Mayor Hamilton's New Revenue Remarks at April 6 Council Meeting

Bloomington is at a pivot point. You’ve all heard me describe pressing needs confronting us—several times. I’ll begin tonight with a different voice.

Mayor Tomi Allison made the following comments in a 1984 memo to City Council, which first established the Local Option Income Tax: “No government official wants to raise taxes which are unnecessary. But our first obligation is to provide basic services to our citizens. We must maintain the high quality of our police and fire services. We must maintain our streets, curbs, sidewalks, our equipment inventory, and our city facilities.” This 1984 income tax of 0.5% was raised another 0.5% five years later, in a 1989 Council action, bringing the basic LIT to 1.0% some 30 years ago, where it stayed until 2016 when the Local Income Tax Council raised a 0.25% Public Safety LIT to support critical investments in that sector. 

For three decades, together, we have provided those essential services. But in order to continue to do so, with several revenue sources declining, city services and facilities expanding, pressures on our employees, and our expenses increasing, we must have additional revenue to continue the excellence we have achieved and our residents expect.

In addition, beyond those essential services, I believe we owe current and future residents a similar obligation to invest in the future, to address challenges we see today and expect tomorrow. In particular, climate, and inclusion, to ensure we are addressing this changing planet and community responsibly and in ways that allow ALL our residents to thrive, future and present, and from whatever walk of life. 

That’s what tonight and the next two weeks of consideration are about—meeting basic needs and meeting fundamental obligations. Tonight I’ll briefly share where we are and our recent progress together over the past few years. Then we will review the process that has led us to these LIT and bond proposals. And the next steps. I’ll be happy to address questions during the presentation or thereafter, continuing the extensive dialogue we have engaged in over the past weeks and months. 

BACKGROUND

Just to set the table: Since 2016, together, we have made great progress in our City in providing excellent essential services and improving opportunities for our residents. 

Through your support of the Public Safety LIT in 2016, we have been able to equip and update our dispatch, police, and fire departments. Today, we are the only city in Indiana with a nationally accredited police force and a top-ranked fire department (ISO 1). With declining crime rates and an unprecedented fifth year in a row with zero fire fatalities. 

Through your support for affordable housing through the Housing Development Fund and zoning incentives, we have expanded our investments in affordable housing dramatically, resulting in 1,121 units of affordable housing over the past six years.

Through your support for the integrated Tax Increment Finance (TIF) district and the Redevelopment Commission, we have been able to create Switchyard Park, the Trades District, Hopewell, and support other key local infrastructure investments. Our jobs and wage rates are increasing. And we have seen unprecedented private investment and public infrastructure progress, over $3 billion in recent years.

Through your support for our Parks department, through the years and through the Bicentennial, we have been able to earn two national gold medals and expand a department to the envy of most cities our size. Including, of course, our largest new parks project ever, Switchyard Park.

Through your support for three affiliated entities, we have seen strong growth in impact and quality at each: incremental rate adjustments at our Utilities department have accelerated water main replacements and improved the size and quality of our wastewater plants, as well as protecting the quality of our water and Lake Monroe. 

Bloomington Transit has attracted substantial federal support to replace buses, buying 28 new buses over the past six years, compared with only 10 in the previous six years.

And the Bloomington Housing Authority has dramatically accelerated the upgrades of more than 200 public housing units, doing in about five years what was previously scheduled to take more than 25 years.

Through your support for our solar contract and expanding our investments in sustainability, we have begun implementing our first-ever Climate Action Plan. 

Overall, through the Council’s consistent support for fiscal stewardship throughout all the years, we have been able to advance our community in these many ways, responsibly and proactively. The most recent investments of Recover Forward are one more example, allowing us during a pandemic and great recession to keep investing in our nonprofits and our people, our employers, and our basic services to weather the storms and do our job to help people thrive.

LOOKING FORWARD

Today is another step in being those good stewards and meeting those challenges and opportunities. Our fiscal condition at present is good, but not without future revenue. 

Two years ago, in January 2020, we previewed critical investments needed and discussed a potential LIT. Then COVID hit. In 2021, we considered a LIT again amid a very challenging pandemic and recession. We dedicated local reserves and then federal money to Recover Forward. The federal support from the American Rescue Plan of last year was absolutely critical to sustain our good efforts. But as you know, that was just one-time support. Finally, during deliberations for the 2022 budget, as a Council, you indicated support for more public safety investments and more regular infrastructure investments, hence our development of the general obligation bonds and the LIT proposals we are discussing this evening.

Three weeks ago, our Administration shared a detailed outline of categories and programs for the LIT and the bonds. We specified four key areas for LIT investments. First, critical public safety investments, including staffing costs for both sworn and non-sworn personnel and major facility costs that are not covered in the ten-year PS-LIT capital plan.

Second, investments are needed to sustain other essential city services in the face of pressures on workforce costs, increasing operating and supply costs, growing general maintenance and replacement needs, as well as revenue reductions, in particular, affecting information technology needs, including cybersecurity. 

Third, investments to prepare for and mitigate climate change and its effects locally. This includes major local investments in improved transit services, which should also help leverage significant federal funding and direct investments to implement the ambitious city-wide Climate Action Plan.

And fourth, we outlined key LIT investments needed to assure Bloomington is a place of diversity, equity, and inclusion, where all can thrive, including significant investments in affordable housing – both ownership and rental – and help people access jobs and careers, including in trades, for example, as infrastructure spending in coming years increases. We also establish an economic equity fund to help low-income working residents and ongoing investments to support our vital arts and local food sectors. 

