The fiscally struggling city of Gary won a partial reprieve last week from state-imposed property tax caps, saving it from steep spending cuts and mass layoffs.
Under state rules adopted last year, property taxes are capped this year at 1.5 % of a home’s assessed value and 3.5 % for business properties, then next year at 1% and 3%, respectively.
Gary applied to the state’s Distressed Unit Appeals Board for a partial exemption — a move allowed for communities that stand to lose at least 5% of their property collections due to the caps. Gary projected that it would lose about half of its property tax collections — or $30 million — due to the new caps.
Gary and its sister agencies asked the board to raise the caps, and the board agreed to set the caps at 2% for homes and 4.55% for businesses. The action will save the city, the sanitary and storm water district, the local transit agency, and Gary/Chicago International Airport about $23.5 million. They had sought an aggregate $35 million of relief.
As part of the decision, Gary also must hire a private consultant to assist in fiscal management and cost-cutting.