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The Journal Gazette

  • File: Finished Chevrolet trucks roll down the assembly line at the GM truck plant in southwest Allen County.

Wednesday, September 28, 2016 3:23 pm

Business tax stays, council decides

Dave Gong | The Journal Gazette

A proposal to eliminate business personal property taxes in Allen County failed Tuesday following testimony and discussion by members of the Fort Wayne City Council.

In a 5-3 vote, the council voted down the proposal brought by Councilman Jason Arp, R-4th. The decision came after several public hearings during which council heard testimony from numerous residents both in favor of and against eliminating the tax. A public hearing Tuesday drew six commenters – three in favor and three against – including a state representative and two former City Council members.

Speaking before the vote, Councilman John Crawford, R-at large, suggested postponing the issue for further discussion. Arp, however, chose to move forward with a vote, even when it became apparent his proposal did not have enough votes to pass.

"I think there are several members who would rather have closure on it this year," Arp said. "We can get on to the mayor’s budget and the other business we’re doing. If we feel like we need to bring it up again next year, we can."

Arp said while he was disappointed in the outcome, he was pleased by the discussion his proposal generated.

Councilman Glynn Hines, D-6th, said although he could not support the bill now, he would support revisiting it at a later time, provided there is also discussion about a living wage for workers.

Councilman Geoff Paddock, D-5th, was more adamant in his opposition to the overall notion of eliminating business personal property taxes, stating that he would not support a motion to revisit the issue in the future. Paddock said from what he’s heard, he does not think the proposal is something he would ever support.

"Frankly, in almost five years in office, I haven’t heard from any business owner in Fort Wayne who has really come forward other than some of the folks you’ve brought here for discussion," Paddock said. "But prior to that, I haven’t heard from anybody who really felt this is something that needed to be done."

Arp was joined in support of his proposal by Council President Russ Jehl, R-2nd, and Councilman Paul Ensley, R-1st.

"The business personal property tax disincentivizes capital investment in machinery and equipment that can put people to work," Ensley said. "The tax also puts our city at a competitive disadvantage compared to our neighboring states Ohio, Michigan and Illinois, all of which have taken steps to eliminate this tax."

Ensley said the current system of tax abatements creates an unfair system where the government, not the free market, chooses winners and losers.

Crawford, Hines and Paddock were joined in their opposition by Councilmen Michael Barranda, R-at large, and Tom Didier, R-3rd.

Barranda said while he likes the idea, without a more fair alternate revenue stream such as a local option sales tax, he couldn’t support Arp’s proposal. Didier described Arp’s plan as bold, but he said that based on the evidence he’s seen, the proposal would have the heaviest impact on residents in Districts 1, 2, 5 and 6.

In a statement late Tuesday, Mayor Tom Henry said was encouraged by council’s decision to vote down Arp’s proposal. If implemented, the move would have adversely affected infrastructure improvements, park enhancements, library services and school transportation.

"Now more than ever, it’s important for all of us to work together to continue to make Fort Wayne a great place to live, work, and play," Henry said. "We must remain committed to ensuring essential services continue to be provided to residents and children and protect homeowners from having to pay higher property taxes."

In other business, the City Council heard City Controller Len Poehler’s formal presentation of Fort Wayne’s 2017 budget. The city expects about $160.6 million in property and income tax revenue for 2017, coupled with $158.2 million in expenditures, which allows for a $2.4 million increase to the city’s cash reserves, Poehler told the council.

Although the 2017 impact of Indiana’s property tax caps won’t be clear until March or April, Poehler said estimates show the 1 percent cap will cause the city to lose about $20.5 million in property tax revenue, compared with $18.9 million lost in 2016.

Poehler’s presentation Tuesday kicked off council’s annual budget season. Starting Oct. 4, representatives of city departments will appear before the council to discuss their budgets and defend any spending increases that may have occurred since 2016. Council must pass the 2017 budget by Oct. 25.