Plenty of room at the grown-ups table - Introduction

by Don Wheeler

This begins an intermittent series of discussions about the challenges faced by local governments - due to significant revenue loss. The hope is that we can discuss this situation calmly, and perhaps come up with some useful ideas to address a serious problem.

Let's face it, everywhere you turn Governor Daniels shows a clear strategy of enhancing State revenue in the short term, making himself look good, while creating challenges for the State in the longer term, and challenges to local governments almost immediately.

Leasing the toll road brought a windfall of cash - but the State lost all the future revenue from it for 75 years. The company who paid the fee wouldn't have done so unless it felt there was a tidy profit to be made. Which means that the citizens of Indiana could have enjoyed the benefits instead.

I noticed when I recently renewed my Driver's License that it is now a six year license, rather than a four year one. Naturally, the fee was increased. So the State got more money now, but will have longer to wait for my renewal fee. I could go on, but I think you get the idea.

Our starting point for this discussion is the anticipated 27% loss of revenue to the City of South Bend due to the passage of House Enrolled Act (HEA) 1001. This measure brought much needed property tax relief (making Daniels and the legislature look good), but it was not paid for. Increasing sales tax (arguably a more regressive tax than real estate taxes) by one percent sure doesn't cover it.

Much in the way the federal government passes unfunded mandates, burdening states, the State has passed on an unfunded mandate to local governmental units. Not to beat a dead horse, but think seriously what one's alternatives are when facing the loss of over one quarter of total income.

In fact, let's make it personal. Say you agreed to small pay cuts over the last few years to keep your position (despite increasing costs), but finally your company got into such trouble that they eliminate your job. Because of your tenure with the company you're able to bump the guy below you. But they guy below you was making a bit less than three quarters of your reduced salary. What would this scenario do to your family budget?

I must admit to some consternation with the reaction of many of my fellow citizens. Many advocate "tightening the belt", but scream when facilities and services they hold dear face resource reductions and/or elimination. I've noted some interesting strategies proposed, too. My favorite was from a writer who thought not spending money already spent would turn the trick. I guess he thinks we can unspend things. Others seem to think our Mayor is playing some sort of fiscal "Chicken" game with us. I normally don't get too bothered by this sort of nonsense, but this is a serious problem and we need serious people to deal with it.

I was a charter member of The Concord Coalition - a group founded by former Senator Warren Rudman and the late Senator Paul Tsongas. As most of you probably know, The Concord Coalition is dedicated to fiscal responsibility - advocating a federal balanced budget. What you may not know is that they also try to educate citizens about how hard that is to achieve. How many hard decisions have to be made to get to that point. You won't be surprised to learn that unfunded tax cuts don't fit in well with their suggested strategies.

Let's pause at this point. You have a homework assignment. Review (via the links below) the City's outline of a strategy to address the situation. You'll need that for the next session.

http://www.ci.south-bend.in.us/news_detail_T13_R373.asp

http://www.ci.south-bend.in.us/news_detail_T13_R378.asp

http://www.southbendin.gov/news_detail_T13_R375.asp