt to accomplish this, two new taxes have been enacted since 1995 that have begun to shift this financial tax burden. Economic Development Income Tax (EDIT) - This tax was first enacted as of July 1, 1995 at the rate of one tenth of one percent (0.1%) of City residents (and some nonresidents') adjusted gross income, which generated $1382 670 and $1,466,029 for the City of South Bend in 1996 and 1997, respectively. The City's Common Council and the St. Joseph County Council passed respective ordinances that increased the rate to two tenths of one percent (0.2 %), which effectively doubled the City's distribution beginning in 1998. The City received $3,105,473, $5,462,867 and $3;689,202 of EDIT distributions in 2001, 2002, and 2003 respectively, and is anticipating the receipt of $3.5 million from this tax in 2004. Both of the local option income taxes (EDIT and COI are collected and administered by the Indiana Department of State Revenue. The EDIT distribution is then remitted to the county, which then allocates these tax receipts between the county and the cities and towns in the county based on the proportionate amounts of proppeq tax levy for each unit. The City's portion of the total county's EDIT ranged from 35.6/o to 38.2% over the last four years as the proportionate roperty tax levies have changed. The EDIT rate will remain at the current level (0.2 %unless further action is taken by the respective councils. The EDIT rate can legally be raised to four tenths of one percent (0.4%). • County Option Income Tax (COIT) - The City and County Councils enacted this tax effective July 1, 1997 at a rate of two tenths of one percent (0.2 %) with an increase of one tenth of one percent (0.1 %) per year during the next four years. In 2002 the rate was set to its legal limit of six tenths of one percent (0.6 %). The City would not have supported the new County Option Income 'pax if it had not been accompanied by a tandem ordinance, which established an additional 6% homestead credit for roperty taxpayers. This additional homestead credit increased to 7% in 1999 and to 8% in 20000 (where it will remain at this level). Thus, as a result of the passa a of this new tax, City property taxpayers were provided relief through a reduction in their property tax bills while the City was provided with an additional source of revenue that will eventually slow the rowth of- future grope tax rate increases. The City received $4,491,922 in 2001, 9,531,190 in 2002 and1$8,015,302 in 2003. The City is anticipating the receipt of $7.1 million from this tax in 2004- In 2002 a one -time adjustment of $2,318,375 for conservative distribution estimates in the early years of the tax was transferred. These countywide taxes are allocated (net of homestead credits) between all taxing units within the county based on the proportionate amounts of property tax levy for each taxing unit. As mentioned earlier, the City is always looking for other sources of revenue that would reduce its reliance on property taxes. A viable source of revenue is from user fees and/or charges for services currently being performed. It is the City's desire to establish all user charges and fees at a level closely related to the full cost of providing the services while taking into consideration similar charges /fees being levied by other public and private providers. The city recalculates, on an annual basis, the full costs of activities supported by user fees (including the Parks Department programs and EMS ambulance services among others to identify the impact of inflation and other cost increases. It then revises user fees accordingly. As a result, overall charges for services and user fee revenues are anticipated to increase in line with annual operating and capital budgets. General Government Expenditures The City breaks its general government expenditures into six categories: general government, public safety, highways and streets, health and welfare, culture and recreation, and urban redevelopment and housing. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balances for the genera, park funds and central development area bond proceeds which are considered major funds. Data for the other funds are combined