MISHAWAKA — It's the new theme for city government in Mishawaka, and the focus of Mayor Jeff Rea's state of the city address: battle "financial uncertainty" by increasing efficiency.
Mayor Rea (R) delivered his 6th state of the city address in front of a standing room only crowd at Mishawaka City Hall Monday night. He said the city must change the way it operates to provide new services at lower costs.
Like many other local cities, Mishawaka has been hit by loss of revenue due to Indiana's new property tax caps passed in 2008 under House Enrolled Act 1001.
Under HEA 1001, property taxes are now capped at 1.5% of a home's assessed value for homeowners, 2.5% for rental properties, and 3.5% for commercial properties.
In 2010, those levels drop to 1%,2% and 3% respectively.
On Monday night, Mayor Rea said it all means that planning for the future is now more important than ever.
Still, the Mayor took some time in the speech to laud the city's 2008 list of accomplishments, including a record breaking year of construction that saw more than $316 million in new investment from projects like the new St. Joseph Regional Medical Center on Douglas Road, the new cable stay bridge over the St. Joseph River and a new underpass on Main Street just north of the downtown corridor.
It marked the fifth straight year of record growth for the Princess City, Rea said.
Violent crime is down across the board, Rea said, though burglaries and robberies were up sharply.
Mishawaka was also able to avoid forced layoffs to city employees, accomplishing a force reduction of 13 people solely through attrition.
Even so, Rea cautioned change is in the air.
"There's great uncertainty ahead," he said. "We don't know what kind of revenue is going to be available to us. We know that the cost of delivering services is going up, so that presents great challenges to us."
Still, they are challenges Mayor Rea says the city is prepared for.
He estimates Mishawaka will lose up to $1.5 million in property tax funding over the next two years due to the new caps. Health insurance costs for city employees are also expected to rise by up to $2 million during that time span.
Together, the two make up about 7% of the city's total budget.
Rea says they also add up to one simple thing.
"We have to be in a mode of continuous improvement. We have to change the way we do things. We've made comprehensive, sweeping changes in the city in the last 5 years. We will make the most comprehensive changes we've ever made over the next 10-12 months," Rea told Common Council members.
It's the same theme South Bend Mayor Steve Luecke (D) used in his state of the city address last week.
But, South Bend faces estimated property tax losses of up to $18 million by 2010. Mayor Luecke estimated that could mean cuts of up to 25%.
"If that 25% is the final number we end up with, every department will feel the impact," Luecke said last week.
It had some at Mishawaka's state of the city address wondering why such a large disparity in revenue loss exists between the two neighboring cities.
"Good planning," said Mishawaka Common Council President Ron Banicki (D-6th District) with a shrug. "That's really helped us to get where we're at. I think Mishawaka has done a good job, and that's because of things that were set in place years ago, making sure we didn't spend more than we had."
But, experts say there's likely more to the story.
"It's really apples and oranges," said Saint Mary's College Political Science Professor Dr. Patrick Pierce. "You're really dealing with such fundamentally different situations that South Bend is in and Mishawaka is in. Some cities and governmental units are going to have to offer more services, and Mishawaka just isn't in the same league as South Bend."
"The economic downturn is simply going to hit South Bend and St. Joseph County harder," he added.
Mayor Rea's prepared remarks also highlighted another difference:
"Mishawaka has positioned itself to weather the fiscal storm and continue to provide outstanding city services. Unlike other local governments, I don't believe that we need to re-invent government. However, I do believe that these challenges will mandate continued changes and cuts," he wrote.
Mayor Luecke titled his state of the city address: "Remaking South Bend."
Other Mishawaka Common Council members agreed with Rea's assessment.
"We do not necessarily need to re-invent ourself," said Common Council member Gregg Hixenbaugh (D-at large). "That said, we should always be willing to take a step back and review where we are as a community, and not be closed to new ideas."
"We know we have to be able to look our citizens in the eyes and say we've done absolutely everything we can to control our cost. And that's what we'll be doing over the next few months," agreed Rea.
Still, there is one thing that Rea doesn't agree on.
Last week, Mayor Luecke reiterated his support for an increase in St. Joseph County's local option income tax rate to offset losses from the property tax caps.
Rea says Mishawaka still isn't sold.
"I'm not sure we're going to need it," he said. "Before we seek any new revenue opportunities, we have to exhaust everything else first."
Still, both cities agree that increased efficiency is the biggest short term goal.
For Rea, that includes everything from billing for utilities electronically and adding additional internet based government services to attempting to pool insurance costs with the State of Indiana.
It all sounds good to city leaders, but they're waiting to see how it will all come together.
"The devil will be in the details," said Hixenbaugh. "I am confident that we'll have the opportunity to have those type of discussions moving forward."
Click the following link to read the complete text of Mayor Jeff Rea's 2009 State of the City address. (.pdf)
http://mishawakacity.com/mishawakastateofcity2009.pdf