Regarding the bonds – we committed to bringing two 5 million dollar bonds for Council review focused on local infrastructure needs, consistent with relevant plans like our Comprehensive Plan, our Transportation Plan, including our High Priority Bike Network, our Parks Plan, and our Sustainability and Climate Action Plans. All relevant city departments scrubbed those plans and their own capacities to recommend a wide range of options, prioritized by the department and by ripeness in time, and evaluated according to power to leverage additional funding. That very large list was winnowed to two lists presented three weeks ago, offering Council the opportunity to review and re-prioritize as desired. 

All of this reflects our community at a pivot point. How will we come out of the pandemic and recession? As President Biden has urged, will we Build Back Better? Will we keep up Bloomington’s momentum? 

Since sharing that outline and all of those details, we have been listening. To you directly, in a public Council work session, and through many, many individual conversations. We have heard from organizations and from individual public members, including through an online poll active for weeks, with scores of people responding. And truly, since January 2020, countless conversations and communications.

And of course, it’s worth noting that the proposal reflects extensive public input incorporated in documents like the Climate Action Plan itself and three city-wide scientific surveys, for example, reflecting the public’s opinion that the City should seriously address affordable housing and our Comprehensive Plan and Transportation Plan both updated through long public processes in the past five years

Specifically, since mid-March, in reaction to our proposals, we heard feedback including:

• A 1% rate rise seems too much; lower if possible. Others strongly support a full 1%
• Some wanted even greater investment in basic city services beyond public safety
• Some wanted to reduce new investments in transit; others said they are essential and to increase
• Some wanted to eliminate or reduce jobs money; others view it as important
• Some wanted more, and some wanted less in the economic equity fund
• Several supported housing, some especially for homeownership
• Some wanted more Climate Action Plan direct investment. Some wanted less.
• Regarding Bond projects, some suggested adjusting priorities
• Some expressed interest in knowing what leverage the LIT investments offered
• Some wanted assurance of transparency in explicitly tracking LIT expenditures over time
• The public voted allocations among all four categories, within a 20-30% range for each one.

We took all that feedback in, and before we share revisions to the proposal, I want to remind the Council of our local capacity to invest. As we have discussed, our county LIT is low now. Lowest among the seven contiguous counties. Low statewide. We haven’t raised the basic LIT for 30 years. For perspective, if we do raise as proposed, we would land smack in the middle of our seven-county region, with three counties at a higher LIT rate and three at a lower rate. 

When you look at our overall tax rate – income and property – we are among the lowest of Indiana’s large cities. We also have modest spending levels when we compare ourselves to those cities. And our debt per capita is also very responsible. We have the capacity to support these critical investments.

THE PROPOSAL

So based on all the input regarding the two $5 million bonds, we have adjusted the priority lists in one way based on the majority views – in the Public Works G.O. bond, moving the High Street project to the top of that list. All other projects and priorities are retained, though I will state we are absolutely open to any and all future adjustments of priorities based on the Council’s directions.

Again based on feedback, and as always focusing on meeting needs regarding the LIT, we will advance for your review a proposal based on the March 17 outline, adjusted as follows:

• A 0.855% increase in the LIT – lower than the full 1% that some have advocated but sufficient to meet our community’s needs. This incorporates the Economic Development LIT proposal allocated by population.
• An increase in essential city services, of $500k allocated to personnel, and major expenses increases 
• An increase in Climate Action Plan investments of $250k
• An increase of $250k for the economic equity fund to help address any negative impacts

Also, based on your feedback, we will create a new fund into which the ED LIT revenue will go. It will be appropriated annually through the budget process and the program budgets, tracking through to each department and program.

These proposals will result in a local LIT rate of 2.2%, which will put us exactly in the middle of our immediate neighbor counties – three higher and three lower. Statewide it will put us in the second quartile of LIT rates. And by the way, it’s important to note that the state recently adopted a reduction in the state income tax, planning a 0.33% point reduction over the coming years. That would bring the effective rate we are adding down nearly to 0.5%. As to the bonds, our relative position of per capita debt will not budge – we remain right in the middle of comparable cities. 

A 0.855% increase in the LIT, as proposed here, is projected to generate approximately $18 million in new annual revenue for the City of Bloomington. Other governmental units would also receive additional projected annual revenue: specifically, the County would receive $11.4 million, Ellettsville $1.4 million, and the town of Stinesville about $44 thousand annually.

These new funds – from the bonds and the LIT – will change our community’s trajectory. They will allow us to address critical needs and meet fundamental obligations to our residents, present and future. As Mayor Allison said 38 years ago, we meet our “first obligation” of basic services, and we also advance our community into a much brighter future, more sustainable and more equitable.

This proposal will soon be in your hands. I know very well that all nine of you, like me, love this City and work diligently to advance our future. I also know that the ten of us may have different assessments of how best precisely to do that. I believe we share a great deal in values and in goals. Indeed we share a great deal in approaches and priorities. But we are not all of one mind. That’s a democracy. I have done my best to provide a proposal that reflects the range of thinking on this Council and this community. On how best to move forward. It’s up to us now to work together to find that common ground, reflecting the fact that none of us will find a final result matching exactly what we might want personally. Still, we can be confident that the solution will be a great step forward for all of Bloomington. 

Thanks. Happy to respond to questions as I’m able.

Click here for the slides from Mayor Hamilton’s presentation.