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HomeMy WebLinkAbout12-11-08 Common Council Minutes SPECIAL MEETING DECEMBER 11, 2008 Be it remembered that the Common Council of the City of South Bend, Indiana met in the Council Chambers of the County-City Building on Thursday, December 11, 2008 at 7:00 p.m. The meeting was called to order by Council President Rouse and the Invocation and Pledge to the Flag were given. ROLL CALL COUNCILMEMBERS: Present: Derek D. Dieter 1st District, Chairperson Committee of the Whole Henry Davis, Jr. 2nd District Thomas LaFountain 3rd District Ann Puzzello 4th District David Varner 5th District Oliver Davis 6th District Vice-President Timothy Rouse At-Large President Al “Buddy” Kirsits At-Large Karen L. White At-Large OTHERS PRESENT: John Voorde City Clerk Mary Beth Wisniewski Chief Deputy Janice I. Talboom Deputy City Clerk Aladean DeRose Chief Assistant City Attorney RESOLUTIONS BILL NO. 08-107 RESOLUTION OF THE COMMON COUNCIL OF THE CITY OF SOUTH BEND, INDIANA, PROPOSING AND VOTING IN FAVOR OF AN ORDINANCE OF THE ST. JOSEPH COUNTY INCOME TAX COUNCIL IMPOSING A PROPERTY TAX RELIEF LOCAL OPTION INCOME TAX BILL NO. 08-108 A RESOLUTION OF THE COMMON COUNCIL OF THE CITY OF SOUTH BEND, INDIANA, PROPOSING AND VOTING IN FAVOR OF AN ORDINANCE OF THE ST. JOSEPH COUNTY INCOME TAX COUNCIL IMPOSING A PUBLIC SAFETY LOCAL OPTION INCOME TAX Councilmember White made a motion to combine Bill Nos. 08-107 and 08-108 for the purpose of Public Hearing. Councilmember Oliver Davis seconded the motion which carried by a voice vote of nine (9) ayes. BILL NO. 08-107 RESOLUTION OF THE COMMON COUNCIL OF THE CITY OF SOUTH BEND, INDIANA, PROPOSING AND VOTING IN FAVOR OF AN ORDINANCE OF THE ST. JOSEPH COUNTY INCOME TAX COUNCIL IMPOSING A PROPERTY TAX RELIEF LOCAL OPTION INCOME TAX 1 SPECIAL MEETING DECEMBER 11, 2008 WHEREAS, the Common Council of the City of South Bend, Indiana recognizes that property tax relief is in the public interest of the City of South Bend, Indiana; and WHEREAS, the Indiana General Assembly recently authorized local governments to impose a property tax relief local option income tax for the purpose of providing local property tax replacement credits at a uniform rate to all taxpayers in the City of South Bend, St. Joseph County, Indiana (I.C. § 6-3.5-6-32(f)(1)); and WHEREAS, it is in the best interest of the City of South Bend to adopt a property tax relief local option income tax for the purpose of providing local property tax relief credits at a uniform rate to all taxpayers in the City of South Bend, St. Joseph County, Indiana. NOW, THEREFORE, BE IT RESOLVED BY THE COMMON COUNCIL OF THE CITY OF SOUTH BEND, INDIANA, as follows: SECTION I. The Common Council of the City of South Bend, Indiana, proposes and casts its 40.59 votes in favor of the following Ordinance of the St. Joseph County Income Tax Council: AN ORDINANCE OF THE INCOME TAX COUNCIL OF ST. JOSEPH COUNTY, INDIANA IMPOSING A PROPERTY TAX RELIEF LOCAL OPTION INCOME TAX IN ST. JOSEPH COUNTY, INDIANA STATEMENT OF PURPOSE AND INTENT The St. Joseph County Income Tax Council (Council) acknowledges that property tax relief is in the public interest of St. Joseph County, Indiana citizens. The Indiana legislature in 2007 provided a mechanism under Ind. Code § 6-3.5-6-32 (amended in 2008) to grant property tax relief by imposing an income tax, the revenue from which is available for local property tax replacement credits at a uniform rate to all taxpayers in the County. The Council also acknowledges that some taxpayers in St. Joseph County, Indiana who do not pay the tax rate imposed by this ordinance will receive a property tax replacement credit that is funded with tax revenue from the tax rate under this Section. Nonetheless, the effect of this ordinance is beneficial to all St. Joseph County citizens who will have overall reduced property taxes. The St. Joseph County Tax Council determines the best estimate of the property tax credits to be provided to all property taxpayers as a result of this ordinance is as follows: Homesteads: $11,517,000.00 Other residential property: $ 3,465,000.00 Industrial property: $ 1,803,000.00 Agricultural property: $ 320,000.00 Commercial property: $ 6,102,000.00 NOW, THEREFORE, BE IT ORDAINED BY THE ST. JOSEPH COUNTY, INDIANA INCOME TAX COUNCIL, as follows: 2 SPECIAL MEETING DECEMBER 11, 2008 SECTION I. The St. Joseph County Indiana Income Tax Council hereby imposes a property tax relief local option income tax (LOIT) at the rate of One Half Percent (.5%) pursuant to Ind. Code § 6-3.5-6-32 for the purpose of providing local property tax replacement credits at a uniform rate to all taxpayers in St. Joseph County, Indiana, as provided by I.C. 6-3.5-6-32(f) (1). SECTION II. The St. Joseph County Indiana Income Tax Council also acknowledges that some taxpayers in St. Joseph County who do not pay the tax rate imposed by this ordinance will receive a property tax replacement credit that is funded with tax revenue from the tax rate under this Section. SECTION III. If any portion of this Ordinance is declared to be unconstitutional or invalid for any reason, such determination shall not affect the remaining portions of this Ordinance. SECTION IV. This Ordinance shall be in full force and effect from and after December 31, 2008 upon its passage by the St. Joseph County, Indiana, Income Tax Council. ****** SECTION II. This Resolution shall be in full force and effect from and after its adoption by the Common Council and approval by the Mayor. s/Timothy A. Rouse Member of the Common Council BILL NO. 08-108 A RESOLUTION OF THE COMMON COUNCIL OF THE CITY OF SOUTH BEND, INDIANA, PROPOSING AND VOTING IN FAVOR OF AN ORDINANCE OF THE ST. JOSEPH COUNTY INCOME TAX COUNCIL IMPOSING A PUBLIC SAFETY LOCAL OPTION INCOME TAX WHEREAS, the Common Council of the City of South Bend, Indiana recognizes public safety as a priority for citizens of South Bend, and acknowledges the need to maintain effective public safety despite expected loss of property tax revenue; and WHEREAS, the Indiana General Assembly recently authorized local governments to impose a public safety local option income tax (Public Safety LOIT) provided certain conditions are met, which authority is codified at Ind. Code § 6-3.5-6- 31; and WHEREAS, there is a financial need to provide a Public Safety LOIT pursuant to I.C. 6-3.5-6-31. NOW, THEREFORE, BE IT RESOLVED BY THE COMMON COUNCIL OF THE CITY OF SOUTH BEND, INDIANA, as follows: 3 SPECIAL MEETING DECEMBER 11, 2008 SECTION I. The Common Council of the City of South Bend, Indiana, proposes and casts its 40.59 votes in favor of the following Ordinance of the St. Joseph County Income Tax Council: ORDINANCE NO. AN ORDINANCE OF THE INCOME TAX COUNCIL OF ST. JOSEPH COUNTY, INDIANA IMPOSING A PUBLIC SAFETY LOCAL OPTION INCOME TAX IN ST. JOSEPH COUNTY, INDIANA STATEMENT OF PURPOSE AND INTENT The St. Joseph County Income Tax Council recognizes that maintaining public safety is a local government priority. The imminent decline in property tax revenues threatens to compromise and challenge local government's ability to provide high quality public safety to citizens of St. Joseph County, Indiana. By enacting Indiana Code 6-3.5-6-31, the Indiana legislature has provided a means for local government to help maintain quality public safety through imposition of a public safety local option income tax (Public Safety LOIT). Pursuant to Indiana Code 6-3.5-6-31, the members of the St. Joseph County Income Tax Council hereby adopt and impose such a tax in St. Joseph County effective December 31, 2008. Imposition of the Public Safety LOIT in St. Joseph County meets all requirements of I.C. 6-3.5-6-31(b) and (c), in that St. Joseph County recently imposed a property tax relief Local Option Income Tax (LOIT) of at least 0.25%, and the public safety tax to be imposed does not exceed 0.25%. NOW, THEREFORE, BE IT ORDAINED BY THE ST. JOSEPH COUNTY, INDIANA INCOME TAX COUNCIL, as follows: SECTION I. The St. Joseph County, Indiana Income Tax Council imposes the public safety local option income tax (Public Safety LOIT) on the taxpayers of St. Joseph County, Indiana at a rate of 0.25% effective December 31, 2008. SECTION II. This ordinance meets all requirements of Ind. Code § 6-3.5-6-31(b). SECTION III. If any portion of this Ordinance is declared to be unconstitutional or invalid for any reason, such determination shall not affect the remaining portions of this Ordinance. SECTION IV. This Ordinance shall be in full force and effect from and after December 31, 2008 upon its passage by the St. Joseph County, Indiana, Income Tax Council. 