Bloomington City Council delayed voting on the proposed 64 percent Monroe County local income tax hike for a second week in a row.
Councilmember Sue Sgambelluri was not at Wednesday’s meeting, and other members shied away from voting without all nine members present. Council will consider the matter again May 4.
Under the current proposal of a 2.2 percent LIT, Bloomington would gain an additional $18 million in annual revenue. This revenue would be divided into four categories:
Public safety- $4.5 million, including $1.5 million to fund the new police union contractand $2.5 million for police and fire facility repairs
Climate change- $6.5 million, including $4.15 million for Bloomington Transit
Equity and quality of life- $4 million, including $1 million to offset the impact of the LIT increase on low- or fixed-income households
City services- $3 million
Public Safety LIT
Council’s conversation focused on finding additional sources of revenue. Several members took a specific interest in the 0.25 percentage point increase in the ‘public safety’ LIT in 2016.
City controller Jeff Underwood said Bloomington generates about $3 million each year from the public safety LIT. Councilmember Dave Rollo referred to these as “discretionary funds,” and said they are worth researching.
Mayor John Hamilton said the county passed the public safety LIT increase six years ago to specifically commit money to capital upgrades, such as police and fire equipment. While these commitments are not legally binding, Hamilton suggested council not reappropriate the money.
Fire Chief Jason Moore agreed and said it is important to have funds for capital improvements.
“If we do spend-down reserves for these one-time projects, that’s going to go against what we’re trying to do,” he said.
The 2016 public safety LIT is the sum of the two green boxes. The current proposed 0.855 percentage point increase would go into the yellow box, thus pushing the entire LIT to 2.2 percent.
The current proposed tax increase falls under the ‘economic development’ LIT, which actually gives the city more latitude in spending. However, the city administration is still committed to investing $4.5 million into public safety each year from the new LIT fund.
Why not raise the public safety LIT again?
The tax hike would be even higher if Bloomington still wanted to invest $4.5 million per year through the 'public safety' LIT category.
Underwood said the overall LIT would require a 66 percent increase to generate the same amount using the public safety categories. The proposed 64 percent increase under the economic development category generates more money per tax dollar for Bloomington.
Community Redevelopment Economic Districts
Another topic of conversation were Bloomington’s two community redevelopment economic districts, or CREDs. These districts allow the city to benefit from increased taxes on new businesses. The funds are then used to spur economic development.
Underwood said the downtown CRED fund is worth $6 million. This fund expired last year, which means the money is legally available for reappropriation. The Thompson CRED District is worth $10 million and will expire June 30.
However, Hamilton urged council not to use these one-time funds for long-term annual investments such the police union contract.
Council Comments
As it stands, four council members support the proposed LIT increase:
Matt Flaherty
Kate Rosenbarger
Steve Volan
Isabel Piedmont-Smith.
“I would go the full amount and I expect my colleagues to be very specific in their justification for what they would cut and why they would cut it,” Volan said.
Three council members are either unsure or unsupportive of the current proposal:
Dave Rollo
Susan Sandberg
Ron Smith
Smith said council should take more time to focus the investments and work collaboratively with county colleagues. He also said he doesn’t like the administration attaching the police union contract to the LIT increase.
“I kind of feel like I’m being backed into corner as a city council member,” he said. “I’m not really that happy about it.”
Councilmember Jim Sims indicated support for an increase but said it is important to compromise between both ends.
Based on the demographic makeup of the LIT council, only eight Bloomington City Council members could implement the tax hike for all Monroe County residents. If fewer than eight city council members support the increase, the remaining financial bodies in the county will also get an opprtunity to vote on the increase.
