2006 Performance Based Budget - Laserfiche WebLink

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state law over the past several years. Growth for 2003, 2004 and 2005 was limited to 4.8%, 4.7% and 4.4% respectively. For 2007, the City has been informed to anticipate a property tax increase of 3.6%. Beyond 2007, the General Assembly amended HB 1001 to pmvide fora 2% cap on property taxes for all residential property begmni~ag in 2008. This cap is mandatory for all property types beginning in 2009 pay 2010. The estimated reduction in property tax revenue to the City in 2008 is estimated between $6 and $8 million. As more frilly discussed below, the City's Common Council has passed ordinances that established two new local option income taxes. These local option income taxes will eventually generate enough funds to reduce the heavy reliance the City currently needs to place an property taxes to fired a majority ofthe services provided by the City. Approximately 75% and 71% of the General Fund and Park Department revem~e, respectively, are funded by property taxes. It is anticipated that it will take several years before these newly enacted taxes will be at a level that will make it possble to reduce the need to increase the City's total tax levy up to the maximum 5% each year. In the meantime, the City continues to search for ether sources of revenue to reduce its reliance on property taxes. As mentioned above, the City currently has available a major new source of revenue in the form of the County Option Income Tax {which was enacted effective July 1, 1997) and the Economic Development Income Tax (enacted effective July 1, 1995 and increased effective Tiny 1, 1997). These two relatively new countywide taxes have allowed the City to shift a portion of its capital expenditure fimding from the General Fund to these two Capital Funds. The County Option Income Tax rate was phased mover afour-year period, increasing from two tenths of a percent (0.2%) of adjusted gross income to its current rate of six tenths of a percent {0.6°/©), and, when combined with the Economic Development Income Tax, the total tax is eight tenths of one percent (0.8%) of the couuty taxpayers' adjusted grass income. The maximum combined. rate for these two income taxes could be 1 % of adjusted gross income if the Economic Development Income Tax was raised to its limit {0.4%} by the County Income Tax. Council. Both of the local option income taxes are collected and admaianistered by the Indiana Department of State Revenue. This department is required to estimate by July 1 of each year the amount of revenue to be received by the County during the following year. This estimate is referred to as the Acertified distriibution@ and it becomes an amount tl~t the County can be guaranteed to receive. The County then allocates these receipts based upon property tax levies as descn~recl below. This allocated certified amount is the amount budgeted by the City for both taxes. These two option income taxes have generated and are projected to generate the following annual revenue streams as a direct result of increasing tax rates (no income growth rate has been factored into these projections): • Economic Development Income Tax (EDIT): Actual receipts for 2002, 2003, 2004 and 2005 were $5,462,867, $3,689,202, $3,448,688 and $3,464,152 respectively. The 2006 budget projects receipts to be $3,498,744 and this is the anticipated level to be collected each year, assuming the current rate of two tenths of one percent and no growth rate. The 2002 receipts inchaded a one time distn'butian of $1,506,173. This increase from the State is a "catch-up" from prior year conservative estunates. This tax is allocated between the County and the cities and towns in the County based on the proportionate amounts of property tax levy for each unit. The budgeted 2006 City's portion is 37.9%. Any future change in the actual aaamual amount of adjusted gross income reported by county taxpayers would have a direct impact on the amount of EDIT taxes collected. Another possble impact an the amount of EDIT fiords received in the future would be a result of an EDIT rate change if approved by the County Income Tax Council. B-5