Star Downplays Tax Increase Proposal

A proposed increase in the Marion Co. Local Option Income Tax, which was first reported by Abdul Hakim Shabazz over the weekend, was formally introduced in the city-county council last night. In today's Star, however, you had to search pretty hard to find this small story by Brendan O'Shaughnessy:

Also Monday, the City-County Council introduced a proposal to increase the county option income tax.

Proposal 264 did not include figures indicating how much the tax might go up. The council must wait for the state Department of Local Government Finance to provide certain tax rate information before it can plug numbers into the placeholder proposal.

Council President Monroe Gray delayed the next meeting, scheduled for July 9, until July 23 so that information would be available for consideration. The state law authorizing up to a 0.5 percent increase for public safety needs requires the proposal be passed by Aug. 1.

Vernon Brown, a Democrat sponsoring the proposal on behalf of Mayor Bart Peterson, said raising taxes is not a popular choice, especially in an election year. However, he said, it's the only option to adequately fund necessary public safety improvements.

The Star story doesn't mention how much of a dollar increase the proposed tax rate hike equates to. Shabazz reports it's an $85 million tax increase; however, when factoring in other local option income tax increases already scheduled to take effect, it equates to almost $170 million. Altogther, the COLIT tax rate will increase a full percentage rate to accommodate the tax and spend policies of Mayor Peterson (D) and his Democratic-controlled council.

Meanwhile, you have a front-page story in the Star today entitled "You ain't safe nowhere," discussing a spate of attacks on the elderly in the Butler-Tarkington neighborhood on the city's northside. Remember, a cornerstone of the Peterson Plan eight years ago when Mayor Peterson first ran for office was getting more police officers on the street and cutting the city's crime rate--a task at which he has failed miserably. He hasn't failed, however, at putting over a billion dollars of taxpayer funds into the private investments of some of the state's most wealthy citizens. Note that the Simons, the Irsays and the Dean Whites all live outside Marion County and won't be affected by Peterson's latest proposed tax increases.

UPDATE: I would be remiss if not to point out, as I've been reminded, that Brendan O'Shaughnessy had a story in the Star on May 5, discussing the possibility of an increase in the COLIT. The Peterson administration and others in the media are questioning the $170 million figure thrown out today by Shabazz. "The $170 million number is pure speculation with no basis in reality," according to one media source. "The Mayor's office has told me I have my facts wrong so I've invited them to come on the show tomorrow and tell me why," Shabazz writes today. "Deputy Mayor Steve Campbell will join us from 8:10 to 8:30 tomorrow on WXNT," he adds. O'Shaughnessy's May 5 story in the Star read:

Marion County residents may have to pay nearly double the amount of county income tax starting in October to cover Mayor Bart Peterson's spending plans.

If the tax increase is approved, it would mean a Marion County resident earning $50,000 in annual taxable income would pay $375 more a year for the tax starting in October. The tax would jump from $450 per year to $825.

It is not clear how the City-County Council will react to Peterson's plan to increase the tax to pay for the $85 million needed for the budget deficit and crime fighting measures. He can increase the tax rate, now 0.9 percent, to a maximum of 1.65 percent.

The General Assembly gave Marion County and other counties authority to raise income taxes to keep property taxes down. Another goal was to give local government new revenue options. The bill lets Marion County raise the tax 0.5 percent, but Peterson has said he's not certain whether he will ask for the full amount this summer when the City-County Council plans the 2008 budget. He said other legislative action, budget underspending or unexpected revenue could reduce the amount needed from the county income tax.

"It's clear it will be an income tax increase," Peterson said. "We think the legislature gave us the ability to plug our budget, though we might not need to go to the limit if we find other alternatives."

Peterson said legislators' failure to merge township fire departments with the Indianapolis Fire Department means the city lost out on a potential savings of $15 million. He said residents could have been spared a tenth of a percent increase in income taxes if the measure had passed.

The city's tentative contracts with the Fire and Police departments were contingent on the fire department merger bill passing. The projected savings were supposed to provide the millions necessary for raises. Peterson said he believes new income taxes will produce enough money to pay for the pay hikes.

Gaining authority to raise income taxes was absolutely necessary to pay for public safety costs, he said.

"There was no plan B," Peterson said. "It was life or death. You can't just shut down public safety."

Phil Borst, the City-County Council's Republican minority leader, said he doesn't know how a proposal to increase income taxes will fare in the council. He said he could not say how he stands on the proposal until he learns more about it.

"It's becoming the same as the property tax," Borst said. "The income tax will be our next crisis. It's doubled and then some in the past few years."

The county income tax was 0.7 percent until 2005, when the council voted to raise it 0.3 percent over three years, ending this July, to pay for improvements in the criminal justice system. The goal, ending early releases from a crowded jail, has been achieved -- there hasn't been an early release since August.

Additional county income tax was approved for other expenses, including a contingency fund, pushing the tax to 1.15 percent.

The new spending will provide $35 million per year to pay off police and fire pensions, $35 million to pay for already implemented improvements in the criminal justice system and $15 million for new anti-crime initiatives.