Gary residents decry city’s request for bailout

January 8, 2011

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(Mike Puente/WBEZ)
Gary resident Jim Nowacki speaks before Indiana's DUAB as Gary's Mayor Rudy Clay (far right) walks by.

Richard Barnes has had it when it comes to hearing about property tax relief for his hometown of Gary, Indiana.
Barnes traveled to Indianapolis Friday morning to urge members of the Indiana Distressed Unit Appeals Board not to allow Gary to collect another $11 million in property taxes from homeowners and businesses.
“Property tax relief for the city is tax payments for residents,” Barnes told the board. “The time has come to provide relief for the residents, not the government.”
Barnes was among a handful of residents who oppose the DUAB granting Gary an exception to the state’s property tax cap. That cap limits local governments’ property tax rates. Gary is asking for a one-year tax rate of three percent, a higher rate than any other Indiana city.
Indiana voters recently approved an amendment to the state constitution that puts the property tax cap on its firmest legal footing. The amendment caps the amount of property taxes for different types of property: one percent for homeowners, two  percent on rental units and three percent from businesses.
Gary officials told the panel it cannot operate its city within the confines of such caps.
If it did, the city would have about a $30 million operating budget for a city that encompassesnearly 60square miles and has 95,000 residents.
Just a few years ago, the city’s budget hovered at $75 million budget; however, the tax caps and reductions in the amount of tax from U.S. Steel Company – the city’s largest employer –is forcing the city to make drastic cuts.
Just in the last week, the city’s laid off more than 30 fire fighters and shuttered three fire stations.
Gary Mayor Rudy Clay and Controller Celita Green  urged the board to allow relief for this year. Both claim Gary is doing all it can to reduce expenses and is following recommendations set forth by Public Financial Management, a Philadelphia-based firm. PFM was hired at the state’s insistence to be the city’s fiscal monitor.
The DUAB has already provided some tax relief for Gary last year and in 2009, but by next year, the board loses authority to provide any property tax relief.
 
During this final go-around, some on the DUAB wonder if Gary is doing all it can to reduce expenditures. Board member Mark GiaQuinta of Fort Wayne was shocked to learn that Gary city council members earn annual salaries of $26,000, among the highest in the state.
He said it should be cut.
“I think it would be very beneficial to the community and to all of you personally to announce a dramatic decrease in your salaries. I just think it would be a very important thing to do,” GiaQuinta said. “It’s not going to change anything. It’s kind of window dressing. But sometimes window dressing is important.”
GiaQuinta said he’s sympathic to Gary’s financial woes and the unique plight of the city’s history of social deterioration and industrial disinvestment. He said he doesn’t believe there’s another city Gary’s size that’s being asked to make ends meet with a $30 million budget.

However, GiaQuinta said Gary needs to look at what more it can do to cut its budget because by next year, it will have no choice.
He and other board members urged Gary to look at transferring or consolidating some of its services for health and animal control to Lake County, Indiana.
 “You’re going to have to think outside the box. You’re going to have to create the new paradigm because you’re not going to have any choice (by next year),” GiaQuinta said.
But city officials contend the county has its own financial issues, and isn’t necessarily willing to take on the added cost of shouldering services for Gary residents.
Near the end of the city’s presentation, several residents had harsh words for their hometown including Jim Nowacki, a longtime critic of Gary city government.
 “The reason the city can’t function under the tax caps is because of waste, corruption and the scandalous abuse of the authority given to them,” Nowacki said. “I want the board to understand that this (Gary) is a nonfunctioning unit of government and not grant relief. What you got here is not simply a unit of government that is in distress. You’ve got a unit of government that is a corrupt criminal enterprise.”
The board is expected to make a decision on the city’s request by March.