Gary won’t have to gut budget

Gary budget

April 13, 2011

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The city of Gary got a financial lifeline of sorts Wednesday when the state of Indiana’s Distressed Unit Appeals Board (DUAB) approved the city’s petition for property tax relief.

The decision means Gary won’t have to cut $11 million from its budget of $41 million.  Instead, the DUAB, is requiring the Steel City to trim just $ 1 million this year. That was good news to Gary Mayor Rudy Clay who attended the hearing in Indianapolis.

“Everybody knows our [budget] numbers have been going down the last three years,” Clay said. “I’m gratified the board approved our petition.”

This is the third year the DUAB has granted Gary an exemption to the property tax caps. Clay expected this year’s petition to come through because the city has cut its budget by about one-third since the Indiana General Assembly approved a state-wide property tax cap three years ago.

In 2008, Gary’s budget stood at $63 million. The property tax caps have hit Gary particularly hard because its tax base has dwindled, mostly due to business disinvestment and continued population decline.

Gary City Council vice president Kyle Allen says the city is also hurting because of tax breaks given to the city’s biggest employer, U.S. Steel.
He says U.S Steel successfully petitioned the state to reduce the company’s property tax burden.

Allen says, given these circumstances, Gary simply needs more tax money to function.

“You want frugality and you want cities to be efficient but I think people have to recognize that government has to function, especially when it comes to core services,” Allen said.

City officials eventually prevailed in making their case for a property tax cap exemption, but some Gary residents had been on the other side of the argument. More than a dozen residents had asked the DUAB not to grant an exemption, even if that meant cutting city services. They had argued the city should tighten its belt instead of maintaining the highest property tax rates of any city in Indiana. 

While Indiana’s property tax cap has reduced revenue for cities throughout the state, only Gary has asked the DUAB for state assistance. This is the third and final year Gary can ask for such help from the state from the DUAB, which disbands after this year.