CEDIT - (County Economic Development Tax)

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CITY OF SOUTH BEND STEPHEN J. LUECKE, MAYOR OFFICE OF THE MAYOR July 13, 2009 South Bend Common Council 4~' Floor, County-City Building South Bend, IN 4b601 Re: Resolutions Approving County Tax Council Ordinances to enact Local Option Income Tax (LOIT) for Public Safety and Property Tax Relief, and to enact County Economic Development Income Tax (CEDIT) Dear Councilmembers: The City of South Bend faces a severe revenue shortfall in 2010 due to the effect of the property tax caps enacted under HEA 1001. During 2009 budget deliberations you learned the devastating impact that would result to all our departments if some replacement revenue is not put in place. We have made significant reductions to our budget already, including $3 million in 2009 and savings of almost $4 million during 2008. We will continue to make further cuts and find more efficiencies, but we will not get to a $22 million reduction without decimating key services and reducing quality of life in our community. The State provided local government with one option to replace revenues lost to the caps -enact local option income taxes. So, in conjunction with Council President Derek Dieter, I am submitting three Resolutions for consideration at your July 13~' meeting. These Resolutions would cast South Bend's 40.59 votes as a member of the St. Joseph County Income Tax Council in favor of enacting additional local income taxes at a combined rate of 0.95%. These taxes will provide relief for schools, parks and libraries, as well as for city and county government. Two LOIT taxes sought to be adopted consist of a public safety tax of 025% and a property tax relief tax of 0.5%. By statute, the revenue derived from the public safety LOIT must be deposited into a separate fund and must be appropriated "only for public safety purposes." The largest cost component of South Bend's general fund budget is for public safety, so adoption of this LOIT will prevent drastic reductions in sworn officers in our police and fire departments. COUNTY-CITY BUILDING • 227 W. JEFFERSON BOULEVARD • SOUTH BEND, INDIANA 46601 PHONE 574/235-9261 • FAx 574/235-9892 • TDD 574/235-5567