07-13-09 Common Council Minutes - Laserfiche WebLink

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REGULAR MEETING JULY 13, 2009 Mayor Luecke advised that the City of South Bend faces a sever revenue shortfall in 2010 due to the effect of the property tax caps enacted under HEA 1001. Additionally, during the 2009 budget meetings it was learned that the impact would be devastating and that all departments would be affected. He stated that significant reductions to budgets have been made already, including $3 million dollars in 2009 and a savings of almost $4 million in 2008. He stated that the city will continue to make further cuts and find more efficiencies, but will not get to a $22 million reduction without decimating key services and reducing the quality of life in the community. Mayor Luecke noted that the State provided local government with one option to replace revenues lost to the caps and enact local option income taxes. He stated that the two LOIT taxes sought to be adopted consist of a public safety tax of 0.25% 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 the police and fire departments. The property tax relief LOIT will be used to provide property tax credits uniformly to all types of property in the county. He noted that in order to enact the 0.25% public safety LOIT, State law requires that a property tax relief LOIT of at least 0.25% be enacted. The third measure would adopt the 0.2% County Economic Development Income Tax which remains available in St. Joseph County. The CEDIT funds can now be used for general operations of government and are n longer restricted to economic development or capital purposes. In total, these three taxes would provide about $16 million relief to the revenue lost to the caps. The combined rate would be 0.95% and these taxes would then provide relief for schools, parks and libraries, as well as for city and county government. He stated that they will still need to find savings and efficiencies of approximately $6 million for 2010. In addition to developing additional efficiencies and savings in the delivery of services, they will continue to attract new jobs and investment to South Bend and look for opportunities to partner with other units of government and the private sector. Mayor Luecke stated that resolving these revenue shortfalls will take many multi- pronged initiatives, including developing new revenue streams. He stated that the alternative is to drastically reduce key services that the residents and businesses of South Bend demand. He noted that the survey that was taken showed that the residents of South Bend demand keeping current services at the level they are now and even challenged South Bend with doing more. He stated that he believes that it is in the City’s best interest to implement these local income taxes. He noted that these taxes would stay local and not go to the State. He wanted to remind the Council of the many initiatives already in place to streamline local government. They have been engaged in these efforts for a number of years and since the year 2000 have reduced the City of South Bend’s full time employment staffing by 121 positions. That is about 9½ percent of the workforce at that time. They have reduced take home cars, code inspectors now drop their cars off at the former Bureau of Housing lot, and they pick them up when they come in driving their personal cars, drive the city car for their inspections, drop them off and go home in their personal cars. Mayor Luecke stated that he and other department heads have turned in their city owned vehicles. He stated that they are re-evaluating other take home cars in the City of South Bend and will continue to reduce the number of take home cars in the fleet. He stated that they have looked at various initiatives to consolidate operations in the City of South Bend for instance the Park Department does now most of the city’s mowing. They do not only mowing of the parks but also mowing for Code Enforcement and the Redevelopment Commission. They have used technology to enable the city to reduce staffing and to be able to reduce cost and improve efficiency in the delivery of services. He stated that as they look to the benefits of City employees, they have cut the merit bonus program which had been in effect to reward extraordinary work practices by employees. In 2010, they will be eliminating the City’s contribution to the flexible spending plan, this was a $500 per employee contribution that helped to pay for medical costs, dental, eye and child care costs. He stated that they wished that they could continue to do that but the budget is such that that will not be the case. There were no raises for non-bargaining employees in 2009. He stated that he along with department heads have taken a 5% salary deduction for 2009. In 2010 they will be moving to an 80/20 insurance program for all employees, the 90/10 option will no longer be available to the City of South Bend Employees. They have had to eliminate a number of City initiatives that have been good for the community, but are not core city services. The 11