Monroe County’s local income tax rate (LIT) will increase by 51 percent Oct. 1.
Bloomington City Council Wednesday unanimously approved a 0.69-point increase, raising the LIT to 2.035 percent. Bloomington Mayor John Hamilton originally proposed a 0.855-point increase, but council reduced this proposal after weeks of conversation.
According to the U.S. Census Bureau, Bloomington’s median household income is $41,354. These households pay about $556 in local income tax each year. Under the adopted increase, they would pay about $286 in additional taxes.
The approved increase will generate about $14.5 million in annual revenue for Bloomington:
Public safety- about $4 million, including $1.5 million to fund the new police union contract. This fund is down from $4.5 million.
Climate change preparedness - $5.4 million, including about $3.8 million for Bloomington Transit. This fund is down from $6.6 million.
Equity and quality of life for all- $2.3 million, down from $3.9 million.
Essential city services- $2.8 million, down from $3 million.
Almost every proposed investment line was reduced from Hamilton’s original request.
“Sometimes there are no solutions, there are only tradeoffs, and this is the classic example,” councilmember Sue Sgambelluri said. “All of us have given up something that we felt very strongly about in the process.”
Councilmembers Jim Sims and Isabel Piedmont-Smith both said they support investments in public safety, but it is time to analyze Bloomington’s policing practices.
“13.9 percent of the citations are written to Black residents,” Sims said. “Understand [the Black] population is under four percent. Where is the equity in that?”
Community Redevelopment Economic Districts
Last week, council determined the city’s two community redevelopment economic districts, or CREDs, are worth $16 million. CREDs allow the city to benefit from increased taxes on new businesses and then spur economic development in the district.
Originally, Hamilton opposed using these one-time funds for annual investments. However, he has since committed $3 million from the downtown CRED fund after conversations with councilmembers.
Councilmember Dave Rollo proposed postponing the entire vote for a third time. He said he wanted to further reduce the 0.69-point increase with CRED funds.
Councilmember Steve Volan, who represents business owners in the downtown CRED, said he already compromised with letting $3 million go outside the district.
“I’m not sure what [Rollo] thinks that I’m supposed to tell the businesses and the residents who live in the area immediately surrounding the courthouse,” Volan said.
After Rollo’s motion failed on a 3-6 vote, council passed the LIT increase by a 9-0 vote.
The LIT was one part of Hamilton’s ‘new revenue’ proposal, which also included two general obligations bonds. Council approved these bonds April 20.
