CHICAGO - New Indianapolis Mayor Greg Ballard asked Indiana lawmakers this week to take over the city's police and fire pension obligations to help blunt the expected loss of revenue from proposed property tax reform in the state.
In testimony on Monday before the House Ways and Means Committee, Ballard generally spoke in favor of the state's sweeping property tax reform proposal, which Gov. Mitch Daniels and lawmakers have named the top priority for the state.
The current proposal would cap homeowners' property tax bills at 1% of assessed value and enact a series of other local spending restrictions, including greater scrutiny on new bond issues. The proposal is expected to provide up to $1 billion in property tax relief by 2010 - some of which would be replaced with a 1% increase in the sales tax. On Monday the House committee was considering a resolution to enshrine the property caps into the state constitution.
"We [Indianapolis/Marion County] are the largest economic engine for the state and our city government must remain viable," Ballard told lawmakers.
"I would request the legislature provide local governments with the tools required to mitigate the effects of this bill. I would also ask for your help to look at absorbing public safety pensions, which would relieve large operating costs for many counties," he said. "I would feel much relieved if this could be done."
Ballard told lawmakers that the county's annual public safety pension payments come to roughly $27 million, rising and falling slightly over a 30-year period. The mayor also wants the state to take over an estimated $450 million pension liability for its pre-1977 police and fire funds. That liability may also be covered under a long-planned $460 million pension obligation bond issue that has been stalled since Ballard won the office last November. The city's post-1977 police and fire funds are fully funded.
Ballard estimated the city-county government would lose $40 million to $50 million annually under the new plan, though other state lawmakers suggested the losses would be closer to $100 million.
"[The state taking over] the pensions could go a long way toward that," said Ballard.
Some representatives lightly chastised the new mayor for his request.
"We can't even afford the bill we just passed, and you're asking for more," said Democratic Rep. Dennis Avery.
The House on Jan. 24 passed a massive bill that encompassed most of Daniels' reforms. The Senate is now considering the bill, which both chambers are hoping to pass by session's end on March 14.
"I'm not sure you understand what you mean when you say you're in favor of this; you're going to have to make severe cuts," said Democratic Rep. Winfield Moses. "If we assume [responsibility for] the pensions, it can't just be for Indianapolis, the other cities around the state would want some of that action."
Ballard, a Republican, defeated incumbent Bart Peterson last November in an upset that many political observers attributed to Peterson's decision to raise income taxes in the midst of a brewing statewide protest over rising property taxes. Ballard campaigned heavily against taxes - saying he favors total elimination of property taxes - as well as any new borrowing. q
