11-12-01 Residential Neighborhoods & Community & Economic Development

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Qommitt .port: ,Joint Muting of tit Varsiturntial Ittighborbootio tommittu anti tipz Qtommunitja anti Commit I iit1opment tommitfrt The November 12,2001 meeting of the joint meeting of the Residential Neighborhoods Committee and the Community and Economic Development Committee was called to order by Residential Neighborhoods Committee Chairperson, Council Member Karl King at 3:05 p.m. in the Council Informal Meeting Room. Persons in attendance included Council Members Aranowski, Pfeifer, Kelly, King, Varner, Ujdak, Coleman, Kirsits and White;Mayor Stephen J. Luecke, Public Works Director Gary Gilot, City Controller Frederick 011ett, Michael Danch, Richard Nussbaum, and Terry Bland of the 'o1111) 5:6010 tri 1.t1U,and Kathleen Cekanski-Farrand, Council Attorney. Council Member King noted that the joint committee was called in order to hear a presentation from Attorney Richard Nussbaum on the proposed "Indiana's 21st Century Tax Plan". He noted that it is important that the Council know how the proposal would affect our residential properties as well as its impact on economic development. Mr. Nussbaum provided a handout on Indiana's 21st Century Tax Plan (copy attached) and noted that this information can be accessed at the Lieutenant Governor's website. He noted that there has not been a revamping of the tax procedures since the Doc Bowen days of almost thirty years ago. The tax restructuring is resulting from a Supreme Court decision which emanated from Lake County requiring a change of the assessment process to a fair market system. The Court ordered that an assessment be conducted in 2001 effective 2003. Tax bills will be "drastically different", and if nothing is done home owners will experience a 33 % increase with most urban areas increasing higher than that amount. Mr. Nussbaum noted that the major sources for Indiana state and local taxes for 2000 are: 28.7 % Property taxes 23.8 % Individual income taxes 23.3 % Sales taxes Mr. Nussbaum noted that his home was built in 1926 and that he would experience an increase greater than 33 % if nothing is done. He then reviewed the handout. He noted that the "Shelter Allowance Rule" is currently being challenged in Court. It provides that the 1st$ 20,000(average) would not be subject to a tax since it would not be considered "wealth" but rather a "subsistence level". Dr. Varner noted that the range is $ 16,000 to $ 22,700 and that a county average is then developed. Mr. Nussbaum noted that the charts reflect the ranges. He further noted that businesses have been at a competitive disadvantage in light of the inventory tax. He then reviewed the gross corporate income tax provisions. The proposed "Indiana's 21st Century Tax Plan" would have as a basic principle that revenue is neutral. The # 1 objective is to revise reliance on property taxes and the # 2 objective is to have state/local economic development and tax fairness initiatives. Mr. Nussbaum noted that the two- tier graduated income tax structure would be as follows: