Council pushes back against possible tax change

Jan. 19—GOSHEN — Goshen City Council members Tuesday pushed back against a proposal currently being explored by the State Legislature involving a possible reduction or elimination of the state's business personal property tax.

That pushback came in the form of an approved resolution expressing the council's opposition to the passage of any legislation that would reduce or eliminate the state's business personal property tax without providing some way for impacted communities to make up the lost revenue resulting from such a change.

Helping to introduce the resolution Tuesday was Goshen Mayor Jeremy Stutsman, who noted that he first got the idea for the resolution during a recent conversation with fellow members of Accelerate Indiana Municipalities, also known as Aim, an advocacy group for Indiana municipalities with more than 460 cities and towns as members.

"I was on an AIM executive committee meeting this morning, and this was a discussion that came up this past fall, this past year, of the potential of the state looking at eliminating the business personal property tax," Stutsman said. "We, at that point, looked, and started calling around...to see, is that a bad effect for Goshen, or is that a good effect? And it turned out to be a not good effect. So, Aim this morning had asked if councils, possibly before February, would pass resolutions to give extra support to the cause for fighting against this change in the State Legislature."

Stutsman was quick to note that his goal with the resolution was not to say the council believes the business personal property tax is good, is bad, should be eliminated, shouldn't be eliminated, etc. Instead, he said his goal with the resolution was to speak specifically to the funding the city receives through the tax, and to express how important that funding is to the city.

"So, we're just saying, if they eliminate it, if they alter it, please do give us adequate replacement for the revenue," he said.

As an example of the potential impact should the tax be eliminated, Stutsman noted that in 2023, the estimated loss of revenue to the city would be roughly $3 million, or roughly 17% of the city's tax base.

"This is money that goes into our General Fund," Stutsman said. "So, right now, our two largest departments are the Goshen police and Goshen fire departments. Those two departments are 61% of our General Fund. So, they utilize the majority of the dollars there. If we were to lose another 17%, we're going to be faced with having to make some pretty drastic cuts to either services, personnel... I don't know what it would be. We'd have some hard decisions ahead of us."

Circling back to his morning Aim meeting, Stutsman noted that a majority of the mayors in Northern Indiana, and several from Southern Indiana, have expressed opposition to any changes to the tax that don't include some form of revenue replacement.

"Tax caps, we've lost quite a bit of money over the years from the tax caps, and it was said that there would be opportunities for replacement of that money, though that never came to fruition," Stutsman said. "So, the city of Goshen, I think our average tax cap loss is about $2.6 million a year. We've gotten used to that. We've adjusted. We deal with that. But to add another $3 million a year (in funding losses) would be pretty tough."

MULTIPLE DISCUSSIONS

When asked exactly what is being proposed when it comes to the tax, Stutsman noted that there are currently multiple discussions going on at the state level within the House, the Senate and the Governor's Office, some of which call for complete removal of the tax with no replacement, while others call for alternations that include avenues for funding replacement.

"So, there are a lot of conversations going on right now, and that's why we're trying to get support to help funnel to a specific conversation that would benefit the communities," Stutsman said. "We're not asking for extra taxes. We're not saying that this is the tax that makes the most sense. We're just saying to the state officials, 'This money is essential to what we do in our General Fund.'"

As for why the state is considering changing or eliminating the tax in the first place, council president Brett Weddell, R-At Large, noted that his understanding is that there is a belief among some within the State Legislature that reducing or eliminating the tax would make the state seem more business friendly.

"I would say the whole goal here — and this is not my opinion, but just what I've read and researched — is that they want to make Indiana look more business friendly, and they're saying this is one of the last things that would be a roadblock to bringing new companies and businesses to the state," Weddell said. "And I believe the surrounding states, other than Kentucky, do not have business personal property tax. So, that's what they're looking at.

"And to go along with what the mayor said, the House is pushing this pretty hard, though the Senate has some major reservations about this," he added. "So, there's definitely a disconnect between the two legislative divisions there at the state level. But if you don't get this out in front of people to voice an opinion, then it can be ignored until it's too late."

For his part, Weddell noted that as a local business owner, he would love to see the tax go away, though as a council member who has to deal with putting together budgets for the city, he can see the proposed change from a different perspective.

"You can't just pull 17% out of a budget without being able to explain how you're supposed to recoup that," Weddell said. "It would be one thing if we didn't have property tax caps, and we were flush with money, and we were wasting money left and right. ... But I think there's got to be some sort of an explanation as to what we're supposed to do."

Council member Megan Eichorn, D-District 4, agreed.

"It seems pretty irresponsible for them to even consider pushing this through with no option for a replacement," she said.

When asked his opinion on the possible change to the tax, Nick Kieffer, president of the Goshen Chamber of Commerce, noted that per his understanding, the state chamber is currently pushing for a gradual phase-out of the tax over maybe 10 years.

"The idea, then, from companies, is that they will invest more in more equipment, newer equipment, and that brings more dollars into your community as well," Kieffer said. "That was what came back to me."

While admitting that a phase-out of the tax would be less of a hit than a total elimination, Stutsman was quick to note that such a change would still be a financial hit to the city, if a slightly diffused one.

"That's what the chamber is supporting, is a phased-in approach, but we don't know what the Legislature will actually do," Stutsman said. "To the phased-in approach, I'll also state, that's easier on us in a sense, but they're still reducing our budget over a period of time, and we know our expenses are going to continue going up.

"So, I guess what we're passing is saying, 'Whatever you do, we just want you to replace,'" he added of the tax. "We're just saying, 'Whatever path you take, if you take money away, make sure you replace it for us somehow.'"

In the end, the council's members agreed, and the resolution was approved unanimously.

John Kline can be reached at john.kline@goshennews.com or 574-533-2151, ext. 240315. Follow John on Twitter @jkline_TGN.