Bloomington Mayor John Hamilton soon will propose a new local income tax (LIT) rate for all county residents. The plan, which will go to city council next week, is part of a new revenue proposal, which also includes two $5 million bonds for the city.
Hamilton has yet to say exactly how much he is proposing to raise the LIT. However, his March 16 memo to city council outlined potential uses for both sources of revenue. These uses are only proposals and may change depending on council discussions over the next month.
“The Mayor is actively working with City Council and other stakeholders to finalize the list of priorities included in the memo,” said city communications director Andrew Krebbs in an email to WFIU News.
Important dates:
April 6- Mayor Hamilton will share his proposal with city council
April 13-Council will discuss revenue-related legislation during a committee meeting
April 20- Council will consider revenue legislation for second reading and final vote
Local Income Tax
Hamilton’s memo called for $17 million in additional annual revenue from the LIT hike. The proposed investments are divided into four categories:
$4.5 million in public safety, including $1.5 million to fund the new police union contract and $1.5 million in fire station upgrades and repairs
$6.3 million for climate change, including $2.1 for a Bloomington Transit East-West express line, $1.4 million for microtransit services, and $1.5 million for the Climate Action Plan
$3.6 million for equity and quality of life, including $2 million to improve housing access
$2.5 million for essential city services, including $1 million for city staff recruitment and retention
Screenshot of the proposed BT East-West express route. (Courtesy: City of Bloomington)
Hamilton said the proposed investments reflect community feedback, including city council’s request to allocate more funding to police officers and the adopted Climate Action Plan.
“The climate emergency has not abated during the past two years and looms ever larger in our lives,” Hamilton said.
In his memo, Hamilton said Bloomington is ranked 19th out of Indiana’s 20 largest cities for combined property and local income taxes, excluding Indianapolis and Marion County.
Additionally, Monroe County’s income tax rate is lower than all seven neighboring counties.
Hamilton added that Bloomington has room for growth because its annual per capita spending from general funds ranks 14th out of Indiana’s 20 largest cities, excluding Indianapolis. Currently, the city spends about $624 per capita annually, about 16 percent below the median of $742.
Currently, Monroe County’s income tax rate is 1.345 percent of adjusted gross income. According to the U.S. Census Bureau, Bloomington’s median household income is $41,354. This means the average city household pays about $556 in local income tax each year. If the LIT were increased to 2 percent, the average household would pay about $271 in additional taxes.
To raise the local income tax, Hamilton needs a majority of votes allotted to the fiscal bodies in Monroe County, including Bloomington, Ellettsville and Stinesville councils, as well as county council. However, the demographic makeup of the LIT council gives Bloomington City Council a majority of the votes.
Hamilton previously proposed a 0.5 percent LIT increase in January 2020, but the pandemic delayed the process. He tried again in fall 2020 with a lower 0.25 percent, but failed to gain city council support.
However, Hamilton said now is an appropriate time to raise taxes because federal CARES Act and American Rescue Plan Act funds helped the community during the pandemic, but those are only one-time investments.
Bloomington Mayor John Hamilton during the 2022 State of the City address Feb. 24. (Holden Abshier, WFIU/WTIU News)
General Obligation Bonds
The memo also included potential uses for two general obligation bonds. These bonds would be issued by the parks and public works departments and would be used for one-time infrastructure improvements.
The proposed parks bond would not exceed $5.8 million and includes the following potential projects:
$25,000 to replace gas-powered equipment with electric equipment
$200,000 to replace a segment of missing sidewalk on South Rogers Street by Switchyard Park
Between $2.4 and $2.9 million for protected bike lanes on Covenanter Drive from College Mall Road to Clarizz Boulevard
Between $800,000 and $960,000 to design a multiuse path on North Dunn Street from the S.R. 45/46 bypass to Old S.R. 37
$375,000 for Griffy Loop Trail dam crossing
$1.5 million for protected bike lanes on West Second Street from Walker Street to the B-Line trail
The board of park commissioners voted to initially support the bond Wednesday. The parks department will present the bond to city council April 13 and the board will hold a public hearing and final vote April 26.
The proposed public works bond would be for the same amount and includes the following potential projects:
Between $2.5 and $5 million for a multiuse path on High Street from Arden Drive to Third Street
Between $1.5 and $2 million to convert all streetlights to LED lights
Between $500,000 and $1 million for construction of downtown ADA-compliant curb ramps
Between $300,000 and $1 million for sidewalk improvement projects
Between $1 and $3 million for energy efficiency retrofiting for all city buildings
Between $1.2 and $2.2 million to continue upgrading city vehicles to hybrid and electric options
Several projects in the bonds could recieve additional federal funding or grants.
