Mayor Hamilton's New Revenue Remarks at April 13 Council Meeting

Good evening, thank you again for your consideration of some very important legislation for our community’s future. I’ll speak with you twice tonight, briefly, just to share from the administration a few overall points. First about the two bonds under consideration, and second about the local option income tax. I thank you and members of the public for your attention and views about our future.

Part 1 - Bonds

Shortly you will have presented to you two general obligation bond ordinances, each for a five-year bond of $5 million. Both ordinances are directly fulfilling commitments our administration made to Council during last year’s budget deliberations. In those deliberations we committed to bring to you this spring two such ordinances – one focused on general public-works related needs and one focused on parks-related needs. Both lists of potential projects derive from a similar two-step process; first reviewing our city plans, including:
 

• The Comprehensive Plan and UDO
• The Transportation Plan including the High Priority Bike Network and Recommended Projects
• The Climate Action Plan and Sustainability Action Plan
• The ADA Transition Plan
• The Parks Strategic Action Plan
• The MPO Transportation Improvement Program

And the second step, developing potential projects from the ground up, city department by city department, reviewing capacities, needs and timing, and prioritizing based on numerous factors, to assemble potential projects for your consideration.

Next, you’ll hear from the City Controller, Jeff Underwood, who will provide some additional fiscal information related to these two bonds, followed by an overview of the process by Corporation Counsel Beth Cate. Please note that Mr. Underwood, Ms. Cate, and I are providing general comments about both of the bond ordinances being discussed tonight–we won’t repeat ourselves for the Parks bond presentation. For each respective bond ordinance, City staff will then briefly discuss specifics for each of the projects and all of us will be available to answer any questions.

Two final points about the GO bonds: First, we are presenting these potential projects to you, in priority order as suggestions. We absolutely welcome your view of priorities. As we’ve welcomed your views about the projects as a whole. We believe they are excellent projects, and will advance needed infrastructure and our city plans. And as a reminder, we will be planning to repeat this exercise every five years, to sustain a steady consistent investment in these kinds of projects.

Second, these are very responsible investments. When we compare Bloomington’s overall debt per capita burden with our peer cities in Indiana, we are right in the middle, and we stay right there in the middle after these bonds are in place. Just like responsible households who borrow for a home or an education, we borrow to make investments that pay off through time, that make us stronger, more equitable, more sustainable. Thank you for your support, and I’ll hand it now to Controller Underwood and Counsel Cate.

Part 2 - Economic Development Local Income Tax (ED-LIT)

I’ve spoken with each of you, and all of you, at various points and at some length about the proposed ED-LIT in front of you tonight. I appreciate your consideration and our collaboration on advancing Bloomington’s future. We have followed your suggestions of the past couple of years, and in this process have begun our work not with a specific proposed rate, but rather by identifying our city government’s needs, and how to meet those needs, and then calculating an ED-LIT rate that allows us to meet those needs. 

I will very briefly summarize the proposal, for you and for the public watching. Then again you’ll hear from our Controller and our Corporate Counsel, to outline basic financial and procedural points. 

We are proposing new revenue focused on four basic categories – four buckets if you will – of critical community needs. Two buckets focus on present, pressing needs for city government to serve our residents. Public Safety and Essential Services. Public safety needs include salary costs under the recently negotiated Fraternal Order of Police contingent contract, as well as supportive services and critical facility upgrades for fire and police. Essential service needs include clear pressures to increase support for all our other city personnel, as well as deferred and ongoing basic maintenance needs, and very real cost increases for supplies and services, as well as inexorable revenue declines in certain areas. 

Two of the buckets focus on meeting critical future needs: Climate change, and equity and quality of life. Regarding the emergency of climate change and the need to mitigate, adapt and develop resilience, we are proposing significant enhancements to our state-leading public transit system, as well as dedicated annual funding to implement our progressive Climate Action Plan. Regarding equity and quality of life, we are proposing significant investments in improving access to safe and quality housing across our city – both ownership and rental – as well as helping people access good jobs, and continuing traditional support for our arts and local food sectors. Finally, we are earmarking funds to help those taxpayers who may face challenges from the LIT itself – an economic equity fund to support those in need.

Many of us in the administration are available tonight for questions about the extensive information we have shared about these proposals. We’ve gotten quite a bit of feedback along the way, from you and the wider public, on several matters:

• We have heard concerns, which we share, about the impact of the LIT on those taxpayers least able to afford increased costs. Of course, first we highlight the annual economic equity fund as a substantial cushion. And, we note that for seniors or others on social security income, in Indiana (and locally) there is no income tax due on social security benefits at all. No impact from ED-LIT on that fixed income.
• We heard concerns about potential free or reduced fare for seniors or low-income workers using BT – those options are very possible, and funding is earmarked for that purpose.
• We heard interest in having a separate fund for ED-LIT proceeds, with annual budget review (and fiscal plan). We plan to do just that, with a discrete fund and annual budget review.
• Based on specific feedback from council, we made four adjustments in the proposal since sharing it last month: increasing essential services in two particulars, and increasing climate action plan and economic equity fund allocations as well.
• Some have asked, Can the administration not just tighten its belt and save our way to what is needed in city government? We absolutely agree on the imperative to save and tighten belts where possible. We have been doing that for six years, and the list online shows many of the steps taken. Here are just a few examples:
  • We replaced crews of four firefighters and a large engine with two-person crews using a commercial SUV to respond to many medical calls.
  • Five street-sweeping vehicles have been reduced to two, doing fewer passes on city streets.
  • We started leaf collection later in the year, cutting from two pick-ups to one, encouraging residents to compost their own leaves, saving money in leaf collection. 
  • In 2004 we had one fleet mechanic for every 45 city vehicles. Today each fleet mechanic serves 65 vehicles, doing more with less.
  • We eliminated three executive-level city vehicles (mayor, deputy mayor, parks director).
  • City Hall still hasn't replaced an antiquated phone system that is well over 20 years old.
• Beyond finding savings like these, which will continue, I’ll note that the structural need for annual revenue is at a scale that would require drastic reductions in personnel and services to meet essential needs. Controller Underwood will share more details, but I’ll just note that we face approximately $5 million in annual basic operating shortfalls in coming years, which is only addressable through new revenue or unacceptable cuts in services and personnel.

I’ll close with two final points. First, we have the capacity to very responsibly make these balanced investments in our future. We are the lowest of all our neighbor counties in local LIT rates and we are very nearly the very lowest of our 20 peer Indiana cities for combined property and income tax rates. We have the capacity to make these essential investments in our future.

And finally, regarding timing, we are already beginning to prepare the 2023 city budget, and we need to know our resources. We have a contingent Fraternal Order of Police contract that is essential to sign as soon as possible, to help us retain and recruit quality sworn officers. And since we began discussing a LIT increase, we’ve already seen the state legislature take steps to make it more difficult to pass a LIT. We don’t know what the future may hold, with this our only substantial local ability to determine our fiscal destiny. 

Next, Controller Jeff Underwood followed by Counsel Beth Cate, for additional information.

Part One Slides–Click here.

Part Two Slides–Click here.