FORT WAYNE, Ind. (www.nbc33.com) - Fort Wayne City Council approved a plan Tuesday night that will increase local option income to to fill a budget shortfall.
In a 6-2 vote, Council raised the local income option tax from 1 percent to 1.35 percent. It is the first income tax increase since 1999. Councilmen Russ Jehl, R-2nd District, and Mitch Harper, R-4th District, voted against the bill. Councilman Marty Bender, R-At-Large, was absent from the Council meeting.
As part of the plan, 0.1 percent of new income tax revenue will go towards public safety. The remaining 0.25 percent will be used to offset property tax revenue losses stemming from state-level caps. Property taxes are not affected in this resolution.
"We've taken nine months to a year examining every possible detail of city finances," Councilman John Crawford, R-At-Large, says. "We understood it better than council and the administration ever have. This is the absolute minimum tax increase necessary to meet the absolute necessary responsibilities streets, police, fire, parks, all the things that the citizens have told us that they want us to continue."
Mayor Tom Henry, D-Fort Wayne, concerned over millions of dollars lost by property tax caps proposed a 0.5 percent income tax. A compromise between the administration and Crawford forged an amended proposal that saw the approved 0.35 percent increase.
"We've made a commitment to invest in Fort Wayne," Henry said in a statement following the vote. "I want to commend Council members for demonstrating leadership by passing a financial plan for the future that will sustain our community and position us for success."
Jehl and Harper proposed a separate plan that would not have raised income taxes, but would have used revenue from other funds to offset the shortfall.
"How do you expect the administration now to use pay-as-you-go when they have not over successive administrations," Harper says. "There's a temptation to use that for future bonding. The prudent thing would be to say let's keep the revenue at an adequate level to take care of our needs, but not produce something that is a temptation for use of future bonding."
The income tax increase will not take effect until Oct. 1.
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