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The Journal Gazette

Friday, July 20, 2018 1:00 am

Tax removal plan decried

Critics assess expected losses; Arp defends latest push

DAVE GONG | The Journal Gazette


Projected annual Business Personal Property Tax losses:

• City of Fort Wayne: $17.7 million

• City of New Haven: $1.2 million

• Allen County government: $10.3 million

• Allen County Public Library: $3.9 million

• Fort Wayne Community Schools: $11.5 million

• Southwest Allen County Schools: $3.3 million

• East Allen County Schools: $3 million

• Northwest Allen County Schools: $902,863

• Fort Wayne-Allen County Airport Authority: $881,846

• Citilink: $824,331

Source: City of Fort Wayne

If a proposal by Fort Wayne City Councilman Jason Arp to eliminate Allen County's business personal property tax is approved, the Allen County Public Library stands to lose about $3.9 million in annual revenue. That's equal to the combined operating budget of almost every department at the main branch in downtown Fort Wayne, Library Director Greta Southard said Thursday.

That $3.9 million also represents most of what the library spends on new books each year, Southard said. It's also the annual cost to operate all the library branches throughout the county.

“How do we choose? Cut books, shut down the branches or close the main library,” Southard said. “This community has a long history of being incredibly supportive to our library system. I just can't believe that crippling the library's ability to serve the public is the outcome they're looking for out of this proposal.”

Southard was joined by Fort Wayne Mayor Tom Henry, New Haven City Councilman and mayoral candidate Steve McMichael and representatives from area school districts, the Fort Wayne-Allen County Airport Authority and Citlilink to oppose Arp's proposal. A public hearing is scheduled for the July 24 City Council meeting.

“I've met with Councilman Arp, and while I applaud his efforts to continue to make Allen County a great place to do business, the ordinance as written, in my opinion, could have the opposite effect,” McMichael said. “As a small business owner, I believe businesses thrive in an environment where funding for essential services like education and public safety are fully met.”

McMichael said New Haven stands to lose $1.2 million, or 21 percent of its annual property tax revenue, under Arp's proposal.

It's the second time Arp has proposed eliminating the tax. His first attempt was voted down in a 5-3 vote in September 2016. A second attempt to eliminate the tax was put on hold last month pending a review by the Indiana Department of Local Government Finance to make sure the ordinance meets form and legality requirements.

Thursday's news conference was the third time in the past two years that critics have spoken out against the proposal. Representatives from many of the same organizations attended a public hearing in September 2016 with the same concerns. Those concerns were reiterated for a second time at a June 8 public hearing.

In an interview Thursday afternoon, Arp said the criticisms leveled against his proposal come from “a lack of understanding by most of the folks in these governing units.”

“The $55 million would not be lost completely at all,” Arp said. “And it would take 10 to 15 years for any of the losses to fully phase in.”

Arp contends that losses would be closer to $37 million when everything has been fully implemented, but would be offset by about $17 million in existing tax abatements that would eventually end and another $17 million now directed toward Tax Increment Financing Districts throughout the city that will eventually be closed.

“It comes down to a choice. Are we going to continue to micromanage businesses, or do we say we have a tax policy that treats everybody the same and fairly?” Arp said.

Losing $11.5 million in business personal property taxes means losing about 20 percent of the tax revenue that FWCS brings in, said Kathy Friend, the school district's chief financial officer. That's in addition to the $6.5 million that FWCS loses due to state-mandated property tax caps, Friend added.

“This would be a significant blow to all of us. I can't imagine where I would cut $11 million from our budget,” Friend said.

“If it were transportation, it might be eliminated completely or we would have to borrow more money for capital projects or we would have to start making some reductions in the classroom.”

If approved, about 60 percent of Allen County homeowners – those who have not yet reached the 1 percent property tax cap – would also see increased property taxes as a result, Henry said.

“Fort Wayne and northeast Indiana are moving in the right direction with positive momentum and investments like never before,” Henry said. “We have become a destination city and region with quality-of-life amenities that provide an attractive place to live, work and play. This is so important to those who are considering calling Fort Wayne home. Now is not the time to change course and negatively impact public services and schools.”

Arp didn't deny that some of the burden could shift to homeowners, but he said there are mechanisms in place that City Council can use to try to offset some of that impact.

“We have the tools in hand and a plan to do it,” Arp said. “I've talked to the county auditor about that. He walked me through the machinations council would have to go through. We can make those adjustments as frequently as we need to.”

As next week's public hearing nears, Arp admitted that no matter what City Council decides, it will probably be a close vote. Arp described it as a “coin toss.”

“It's a new idea. This is a pretty bold step, admittedly,” Arp said. “But, people have had a couple of years to look at the actual impact and what it's actually doing instead of some of the rumors. It makes a lot of sense, it gets us out of the business of micromanaging people and it levels the playing field for all types of businesses.”