4 SPECIAL MEETING DECEMBER 11, 2008 SECTION II. This Resolution shall be in full force and effect from and after its adoption by the Common Council and approval by the Mayor. s/Timothy A. Rouse Member of the Common Council Councilmember Kirsits disclosed that he is a Member of the South Bend Fire Department and has a Uniform Conflict of Interest Disclosure Form #236 on file in the Office of the City Clerk. He advised that after discussion with legal counsel that no conflict exists regarding these bills. Councilmember Dieter disclosed that he is a Member of the South Bend Police Department and has a Uniform Conflict of Interest Form #236 on file in the Office of the City Clerk. He advised that after discussion with legal counsel that no conflict exists regarding these bills. Chief Assistant City Attorney Aladean DeRose advised that the City Clerk will read the titles of the bills into the record. A formal presentation will be given. She noted that the formal presentation is not subject to a time limit. She noted that members of the public may speak for a maximum of 5 minutes in favor or in opposition to the bill, those in favor speaking first. Ms. DeRose advised that a person’s name & address must be given for the record. The public portion in opposition is limited to the time spent in favor of the Bill or 30 minutes, whichever is greater. A 5 minute rebuttal period follows the remonstrance. The public hearing is then closed & the Council debates the Bill. Councilmember Varner made a motion to suspend the rules on the 30 minute limitation to allow more time for the public to speak. Councilmember Dieter seconded the motion which carried by a voice vote of nine (9) ayes. th Mayor Stephen J. Luecke, 14 Floor County-City Building, 227 W. Jefferson Blvd., South Bend, Indiana, made the presentation for these bills. Mayor Luecke advised that the Bill No. 08-107 is a substitute bill which proposes the property tax replacement LOIT at 0.5%, rather than the full 1% in the original bill. He stated that he is doing this for several reasons. First, in recognition of the dire economic conditions and the stress that many families are under, I believe that we need to levy the least tax that we can until the economy improves. He stated that he believes that the 0.5% PTRC and the 0.25% Public Safety LOIT’s will allow us to sustain the most critical services and bridge until we can generate additional revenue. Secondly, he stated that he put forth the 1% to show the public what the true cost of the tax caps is and what is needed to replace those revenues. He stated that he needed to respond to public expectation to do more to streamline government. Mayor Luecke reiterated that having a shortfall still facing the City will make those decisions more urgent and provide an impetus for serious discussion with the Council and the public about what services should be provided by local government. And, finally fears that if the full amount is enacted, the Legislature will be off the hook and feel that it doesn’t need to provide any other tools since we will have “solved” the problem. He stated that they need to continue efforts to have more tools available to provide sustainable revenue for local government. st Gary Malone, H J Umbaugh & Associates, 20 E 91 St., Ste 100, Indianapolis, Indiana, presentation a power point presentation on South Bend, Indiana, HEA 1001 Analysis which was prepared by Umbaugh on December 11, 2008. A copy is on file with the Office of the City Clerk. Ken Marks, President, Local #362 Fire Fighters Union, 402 Lincoln Way West, South Bend, Indiana, advised that he is not speaking on wholly selfish reasons, because he stated that he is speaking on behalf of the folks that are on the chopping block in 5 SPECIAL MEETING DECEMBER 11, 2008 reference to their jobs. He stated that because of the growth of the City of South Bend and its residents, it is very important to have a functional fire department. Mr. Marks noted that a city just 300 miles from here had one of their emergency vehicles break down on the way to a call. He stated that he doesn’t want to see that happen here in South Bend. He stated that these bills are a necessary evil. He stated that anytime anyone introduces a new tax it is a very difficult decision. Mr. Marks stated that he lives in South Bend and cares very deeply about the City. He is also concerned for his fellow stth co-workers safety. He stated that a 21 Century City needs to function not with 19 Century equipment. He understands that this new tax will upset folks and make them angry for having to pay another tax. Mr. Marks stated that when he first heard of this new tax he looked at what the City is trying to accomplish. He stated that it is services. Every man, woman, child in this City rely on public safety officers being able to do their jobs. He stated that these are tough times and commend the Council for making the difficult decisions. He urged the Council to vote in favor of these bills. Mayor Luecke read into the record a letter from Scott Ruszkowski, President, FOP #36. The letter reads: It is imperative to keep the staffing level of officers at its currently capacity. He asked that training and equipment at currently capacity. With obvious economic changes in the Country, State and City, crime escalation is inevitable. The need to keep officers is more than apparent and losing just one officer to cut backs is not only a disservice to the citizens but to the fellow officers representing the City of South Bend. He urged the Council to vote favorably and to keep public safety a top priority. Mayor Luecke advised that both Ken and Scott’s remarks point to the importance of public safety in this Community, it has always been top priority for this Council and this Administration and show it in the budget where 75% of the general fund budget is dedicated to public safety. If there are not replacement revenues for the dollars lost to the property tax caps, there will need to be cuts in public safety. That is not a scare tactics, it’s just being honest to the Council and the public in terms of what is forthcoming. The State provided a tool to support the public safety in a means of a .25% public safety local option income tax and ask that be enacted tonight. He reminded the Council that these are not new additional dollars; they are replacement dollars to replace dollars that are being lost to the property tax caps. He stated that the State also said that in order to enact a public safety local option income tax, they need to enact a property tax relief income tax as well in the amount equal to at least to the public safety tax. So in order to enact the .25% public safety tax they would have to enact at least a .25% property relief tax as well. He stated that he proposes that in the substitute resolution is to enact that property replacement tax credit at .05% rather than the .25% level to sustain parks, other services of local government as they move forward. Enacted this tax won’t replace all of the dollars that they will be losing to the property tax caps, but it does allow the City to sustain the critical services that they provide for the community and to still hold before us that challenge to streamline government. Mayor Luecke stated that the questioned was raised about the general property tax relief credit as opposed to a homestead credit or residential credit. He stated that the relief to the City of South Bend in terms of revenue is greatest by applying the general property tax relief credit. Mayor Luecke stated that it is his belief that homestead owners are receiving significant additional relief through the supplemental standard deduction that is part of the HEA 1001 as well. The home owners in the City of South Bend are receiving significant relief through that supplemental standard deduction in addition to the property tax caps and in additional to the homestead credits that they already provide through the county option income tax. He stated that the question is why now to ask for these taxes? He stated that as we all know the local taxes both property taxes and local income taxes pay for important services such as schools, libraries, police, fire, judicial system, as well as economic development efforts. Mayor Luecke stated that he is proud of the level of services that they have been able to provide in South Bend, but have become to reliant on property taxes and need to spread the cost of these vital government services over several revenue streams. The legislature has refused to give County’s the authority to level local sales taxes, local food and beverage taxes, local auto rental taxes, additional local lodging taxes, or other tools which could effectively spread the cost of service among many revenue streams, preferring instead to enact the circuit breaker through property tax caps. In other states, circuit breaker relief is means tested, that is the beneficiaries of those circuit breakers need to be below a 6 SPECIAL MEETING DECEMBER 11, 2008 certain income threshold. It also generally targeted to homeowners and a key factor in other states, State Government replaces revenue that is lost to local government. In Indiana, the State provided a circuit breaker relief through caps on property for all categories of property, it established no income guidelines and basically told local government to make do with reduced revenue or to enact local income taxes to make up the difference. In St. Joseph County, the schools, libraries, and bus system will lose operating revenue because of the property tax caps, in addition to City, Towns, and County Government. For South Bend the project loses will be 9 million dollars in 2009 and over 18 million dollars in 2010. At the current local income tax rate .08%, St. Joseph County has the tenth lowest income tax rate in the State. Elkhart County is 1 ½ %, Marshall County is at 1 ¼ % and Pulaski County is at 3.13%. Fulton County just adopted an additional .05 local income tax bringing their total rate to 1.93%. Mayor Luecke stated that if they had instituted the local income taxes earlier on, and at the full amount allowable, the property tax rate would have been lower and the impact of the property tax caps would have been less. Two additional local income taxes are being proposed the point .25% public safety tax, which must be used to support police and fire operations and .05% local option income tax which will provide property tax relief for all categories of property. This also reduces the amount of revenue which local units of government lose to the tax caps. The additional .75% rate which is being requested will bring the total local income tax rate to 1.55%. Even with this additional property tax relief and replacement revenue for public safety, South