County, city leaders consider local option income tax

by John Paul (jpaul@wsbt.com)

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leuke at the South Bend budget meeting

In this July 2008 file photo, South Bend Mayor Stephen J. Luecke speaks to the common council about the upcoming budget meetings. (Tribune Photo/ SANTIAGO FLORES)

By Beth Boehne

Story Created: Sep 23, 2008 at 5:16 PM EST

Story Updated: Sep 25, 2008 at 10:52 PM EST

SOUTH BEND — As cities and the county work to finalize their 2009 budgets, we've heard a lot of talk about the local option income tax as a way to generate funds after the state's property tax reform.

Leaders say the issue hasn't received a lot of attention because each department is busy working on its own budget. But South Bend leaders confirm the tax is an option to avoid service cuts.

The state is actually pushing local governments to consider raising this tax. The option was part of the overall package of capping property taxes. It allows local government to raise the county's income tax by 1 percent over a two-year period.

That would also allow them to implement a public safety tax to fund police and fire departments. These are options local leaders are just starting to consider.

While leaders throughout St. Joseph County are putting the finishing touches on their 2009 budget, each department has gone through their budget with a fine-tooth comb.

One thing all parties agree on is they’re doing more with less.

“It's naive though for people to think it has been business as usual. All of us have cut things substantially,” Mishawaka Mayor Jeff Rea told WSBT News.

“I think when all three bodies have their own consensus of where they are with their budget requests, then we’ll move forward to the next step," said South Bend's Common Council President Tim Rouse.

While they are moving quickly to finalize those numbers, they're taking their time before discussing the local option income tax further.

“We have not seen the impact of what the state legislature did last year with House Bill 10-01,” said Mishawaka's Council member David Wood. “None of our citizens have seen any tax bills so we really don't know the impact of that until those tax bills go out.”

The tax would make up for funds lost from the state's property tax reform. Support from two out of the three councils is needed.

“If we were to pass any part of that option, we would have options to pass a 0.25 public safety replacement," said Rouse.

“That's why the community discussion has to happen,” Rea said.

Rouse says members are looking to complete the 2009 budget's third reading October 28. He believes it is unlikely we would hear an announcement about the tax before this date.

While all sides have yet to sit down collectively, at least one council member has reservations about supporting the tax, believing cities can't run to taxpayers every budget.

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