Ballard Won't Repeal COIT Increase Unless He Gets Consolidation and Kernan-Shepard Reforms

In his first state of the city address, Mayor Ballard said it remained his goal to repeal last year's 65% increase in the county option income tax; however, he says further consolidation and implementing Kernan-Shepard reforms are necessary to make that possible. Quoting from his speech tonight, Ballard said:

Last year, the citizens of Marion County were hit with a 65% income tax increase, and although we have returned much of that increase in the form of additional property tax relief, it is my goal that the high-performance government team, coupled with the full implementation of the Kernan-Shepard Commission by our state legislature will produce enough savings for a repeal of the rest of that tax.

Ballard asserts in his speech that Marion County taxpayers are getting back most of the additional $90 million they are paying annually in the form of the COIT increase in the form of property tax relief. But hold on. All Marion County taxpayers started paying an additional one percentage point in sales taxes to help finance Gov. Daniels' property tax relief plan. The City, under that plan, has been relieved of nearly $1 billion in pension debt, or about $30 million a year which had been allocated by the Peterson administration out of the COIT revenues to pay debt service on the pension debt. Other expenses picked up by the state are saving the City at least $65 million a year.

What about the $70 million Ballard said he would find in savings in the current budget? Well, that number has shrunk a bit. Ballard explains the progress on that front:

We have already made significant progress in reducing our spending. Earlier this year, I instructed all city and county agencies to look at their planned spending for 2008 and see if they could hold their spending to 95% of their approved budget. Many agencies identified ways to constrain spending without adversely impacting services. Through this simple process of reviewing our spending, we have identified nearly $9 million that will not be spent.

Nine million is far short of the $70 million dollar savings Ballard discussed during the campaign. Basically, Ballard is saying he won't achieve anywhere near that level of savings unless he gets more help from the legislature on consolidating taxing units within Marion County. Ballard discusses a savings of 15-20% his administration has found in the City's $3.5 billion, 20-year spending plan to bring waste water treatment into compliance with the federal Clean Water Act. "By using value engineering and other measures we will lower the cost by 15-20 percent and use those savings to reduce the planned sewer rate increases," Ballard said. It's a little too vague for me. We'll have to follow up on this one a little more closely.

It's interesting to note that nowhere in his speech does Ballard assert that last year's COIT increase can't be repealed as a certain mouthpiece has been spouting off a lot as of late. If you look at the statute under which the COIT increase was enacted, it reads: "The tax rate under this section may be imposed or rescinded at the same time and in the same manner that the county may impose or increase a tax rate under section 30 of this chapter." Section 30 has this provision: "Notwithstanding sections 12 and 12.5 of this chapter, a county income tax council may not decrease or rescind a tax rate imposed under this chapter." That language seems to support the mouthpiece's position, but new language added to that same section by HB 1001 seems to contradict that language. It reads: "A county income tax council must each year hold at least one (1) public meeting at which the county council discusses whether the tax rate under this section should be imposed or increased."

UPDATE: Here's how the Star's Brendan O'Shaughnessy leads with his story on Ballard's state of the city address:

Mayor Greg Ballard said his goal is to repeal a 65 percent income tax increase the county enacted last year, but he hinged that promise on state legislation to reduce layers of government.

Giving his first State of the City speech on his 100th day in office Wednesday, Ballard said a local efficiency panel and statewide government consolidation that would eliminate townships should produce "enough savings for a complete repeal" of the increase.

Democratic council leader Joanne Sanders reacted negatively to Ballard's speech. "I really didn't hear anything new this evening," Sanders said. "His first 100 days have been uninspiring, so I don't see how he could say he's setting a strong agenda." O'Shaughnessy also quotes Councilor Marily Pfisterer (R) as expressing skepticism about repealing last year's income tax increase. "I think it eventually could be done," she said.