Bend will still receive 8 million dollars less in property tax revenue than currently in the year 2010. Again, this rate does not replace all lost revenue. He stated that they will still need to find more efficiency and perhaps reduce some services. He stated that he has spoken with the members of the Chamber of Commerce about businesses that have gone through downsizing successfully to help re- look at the budget and find a fresh perspective and new ways to provide efficiency in the service of government. Because there is a time lag between the implementation of a tax, collection of that tax, and distribution of the revenues these taxes must be enacted before the end of the year in order to receive revenues for 2010, when the biggest strains hit the budget. If replacement revenues are not in place for 2010, St. Joseph County has projected that it would have to reduce staff by 200 positions. The City of South Bend would see similar cuts including scores of police officers and firefighters, closing parks, and reducing or eliminating other key services. These cuts would be required to live within the revenue stream of the budget. Because of one time additional State Homestead Credits this year in supplemental standard deductions in future years, homeowners will significant reductions in property taxes. Because of the property tax caps on all categories of property, all categories will receive property tax relief in 2009 and accelerating in 2010. One of the reasons that he delayed action on this tax was in hopes that the property tax bills would be out by now, so that people could see the reduction in property taxes that is coming. Unfortunately, that is still not the case. He advised that he has stated from the beginning as he has had these discussions for actually a couple of years, what is happening is a property tax shift. There will be savings on the property tax side and if enacted some increases on the local income tax side. But at the rate proposed, he believes that most home owners in St. Joseph County will still see a positive reduction in the total local taxes paid. He stated that using the Department of Local Government Finance Calculator on their website in South Bend Portage Township, a home with a value of $40,000.00 is anticipated to see $160.00 reduction in property taxes this year. An $80,000.00 home a $350.00 reduction in property taxes, a $100,000.00 home almost a $500.00 reduction in property taxes and a $200,000.00 home almost $1,500.00 reduction in property taxes. He stated that what he is asking people to pay in additional local income taxes will be supported by those property tax savings. Mayor Luecke stated that he gives his commitment that he will continue to seek efficiencies in the delivery of services. He has talked about this during budget time and talked about it for a number of years. South Bend has reduced its workforce by over 90 positions. He stated that he will look to consolidate operations when it makes sense for the customers. Seek other revenue sources to spread the cost of local government and will grow the economy with new jobs and investment to spread the cost of services. Mayor Luecke stated that it is vital that they have sustainable revenues to maintain essential services and quality of life in the community. He stated that he believes that the proposal before the Council tonight does just that. He stated that the property taxes and local income taxes pay for critical services. It is essential that those services be 7 SPECIAL MEETING DECEMBER 11, 2008 maintained for the residents and businesses, and especially important as they look to capitalize on the economic growth opportunities afforded by nano-electronic institute and Innovation Park. He stated that from his perspective the only thing worse than enacting local income taxes at this time is not enacting local income taxes at this time that are needed to sustain the community. th Catherine Fanello, City Controller, 12 Floor County-City Building, 227 W. Jefferson Blvd., South Bend, Indiana, stated that 100% of this information was handed out earlier this summer. She reiterated that it was the businesses and those in the 2% category who received the greatest credits. She stated that she has had several months to look over the information and have given the Council numerous communications about the City fiduciary responsibility. She stated that as Controller, she stated that these numbers are real, they are true, they are accurate, if it is decided not to implement an income tax tonight, there will be some very, very, very serious decisions to make about the priorities are for the City of South Bend. There will still have to be some tough decisions that will have to be made even if an income tax is adopted. She stated that she is aware of how difficult a decision this is to make. She stated that the City of South Bend spends 75% of property tax revenues on public safety. Ms. Fanello stated that she was asked by Councilmember Oliver Davis if South Bend compares to any other City in Indiana. She stated that South Bend is comparable to Evansville in size and population. Ft. Wayne is double the size of South Bend and spends quite a bit more for their public safety departments. She stated that it makes sense to cut the budget in the areas where most of the money is spent. However, if the Council decides that the priorities should change and cuts need to be made elsewhere, she is willing to sit down and discuss those options. She stated that this is a lot of difficult material, it is very complex, and it is complicated. She stated that she doesn’t think that the legislature did the local governments any favors in the way that they structured this. She stated that it could have been structured better to help residents that were at lower incomes, it benefits businesses and other properties more than it does the residents. She stated that unfortunately, that is where the legislature failed. A Public Hearing was held on the Resolutions at this time. The following individuals spoke in favor of these bills. nd Mr. Peter Mullen, St. Joseph County Auditor, 2 Floor County-City Building, 227 W. Jefferson Blvd., South Bend, Indiana, residing at 210 S. Coquillard, South Bend, Indiana, advised that he doesn’t think it would be stretch to say that there are many other places that he or the Council would rather be that sitting here tonight. He thanked the Council for making some very difficult decisions. He stated that the Council has sifted the facts; study them to find out what is best for the community. He stated that there are no easy answers. He stated the question is do we cut revenues or do we cut services or find mid- way between both of them. He stated that if services are cut there will be cuts in costs. Either way in this economy and this environment, the Council will leave a legacy tonight, to the community. Over the last eighteen months the County Council along with the County Commissioners have cut the operating budget of St. Joseph County’s General Fund by 4.1 million dollars. With this reduction in place the County is still faced with a negative operating balance for 2009 without any additional revenue, they must reduce an additional 4.3 million dollars. He has discussed this with the Council President Raphael Morton and stated that if this fails on Tuesday morning they will begin to cut 4.3 million dollars. With almost 90% of the general fund in St. Joseph County in personnel, the quickest and easiest knee jerk on this would be to lay-off 155 people. Even with additional revenues from whatever sources, more budget cuts will have to be made to the general fund. Mr. Mullen stated that they hope every month that the vehicles that they have in service can make it just one more year or the police cars could make it another 5,000 miles. He stated that there are 92 counties in the state, 81 of them have a local option income tax. He stated that they need revenue enhancement, but are faced with just the opposite revenue shrinkage. He stated that they will have an overall property tax loss just because of foreclosures. They won’t receive 100% of revenue from the .08% legacy LOIT. The State Legislature and the State Government have given the local governments tools to implement, local option income tax and of the 81 counties, all but 10 counties in 8 SPECIAL MEETING DECEMBER 11, 2008 the State of Indiana have a higher rate than St. Joseph County. All four counties that border St. Joe County, Starke, Marshall, LaPorte and Elkhart have a higher local tax rate. He stated that the government exists to service the citizens, not everybody will demand the same level, but that service must be provided that is demanded. A LOIT of .05% and a Public Safety LOIT of .25% will raise approximately in St. Joseph County, 35 million dollars. Of the 35 million dollars, 23 million dollars of it will be applied to property tax relief. Mr. Mullen stated that 66% of the raised revenue through the LOIT will go to property tax relief. This is good, what a great benefit to the retired elderly who have no income. They won’t pay a LOIT but they will get the property tax relief because of LOIT. This year has been a long and difficult year for everybody in government. It maybe even more difficult in 2009 and very, very difficult in 2010. Mr. Marty Wolfson, 809 Park Avenue, South Bend, Indiana, stated that he is speaking as an individual and not representing any organization. He stated that he heard the Mayor of South Bend state that without further sources of revenue, the City will have to cut back needed public services. He has every right to be concerned about having to cut back on public safety services and need to look at