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and general government functions (elected officials, Legal Department and Administration and
<br />Finance Department). Approximately 86% of the General Fund's 2004 total revenue was derived
<br />from property taxes. The public safety nd general government functions constituted approximately
<br />74% of the General Funds 2004 total expenditures. South Bend, like many other cities, has public
<br />safety at the top of its priority list. In order to shift part of the financial burden for these services
<br />away from the City's homeowners /property owners, new sources of revenue need to be identified. In
<br />an attempt to accomplish this, two new taxes have been enacted since 1995 that have begun to shift
<br />this financial tax burden.
<br />Economic Development Income Tax (EDIT) - This tax was first enacted as of July 1, 1995 at
<br />the rate of one tenth of one percent (0.1%) of City residents' (and some nonresidents')
<br />adjusted gross income, which generated $1,382,670 and $1,466,029 for the City of South
<br />Bend in 1996 and 1997, respectively. The City's Common Council and the St. Joseph
<br />County Council passed respective ordinances that increased the rate to two tenths of one
<br />percent (0.2% , which effectively doubled the City's distribution beginning in 1998. The
<br />Cityy received $3,105,473, $5,462,867, $3,689,202 and $3,448,688 of EDIT distributions in
<br />200I, 2002, 2003 and 2004 respectively, and is anticipating the receipt of $3.5 million from
<br />this tax in 2005. Both of the local option income taxes (EDIT and COIT) are collected and
<br />administered by the Indiana Department of State Revenue. The EDIT distribution is then
<br />remitted to the county, which then allocates these tax receipts between the county and the
<br />cities and towns in the county based on the proportionate amounts of property tax levy for
<br />each unit. The City's portion of the total county's EDIT ranged from 35.6% to 38.2% over
<br />the last four years as the proportionate pro ertyy tax Ievies have changed. The EDIT rate will
<br />remain at the current level (0.2 %) unless urt her action is taken by the respective councils.
<br />The EDIT rate can legally be raised to four tenths of one percent (0.4 %).
<br />County Option Income Tax (COIT) - The City and County Councils enacted this tax effective
<br />Jul 1, 1997 at a rate of two tenths of one percent 0.2% with an increase of one tenth of one
<br />percent (0.1 %) er year during the next four years. In 2002 the rate was set to its legal limit
<br />of six tenths of one percent (0.6 %). The City would not have supported the new County
<br />Option. Income Tax if it had not been accompanied by a tandem ordinance, which established
<br />an additional 6% homestead credit for property taxpayers. This additional homestead credit
<br />increased to 7% in 1999 and to 8% in 2000 (where it will remain at this level). Thus, as a
<br />result of the passage of this new tax, City propperty taxpayers were provided relief through a
<br />reduction in their property tax bills while the Cit was provided with an additional source of
<br />revenue that will eventually slow the growth of future property tax rate increases. The City
<br />received $4,491:922 in 2001, $9,531,190 in 2002, $8,015,302 in 2003 and $7,001,198 in
<br />2004. The City is antici ating the receipt of $5.9 million from this tax in 2005. In 2002 a
<br />one -time adjustment of 2,318,375 for conservative distribution estimates in the early years
<br />of the tax was transferred. These countywide taxes are allocated (net of homestead credits)
<br />between all taxing units within the county based on the proportionate amounts of property
<br />tax levy for each taxing unit.
<br />As mentioned earlier, the City is always looking for other sources of revenue that would reduce its
<br />reliance on property taxes. A viable source of revenue is from user fees and /or charges for services
<br />currently being performed. It is the City's desire to establish all user charges and fees at a level
<br />closely related to the full cost of providin the services while taking into consideration similar
<br />charges /fees being levied by other public and private providers. The City recalculates, on an annual
<br />basis, the full costs of activities supported by user fees (including the Parks Department programs
<br />and EMS ambulance services among others) to identify the impact of inflation and other cost
<br />increases. It then revises user fees accordingly. As a result, overall charges for services and user fee
<br />revenues are anticipated to increase in line with annual operating and capital budgets.
<br />General Government Expenditures - The City breaks its general government expenditures into six
<br />categories: general government, public safety, highways and streets, health and welfare, culture and
<br />recreation, and urban redevelopment and housing. Infonnation is presented separately in the
<br />governmental fund balance sheet and in the governmental fund statement of revenues, ex enditures,
<br />and changes in fund balances for the general, park funds and South Bend Building Cporporation
<br />construction which are considered major funds. Data for the other funds are combined into a single,
<br />aggregated presentation. Individual fund data for each of these non -major governmental funds is
<br />provided in the form of combining statements elsewhere in this report.
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