a local option income tax as the only source of additional revenue available. However, there are remonstrators here tonight who will say that now is not a good time to be raising taxes on people who are already struggling to make ends meet. They will say that we are in the midst of a potentially very severe recession and people are losing their homes and their jobs. He stated that he thinks those people are absolutely right as well. He stated that he has four reasons for being in favor of a local option income tax. First, cutting back on police & fire protection, libraries and parks and other needed services dramatically undermines the quality of life and makes everyone poorer. Second, making these cuts makes a loss of jobs, and is certainly not what is needed during a recession. Third, the local option income tax is the only source of revenue available to prevent these cuts. Fourth, there remains the possibility that other sources of revenue like a hotel/motel tax or an event ticket tax might be allowed by the State Legislature next year, in which case there might be a possibility of rolling back some of these income taxes. He stated that this is not an easy decision and respects the people on both side of this issue. He stated that why are we fighting against each other over two bad options, the answer is that he thinks we all realize is that we have been put into this box by our Governor, and State Legislature. They claim the political credit for cutting taxes, but what they did is more accurately describe as a tax shift than a tax cut. st They shifted taxes in three ways, 1 they shifted the kind of tax; they cut property tax, but raised the sales tax from 6 to 7 percent, and put pressure on localities to raise local nd income taxes. What they gave with one hand they took away with the other. 2 they rd shifted the geography of responsibility for taxes from the State to the localities. 3 they shifted the burden of taxes away from business and onto individuals, thus compounding the effects of market based assessments and the abolishment of the inventory tax. The State Legislature created a circuit breaker, but it is a very peculiar circuit breaker, other states with circuit breakers cap residential property tax payments as a percentage of income, thus helping homes owners who might have difficulty paying property taxes. But Indiana caps property tax payments as a percentage of gross assessed value, thus including in the tax cut some people who are likely quite capable of paying their taxes. It is similar to the bate and switch tactics that he has seen at the Federal Level. Promise the people a tax cut, but then give the biggest cuts to the wealthiest and hope that the benefits will trickle down to the rest. It didn’t work then and it won’t work now. The problem is not the existence of taxes but the fairness of who pays the tax. He stated that there are not too many people who would want to live in a community where there are pot holes in the roads with libraries that are often closed within adequate police and fire protection. He stated that he thinks that the President-Elect got it right when he said that we should be cutting taxes on people who are struggling and raising taxes on the people who receive the lion’s share of tax cuts in the past, those making over $200,000.00 in income. He stated that he would add to list of people who should pay more are tenured Professors at a League Universities with multi-billion dollars endowments. Although he can assure most that most professors unlike head football coaches come no where near the $200,000.00 income level. He stated that option is not available in South Bend, they only have the option of a local income tax that increases everyone taxes. He suggests to adopt the tax to prevent a drastic cut in services and jobs, but then he thinks that the community should come together to demand some changes from the State Legislature. Taxes that are fairer 9 SPECIAL MEETING DECEMBER 11, 2008 help for people who are struggling with lost jobs and lost homes and the opportunity to live in a community that provides the services that are needed and the respect for all people that is deserved. Mr. Steve Francis, 54174 Juday Creek Dr., Granger, Indiana, stated that he is here tonight representing himself and Sierra Club. He is an elected member of the State Executive Committee of the Hoosier Chapter and a member of the local Michiana Chapter. He stated that this community has been dealt a bad hand, in receiving basically an unfunded tax mandate. He stated that many people, conservatives included do not like an unfunded mandates and that is what this is. The State Government lead by Governor Daniels has sent us a package that restricts the local government’s ability to raise revenues and forces cuts in vital government services. He stated that quality of life in this area and public safety is number one, but public safety, fire and police are not the only things that make up the quality of life in the Michiana area. It is a full package, local governments must make sure that they use resources wisely and use tax dollars efficiently. But, when faced with cutting and closing down parks, when faced with not being able to clean up the environment, which would include the St. Joe River or having to make strong sacrifices in that area. When they are faced with closing treasured resources such as the Potawatomi Zoo and the Greenhouse and Conservatories, which still might be on the chopping block. Mr. Francis stated that everyone needs to step back at look at what is a quality of life, what does it mean for Michiana? He stated that he used the word Michiana, because we are a community, it isn’t the City of South Bend that exists alone separate from the County, and all of the surrounding communities have a vested interest in seeing that there is a stable tax base that they pay a reasonable amount for replacement revenues when they still will receive a net tax cut for most residents and that they not segment themselves into City versus County, Township against Township, and as a County resident he urged the Council to support this proposal, this now reduced tax proposal by Mayor Luecke, because they all drove to attend this meeting on City streets. He stated that everyone here tonight expects that when they walk out of this building tonight and experience difficulty that South Bend Police or Firefighters will come to their aid as well. He advised that if the quality of life deteriorates in South Bend, it deteriorates for all. He urged the Council to vote in favor of this bill. Ms. Christine Fiorlis, President, Michiana Chapter of the Sierra Club, and is speaking on behalf of the Sierra Club. She stated that some will be surprise why she is speaking in favor of this topic, when the Sierra Club is an environmental group. She stated that what they have discovered in recent years that the environment is much more than a bunch of trees or a wilderness area. It is really truly an eco-system it is a healthy community. She stated that is why the Sierra Club is in support of this County Option Income Tax, because they believe that these funds are essential to keeping the community in a healthy state. She urged the Council to vote in favor of this bill. Mr. George Horn, President, Potowatomi Zoological Society, stated that he is speaking on behalf of the Zoological Society tonight. He stated that as the Council is well aware that the Parks and Recreation Department play an important part in this community. He stated that he believes everyone here tonight at one time has enjoyed the parks and recreation that the City of South Bend has provided over the years. Whether you are a citizen of South Bend, St. Joseph County, Elkhart, LaPorte, Marshall, Starke Counties and the neighboring State of Michigan, the Parks and Recreation Department of the City of South Bend has been a part of the Community we all call Michiana. Parks and Recreation are a very important part of the quality of life in this community. They help with mental health and gets people out of the everyday stress in their lives. Parks and Recreation help get the community involved in physical activities which promotes a healthier life style. The parks provide, golf, tennis, softball, and the East Race Waterway has been a host to many Olympic and educational events. The Potowatomi Zoo is an adventure for all ages. The Park and Recreation Department provides activities that mentor young children. A well rounded City needs parks and recreation for a good quality of life. A City such as South Bend cannot grow or prosper without a well- rounded parks and recreation department. Without those kinds of things South Bend will become less viable for businesses and citizens who are looking for places to raise their families and to grow together, stay for an extended period of time and find a place to call 10 SPECIAL MEETING DECEMBER 11, 2008 home. He thanked the Council for being proactive when it comes to making such difficult decisions knowing that what ever happens the bottom line is making South Bend a better place to live. He stated that no one wants to pay more taxes, sometimes; however we all have to reach into out pockets in order to make the things that need to happen for a viable community to exist to actually be able to move forward. This is the time to start doing that. Mr. Todd Skwarcan, 2401 S. Gertrude Street, South Bend, Indiana, stated that he commends the Council for taking the first step and initiating this very difficult issue. He stated that he is a life-long resident of the City of South Bend and is here tonight to rise in support of this bill. Leadership is not always doing the easy thing, and it is certainly not about doing the popular thing. He stated that the Council knows the financial shape the City is in, and what needs to be done. He stated that South Bend has been trying to live within its means. He stated that there are people who are going to speak tonight and say that the City needs to tighten it belt, live within your means, those are all things that he has to do as a homeowner and as a citizen. He urged the Council to support this bill. Mr. Jerry Niezgodski, 2930 Bonds Avenue, South Bend, Indiana, stated that he is speaking in favor of this bill with some caveats. He stated that he doesn’t believe that this issue is just a yes or no vote. He stated that he has been before this Council and talked about the many things that could be done to lessen the impact. He stated that this is not a popular decision, but it is one tool that could be used and hopefully, through the State Legislator’s help and the City Administration lobbying with the Governor, get some other sources of revenue. He stated that if this bill passes tonight, the Council must take a serious look at the staffing in the City. He stated that you cannot compare South Bend to Evansville, Indianapolis, Gary, and Ft. Wayne and draw an accurate comparison because every City is unique. He stated that if you look at the City of South Bend’s Legal Department, the City of Evansville, population 114,000 has a Corporate Counsel, City Attorney, and Assistance City Attorney a total budget of $583,000. The City of Ft. Wayne with a population of 250,000 has four (4) people on staff, but they also allocate an extra $100,000.00 for additional legal services. But there total budget is $505,000. In South Bend, the smallest of the three cities, four (4) Assistant Full-Time City Attorney, two (2) Paralegals, two (2) Secretaries, Collection Specialists, then there are part-time positions with benefits. Two (2) Deputy City Attorneys, a Deputy City Attorney IV, Chief Assistant City Attorney, Assistant Part-Time City Attorney with a total budget of $874,000. He stated that he receive a report recently from the Department of Economic Development Department, and one of the greatest problems they had was getting response from the legal department to move project through, so what do they have to do? Redevelopment went and hired a law firm at the cost of $60,000. The City of South Bend’s Legal Department Fees are reaching 1 million dollars. He advised the Council that he believes this is a management issue and the Council needs to take a look at how are the various departments allocating their resources. The Mayor’s Office budget has a Mayor, two (2) Assistant Mayors, Director of Secretarial Services, etc. If you look at the City of Evansville, their staff is approximately half. Ft. Wayne has a very large staff, but if you compare positions, South Bend comes out either equal or more in staffing. The Department of Water Works Customer Service Department has a Manager and two (2) Supervisors who oversee a total of twelve (12) people. Three people to oversee 12 is not very efficient. Equipment Services between the Director and the Manager, Maintenance Supervisors, Maintenance Supervisor Foreman, there are seven (7) people in leadership positions and they oversee twenty-six (26) other people. So the point is that the City of South Bend is heavy in staffing. Mr. Niezgodski clarified that he is in favor of this bill, but the Council needs to look very aggressively at this budget line by line and work very aggressively with the State Legislators to get the other revenue streams, to get the food and beverage tax. He stated that we don’t have a casino here, but we have home Notre Dame Football Games. Those are tools that are out there that need to be maximized and used. The following individuals spoke in opposition to these bills. 11 SPECIAL MEETING DECEMBER 11, 2008 Mr. Juan Manigault, 1620 Kevin Ct., South Bend, Indiana, stated that he is speaking on behalf of a new organization South Bend Integrity Pac to rise against this ordinance. He stated that this is a great opportunity for the Common Council to regain the trust of the Citizens of South Bend by reforming the oversight responsibilities that were given when elected for the office. He stated that an example of this was the “Vote No” Campaign. Voters were not willing the give the Common Council the oversight responsibility because they were not sure that the due diligence would be performed necessary as it relates to the water rate increases. Now is the time to regain that trust of citizens and voters in South Bend by rejecting this proposal to raise income taxes. He stated that we all must live within our means. He stated that all City Departments must cut their budgets by 10%. He urged the Council to lobby the State Legislature to change the law on TIF to allow for the direct charging for police, fire and street department expenses, directly associated with services provided by these departments in the TIF district. He advised that the City needs to grow its tax base. He urged the Council to make the right decision and vote against this tax increase. Mr. Terry Carter, 22924 Arbor Point Drive, South Bend, Indiana, spoke in opposition to these bills. He stated that they should not start with eliminating police officers & fire fighters. He urged the Council to take a look at the budget and start eliminating some of the burdens that are not generating any new revenue. He stated that the Football Hall of Fame has not been self-supporting since it was built. He urged the Council to find the wisdom to do the right thing. He encouraged the Council to work with the County to combine services to do more with less. Mr. Jim Frick, 61500 Ironwood Road, South Bend, Indiana, stated that he is a Board Member of the South Gateway Association. Mr. Frick stated that the City could save money by first sending out tax bills on time, so that unnecessary funds do not have to be borrowed. He stated that all properties owned by the City should be sold. Have the University of Notre Dame pay for the extra police traffic control for all home football games. Charge users fees on all non-profits who use police & fire protection. He stated that tax abatements should be the exception not the rule. South Bend handed out numerous tax abatement last year compared to Mishawaka who gave only a few. Stop funding tax dollars for the College Football Hall of Fame, South Bend Heritage, and Project Future. Stop using consulting fees, the South Bend Tribune published an article that the City of South Bend had spent over 23 million dollars for consulting fees over a twelve (12) year period. Stop donating tax dollars to non-profit organization such as WNIT; Natatorium; and the Kroc Center. These types of project need to be built with private donations. He stated that the City needs to stop building extravagant buildings such as the Cracker Barrel Fire Station. Mr. Frick stated that he needs to quit building bicycle paths when neighborhood infrastructures are in such bad condition. There are sidewalks in front of Riley High School that are in dire need of repair, so bad that the school children cannot walk down them, they have to walk in the street. Evaluate the bidding process for fairness to contractors. Staffing throughout the City needs to be looked at and revaluated. He urged the Council to vote against any new tax. Mr. Myer Blan, 813 Berlin, Mishawaka, Indiana, stated that he is speaking on only his behalf and not representing any organization. He advised that he is speaking in opposition of this bill because he believes that this is a tax without representation. Mr. Blan stated that he lives in a town that is operating in the black. He noted that Mishawaka does not need to implement the LOIT because they are fiscally responsible with their tax dollars. He stated that he believes that there should be a 20% cut in salaries for employees to start. Mr. Blan advised that other items should be cut out of the city budget not police and fire protection. He stated that there are many things that the city contributes money that can be done without. He stated that the quality of life in South Bend is chasing people out. He urged the Council to vote against this bill. 12 SPECIAL MEETING DECEMBER 11, 2008 Ms. Carol Davis, 2209 Kendall, South Bend, Indiana, advised that she is not in favor of this bill. She advised that the residents of South Bend are being tax to death. Mr. Davis also scolded all the people in the audience tonight for not attending Council Meetings on a regular basis. She noted that this is just one issue, it happens to be one that touches many people the wrong way, but there are many items that come before the City Council and urged those in attendance tonight to become more active in local government. Mr. Tom Zmyslo, 51042 Prairie View Way, South Bend, Indiana, spoke in opposition to this bill. He stated that the city spends way too much money on projects like building new libraries, schools etc. Mr. Zmyslo stated that St. Joseph County is one of the biggest spenders of tax dollars next to Marion County and Lake County. He stated that the city needs to live on less and do with less. He noted that this County is not is a recession it is in a depression and urged the Council to vote against this bill. Mr. Rudy Yakum, III., 51610 Villager Way, South Bend, Indiana, advised the Council that he and his wife are expecting their first child in 2009. He stated that he realizes that with that new baby come extra expenses. He stated he knows that they are going to have to tighten their belts and start saving more and doing with less. He advised that the City of South Bend should do the same. Mr. Yakum noted that the City of South Bend was alerted a couple of years ago that the 2% Circuit Breaker was going into effect, and did nothing to prepare for this. He noted that implementing another LOIT tax is going to create havoc and the taxpayers of South Bend and St. Joseph County have been asked to pay enough. He urged the Council to vote against any new taxes. Mr. Thomas Hennel, 1130 Donmoyer, South Bend, Indiana, advised that he is here tonight to speak against these bills. He urged the Council to cut costs and grow the tax base in the City. He stated that is the only way to make the City viable again. He noted that it might be a good time to start taxes non-profit organizations that use city services such a police and fire. He urged the Council to take a good hard look at the budget and make the necessary and tough cuts that need to be made. He urged the Council to vote no. Mr. Wayne Curry, 1050 Burns Avenue, South Bend, Indiana, stated that the City of South Bend needs to expand the tax base and cut spending. He advised that the City of South Bend has created too many Tax Increment Finance Districts and until the State Legislature revises how the money that is collected in those districts can be used, it is costing the taxpayers that are not in those districts to pick up the slack. He noted that there needs to be new sources of revenue coming into the City. He noted that the 2% circuit breaker was put into place to stop the spending of tax dollars by local government officials. Mr. Curry noted that the City of South Bend has one of the highest debt and debt service in the state and that is why South Bend is being hit so hard. He reiterated what one of the early speakers mentioned that the city spends way too much on consultant fees; however, spend the money and do an efficiency study. He noted that it would show that there are way too many employees and that jobs could be consolidated and work can be done more efficiently with fewer manpower. He urged the Council to vote against these bills. Mr. John Dorsch, 1202 E. Riding Mall, South Bend, Indiana, stated that he is speaking against these bills, however, police and fire protection should not be the first department to be cut if these bills do not pass. He urged the Council to look at outsourcing many of the services that the city provides. This would provide a valuable service to companies that are struggling in these hard economic times. He reiterated that police and fire should not be cut and to look elsewhere in the budget to make cuts. Ms. Charlotte Bridges, 222 S. Dundee, South Bend, Indiana, stated that she is speaking in opposition to these bills. She stated that she has been sitting in the audience listening to other people around here talking. She advised that everyone here tonight against these bills already feels like this thing is a done deal. They are talking like the Councilmember’s already have their minds made up and that no one is even paying attention to what important issues are being brought up by many concerned citizens here 13 SPECIAL MEETING DECEMBER 11, 2008 in attendance. She noted that tax bills haven’t even gone out, and she doesn’t even know for sure is she is going to see a reduction in her property tax. She urged the Council to postpone these bills tonight and wait and see if the justification out weighs the means. Mr. Ben Silver, 1835 Ridewood Circle, South Bend, Indiana, urged the Council to scrub the budget again. He advised that they need to look at other areas to cut, not police and fire. He stated that the underlying problem is the tax base in the City of South Bend is eroding. He urged the Council and the City Administration to try to bring in new businesses. Stop using tax abatement as the only tool to encourage new businesses to come into town. He stated that tax abatement is a good tool, but sometimes it out weighs the good. Mr. Silver used A.J. Wright as an example. When they were looking to build in South Bend, they promised 600 hundred new jobs to the City, with the possibility of expanding to 800. On a good day the highest count was 379! The City then fined the company because they did not employ the number of jobs they promised on their statement of benefits form when they filed for their tax abatement. He stated that there needs to be more enforcement and monitoring of these incentives if they are going to be handed out. Mr. Silver stated that the City needs to cut back on their spending and look toward the future of doing more with less. He urged the Council to vote against any new tax. Mr. Pat Myers, 1118 Lincoln Way East, South Bend, Indiana, advised that the biggest factor in these two bills is the trust that is being placed on the Council. He urged the Council to do the right thing and vote against these bills. Mr. Jeff Kepschull, 21050 Quiet Ridge Ct., South Bend, Indiana, advised that he is speaking in opposition of these bills. He advised that the Council works for the voters who elected them into office. He stated that a tax of this magnitude needs to be placed on a referendum and let the voters decide, just like the way that the Councilmember’s are put into office. He asked the Council to remember who elected them and vote responsibly and vote no. Mr. Pat Mangan, P. O. Box 552, Notre Dame, Indiana, advised that he is speaking in opposition to these bills. He advised that home ownership is one of the greatest experiences and eliminating the assessment system and property tax in Indiana will be one of the greatest accomplishments in the State’s history. He stated that the Mayor and Controller are using the police and fire departments in a manipulative way by stating that they will be the first departments to have their budgets cut. He urged the Council to look for other ways to cut spending. He noted that the City Administration needs to first take a look at their budgets, tighten their belts and do more with less. He urged the Council to vote against these bills. Mr. Jim English, 113 N. Ellsworth, South Bend, Indiana, advised that he is speaking in opposition of these bills tonight because he believes that the problem is with the large number of non-profit organization that overwhelm the City of South Bend. He stated that the City needs to cut some of the programs that it spends tax dollars on. Mr. English advised that the City does not need to be in the golf business and should cut Blackthorn loose. He urged the Council to take a good hard look at the 2009 and 2010 budgets and cut spending for College Football Hall of Fame, Project Future, and other areas that are not self supporting. Mr. Greg Burkowski, 20155 Roosevelt Road, South Bend, Indiana, advised that he is speaking in opposition to these bills. Mr. Burkowski advised that the city’s budget woes are self inflicted. He stated that the city’s tax base has eroded. He stated that the City is in dire financial straits due to poor management. He noted that the Hall of Fame has yet to turn a profit and keeps draining the City. He urged the Council to vote against any new tax. Ms. Kathie Bieshke, 24440 Adams Road, South Bend, Indiana, commending Council Member Karen White for stating her opinion that the Council and the Administration need to take a closer look at the budget and make the hard decisions that need to be made and cut services and consolidate jobs. She urged the Council to consider and weigh the 14 SPECIAL MEETING DECEMBER 11, 2008 facts that have been brought up by all the citizens here tonight who oppose these new taxes. Mr. Barry Baumbaugh, 12032 Timberline Trace, Granger, Indiana, advised that he is against any new taxes and recited a poem interjecting those feelings. Ms. Carole Kelly Havens, 12032 Timberline Trace, Granger, Indiana, advised that being here tonight speaking in opposition to these bills is just so wrong. She stated that everyone here should be at home baking cookies, writing Christmas Cards, wrapping gifts, decorating, and spending time with family and friends, not here at a City Council Meeting objecting to the most absurd idea of wanting new taxes. She stated that the economy is in such bad shape, people losing their jobs, their savings, their homes and the City of South Bend wants them to pay more taxes. She urged the Council to show the citizens of South Bend, Mishawaka, and St. Joseph County how to cut back, how to make ends meet. Ms. Havens got down on her knees begging the Council not to impose any new tax and take a long hard look at their budget, tighten their belts and do more with less. Mr. Jesse Davis, 210 Towle Avenue, Mishawka, Indiana, stated that he owns a small business. He has noticed that the City of South Bend is tearing down homes and buildings depleting the tax base and selling off the land for cheap. He advised that after that is done, then tax abatement if offered. He stated that it is time to cut the fat. He advised the Council to look at the budget again and start at the top. He stated that being a small business owner he knows that there are hard decisions that sometimes have to be made, but in the end it is the right thing to do. He urged the Council to vote against any new tax. Ms. Rita Kopala, 66559 Ivy Road, Lakeville, Indiana, stated that this is one of the best meetings that she has attended in a long, long time. She encouraged everyone present tonight to attend and participate in all the various County/City Government meetings. Ms. Kopala stated that they would be surprised at what goes on. She stated that she attends quite a few and has learned a lot over the years. In Rebuttal, Mayor Luecke reiterated the critical need for vital services. He thanked the Council for taking the first initiative. He stated that there were some very fine points raised this evening. Those speaking in opposition of the tax suggest that police and fire should be put first as a way of sacrificing them or using scare tactics. The Council has sat through budget hearings and knows what a large percent of the budget police and fire takes. The Council also knows that the spending plans for every department called for cuts and at a higher percentage in each department except in Police and Fire. Of course, Police and Fire get talked about because they are so important to the community, it is not a scare tactic, but as a sharing with the residents what the reality is of losing twenty-seven percent of the property tax revenue that is currently being received. There are many challenging decisions for the City of South Bend. He stated that as they look at potential shortfall of 18 million dollars in the 2010, the City will take numerous strategies to address that, first, is to look at more efficiency in government. Second is making cuts as necessary in government. Third is looking to grow the tax base, both jobs and assessed value in the Community. And finally, fourth is finding additional revenue streams. Mayor Luecke stated that he whole heartedly agree with everything that was said about petitioning the legislature to allow local governments different tools to supplement what is currently being held. He stated that he has for the past three years asked the State Legislature for additional tools without success. The tool that was given is the tool that is before the Council tonight. He asked the Council in the best interest of the Community to enact a 0.5% local income tax for general property tax relief in this County and a 0.25% local income tax for public safety. He stated that he would not be here tonight if he did not believe that this is essential for the City of South Bend to continue vital services to the community as they move forward. He asked the Council for their favorable consideration. 15 SPECIAL MEETING DECEMBER 11, 2008 Councilmember’s Dieter, Henry Davis, LaFountain, Puzzello, Varner, Oliver Davis, White, Rouse and Kirsits thanked everyone in attendance tonight. Councilmember Puzzello stated that this is a very tough issue. She stated that she was pursuing the issue of a Food and Beverage Tax. When taxation is necessary she feels that it should be spread around on who would be paying the tax, and visitors to the community would share in paying the tax. However, that tax would take a change in the state legislature and would not be available for the 2009 budget shortfall. She encourages everyone to submit suggestions on where the budget could be cut. Ms. Puzzello stated that she understands that these are very hard economic times and everyone needs to cut back, however, cutting back on police and fire protection is not one are that she is willing to cut. She again thanked everyone for their opinions this evening and stated that she will take all of them into consideration. Councilmember Henry Davis stated that this has been a stressful day. He stated that he discusses with other Councilmember’s especially with Councilmember’s LaFountain and Dieter who sit next to him. He stated that what’s he is doing if you see him talking at his seat to other Councilmember’s. Councilmember Davis stated that he never thought in a million years that he would have to be making such a difficult decision in his first year on the Council. He stated that he appreciates serving the citizens of South Bend for the growth of South Bend. He advised that he is so Pro-South Bend beyond anyone’s measurable belief. He stated that he loves his city, his hometown immensely. He stated that he began this duty as Councilmember to increase the City’s benefits for all citizens. He stated that he is well aware of what is being asked from the citizens tonight. They are asking for all residents to contribute more money into a pot to continue services that many are not fully receiving. He stated that his time on the Council has been fulfilling, he stated that he loves serving the fine people of this City and thanks God each and everyday for the strength and opportunity to do this job. When assessing the matter in how City services are distributed in the Second District, he is not happy with the way services are appropriated and certainly not the growth of the infrastructure. He stated that the Council has two issues to discuss before voting on this tax increase tonight. The first being does the Council maintain status quo or does the Council take this opportunity to institute change to better serve all citizens of the City of South Bend. He stated that the City is demolishing homes with no plan on what is going to go in their place. The streets need a new look, new investment within the corporate City limits that will promote retail development. They continue to pin on the residents of South Bend to keep the city solvent. The school system is not graduating enough of the children with basic academic skills. The city is toying with the idea of closing to recreational facilities in the second district which he represents. These facilities do not just represent recreational activities; they are anchors in the neighborhoods. This hits home for him. He questioned whether or not all avenues have been looked at. The need to identify the necessary places that need to sold to increase private investment. He questioned whether or not they have done everything in their power as elected officials to shield the taxpayer from having to pay an additional tax. He stated that he feels the City has fallen short. He stated that they can blame the State, but he feels that they can diversify the City’s economy. He stated that there is not enough balance because of the numerous non-taxpaying entities and have failed to attract businesses that are for profit, and there is no excuse in that. He stated that he cannot ask taxpayers to pay more and businesses to invest little. He stated that the City uses tax abatement as a tool. He stated that he has firmly voted against arbitrary and unnecessary tax abatements because that just puts the burden on the tax payers who are already cash strapped. He stated that he is fully aware that he represents the residents of nd the 2 District; he also represents the entire City of South Bend also. He state that the Council needs to have a detailed plan in front of them so that they can explain to the residents and taxpayers of South Bend that they have explored every options available to cut spending before enacting another tax increase. He stated that they have been told by the Administration that even with this tax increase that it might not be enough. Councilmember Davis advised that the city has been cash strapped long before the nd housing crisis or at least based upon the obvious neglect to the 2 District of South Bend. He stated that they have not done enough to project the needs of the City nor have they done adequate projections for the amount of revenue that would be received by this tax 16 SPECIAL MEETING DECEMBER 11, 2008 increase. He stated that HEA 1001 through everyone for a loop, but it is obvious that the City was already teetering on the edge. Thus, there are the two options, tax the residents, to maintain the limited status quo or use the situation to instigate change and to reform how the city works in servicing its citizens. He stated that the issue at hand is the housing crisis, what will it be five (5) years from now. Councilmember Henry Davis stated that maybe they should write Congress and ask for a bailout package. Councilmember Oliver Davis advised that he has the privilege of working on the negotiating team for the police and firefighters this past summer. He stated that the experience was very enlightening for him. He noted that the Police and Fire Departments do make up 75% of the City’s total operating budget and that figure is very real. He stated that they struggled to come to terms for a one (1) year contract for both police and fire and had opened his eyes up to issues that he never saw before. He stated that he finally understands why when cuts have to be made, it is the police and fire departments that need to be cut first, mainly because they make up the largest part of the budget, not because anyone is against the police department or fire department, it is just when you have a budget that consumes over half of the entire budget, it is the first place you look at. He stated that cutting the police & fire budgets is not a scare tactic or a threat as many th may want to suggest. He stated that he represents the 6 District, and lives near Rum Village Park. He stated that the park brings a wonderful quality of life for his daughter and him. He advised that they walk and ride their bicycles in the park and enjoy doing this very much. Councilmember Davis stated that the Park Department is the next largest department for the City. He stated that Police, Fire and Parks are very important to him and finds it very difficult to have to look at those departments to make cuts first. He stated that the State Legislature has put local governments in a very difficult position. He stated that he would support the substitute bill at the lower rate. Councilmember Varner stated that the Council has been discussing this issue for the past 12 months. He stated that he has been taking notes and all kinds of thoughts have crossed him mind. He stated that the primary thought is when do you enact a tax and why. He stated that he is on the opposing side of the Mayor. Councilmember Varner stated that the only time a tax is enacted is when there is absolutely no other choice. He stated that in 2009 there are other choices. He stated looking down the road in 2010 is different, and there are already option taxes in place. He stated that when the option taxes were first put into place about fourteen (14) years ago, it was the police and fire departments that came before the Council and stated that the Council needed to enact the tax so that the departments could get adequate enough raises to keep and hire quality employees. He stated that there has to some way to lobby down state to be able to tap those TIF Districts and allow those revenues back into the general fund. Councilmember Varner stated that the Umbaugh Report noted that there is approximately 15 to 20 million dollars in there growing and get spent by the Redevelopment Commission without ever coming before the Council for their approval. At some point and time, it those TIF dollars continue to grow without restraint and doesn’t share those resources with the general public those residents that don’t live in a TIF District will be paying the entire tax. He stated that he believes in his opinion that everyone gave their best effort at budget time, but there were no real cuts made, no action plan devised, and now we are at this point, asking the taxpayers to give more by enacting additional option taxes. He stated that he would much rather come back to this issue after the cuts have been made and to actually see what the shortfall is going to be, then enact a tax to support the shortfall not to enact a tax to support the majority of it. He stated that he believes that is being a fiscally responsible Councilmember. He stated that he believes that once a tax is enacted it is not ever going to be reduced or eliminated. He likened it to the 2% mandatory temporary State Sales Tax thirty-five (35) years ago is now 7% which was supposed to be considered to reduce any new tax locally. He stated that the position that the State has left local government is truly a difficult place to be, but the Council needs to look long and hard at cutting the budget before expecting the residents and taxpayers to pay more. He stated that the Council did not do their due diligence regarding this matter. Councilmember White again thanked everyone for attending this evening’s Council Meeting. She stated that she appreciates both side of the issue, however, when the comments become personal, people lose sight of what is important. She stated that this 17 SPECIAL MEETING DECEMBER 11, 2008 issue with HEA 1001 did not just happen overnight. She advised that the Council as a whole was fully aware of the consequences. She stated that the Council held numerous meetings, even on weekends to start the discussion in terms of education not only the Council but the public to educate both side on the issues that face the City. She stated that she did not want anyone here tonight to leave with the feeling that they were blind sighted and did not have ample opportunity to discuss this issue at hand. She stated that she believes that it is up to the Council to ask the really tough questions and to prioritize what those funding priorities should be and to advise the administration what those directives are. She stated that as the Council looks further into those budget shortfalls; she would like to go on record that she will begin to look at TIF Districts, the Redevelopment Commission’s authority on spending money without Council approval. Councilmember White encourage all present tonight to attend the budget hearings that will being very shortly and bring ideas on where and how the budget can be cut. She stated those cuts will be very difficult and may have to be made in City Services. She noted that not everyone is going to be happy, people will not be happy when their street is not plowed, or that pothole is not repair timely. She stated that people will not be happy because the city will not be able to continue to provide the level of service that everyone st here expects to receive. She stated residents expect that a 21 Century City should be st providing 21 Century services. She reiterated that transparency is a key factor when this Council comes together to discuss the budget. She encouraged the residents and taxpayers to attend those budget meetings to help make those tough decisions. Councilmember Kirsits stated that this is a very passionate issue for both sides. He stated that he appreciates all the comments, some right on target others were very off base and those kinds of comments do absolutely no good when it comes to an issue of this magnitude. He stated that he does not have his mind made up on an issue before the public hearing despite what was said tonight by some. He stated that the State Legislature has put local governments in a very tough position. He stated that he is fully aware of all the non-profit organizations that happen to be located in South Bend. They cannot control those types of issues at the local level. He stated that maybe it is time that non-profits start paying their fair share for services. He encouraged the Council to lobby the State Legislators to allow local governments Hometown Rule and let the various local governments to make decisions that affect their communities. He stated that he will be supporting the bills tonight. Councilmember LaFountain advised that he is not originally from here. He has only lived in South Bend for approximately 20 years. He stated that he and his wife chose to live in South Bend because they love South Bend and all it has to offer. He did not join the Council to get re-elected; he joined because he knew that tough decisions were going to have to be made because he stated that he knew he could make them. He stated that looking at what was presented here tonight and what the Mayor originally wanted by enacted the 1.25% tax, he stated that he could not support that amount. Because the Mayor did make a compromise and went to a lower percentage, he appreciate that gesture given these hard economic times. He stated that because he loves South Bend so much he wants to see everything preserved. He stated that he doesn’t want to cut the park budget and certainly does not want to lose any of the guys that protect him. He stated that he served on the City Negotiating Team this past summer. He stated that they made a promise to make sure that those departments would keep their staffing numbers. In order to do that, this public safety tax needs to be implemented. He stated that the City also needs more funding just to keep treading water. Down state is not helping local governments very much right now. Quite honestly he said it is quite disturbing that the State is telling the local governments to squeeze their citizens as much as they can before they will allow the local governments to try to go after outside the county. If that doesn’t upset everyone here tonight, he stated that he is not sure what will. He stated that he will be supporting the Mayor’s compromise and think that it is a good compromise, and with all due respect to waiting until all the facts are in is not very good way to do business. Because what happens is there is a shortfall and then have to scramble in hope that things can be put in place, so that the City can get money before everything falls out of place. 18 SPECIAL MEETING DECEMBER 11, 2008 Councilmember Dieter thanked everyone for expressing their thoughts and concerns on this very difficult decision. He thanked the County Council in advance for stepping up to the plate and will hold their meeting next week. He thanked Mayor Luecke for taking the leadership role and compromising the percentage. He stated that the State surely is to blame; however, the problem is here and needs to be dealt with. He did agree with exploring the options with the revenue in the TIF Districts and lobbying the State Legislature for changing the law on how that money can be used. He stated that South Bend has a great deal of non-profit agency located with the corporate city limits that do not contribute to the tax base. The greatest concern is the abandoned houses that plague the City of South Bend. People have left those homes and now the City if faced with the challenge and financial responsibility of removing them. All these factors compounded with the property tax bills going out late, it the Holiday Season, end of the year expenses, it is just a lot to deal with at one time. He stated that he believes there are other options out there that need to be pursued so that the share of tax can be spread to other people and not just the residents of the City of South Bend and St. Joseph County. He stated no matter what the outcome tonight, he pledge to work with the City Administration to continue to look at the budget and make the necessary decisions that are in the best interest of all citizens. Councilmember Dieter made a motion to amend Bill No. 08-107, from 0.5% to 0.25%. Councilmember Varner seconded the motion. The motion was defeated by a roll call vote of seven (7) nays and two (2) ayes (Councilmember’s Dieter, Varner) Councilmember Kirsits made a motion to adopt Substitute Bill No. 08-107. Councilmember Oliver Davis seconded the motion which carried and the Resolution was adopted by a roll call vote of six (6) ayes and three (3) nays (Councilmember’s Henry Davis, Varner, Dieter) Councilmember Ann Puzzello made a motion to adopt Bill No. 08-108. Councilmember Oliver Davis seconded the motion which carried and the Resolution was adopted by a roll call vote of seven (7) ayes and two (2) nays (Councilmember’s Henry Davis, Varner) ADJOURNMENT There being no further business to come before the President Timothy Rouse adjourned the meeting at 10:45 p.m. ATTEST: ATTEST: ____________________________ ____________________________ John Voorde, City Clerk Timothy Rouse, President 19