GREENFIELD — What city officials thought would be a matter of weeks has turned into months, and there is still no word on the funding dilemma for the Greenfield Fire Territory.
With a cut in property tax revenue for the department made a year ago and now an upcoming slash to income tax funds, city officials are anxiously wondering how the fire department will be funded in 2013 and beyond.
In June, Mayor Dick Pasco and other city officials testified before the Indiana Tax Court about an appeal against a drastic funding cut to the fire department’s budget. They were appealing a 2011 decision made by the Indiana Department of Local Government Finance that Center Township residents were paying too much for the services. That decision reduced property taxes for rural residents, which slashed revenue to the department by nearly $500,000.
“I thought six to eight weeks was a reasonable length of time to hear something (from the state tax court),” Pasco said, noting that it’s now been six months. “I was pretty naive, wasn’t I?”
The city was able to plug the funding hole this year by using income tax money, to the tune of $570,600.
But two months ago, the Hancock County Council decided to reduce local income taxes in 2013, sending another wave of worry through city officials.
The county council reduced local-option income taxes earmarked for public safety by 0.05 percent. That will mean roughly $200,000 less streaming into the city that could be spent on funding the fire territory.
The combination of the income tax cut with the property tax cut has both Pasco and Chief James Roberts thinking ahead to 2013. While the state tax court could rule in Greenfield’s favor and bring the property tax revenue back to the city, Pasco said it’s time to start thinking about various ways to permanently fix the funding gap.
Layoffs would be a last-ditch scenario, Pasco said, but he would look to all department budgets to cut supplies and equipment. Ultimately, it would be up to the city council to make budget changes.
“It’s doable, in my opinion,” Pasco said. “We’ll have some unhappy departments, some unhappy employees. But it’s doable.”
Former Mayor Brad DeReamer said a year ago that closing one of the two fire stations was also a possibility. But Pasco and Roberts said that is also a worst-case scenario.
“We’ve got to look at every option, every dime,” Roberts said.
The city has hired outside counsel to handle the case in tax court. Pasco said the only thing he’s heard is that there’s a backlog in the tax court.
The funding dilemma for the city’s fire territory has been several years in the making.
The Greenfield Fire Territory was formed in 2008 as a way to even out property taxes among city and rural residents.
The review of the property tax rate for Greenfield’s fire territory was unique to the city: legislation sponsored by state Sen. Beverly Gard and Rep. Bob Cherry called for a special examination and hearing of the rate. Both lawmakers live in Center Township themselves and said plenty of their constituents were concerned when the tax rate went from 5 cents per $100 assessed valuation to 24 cents. But Greenfield city residents also saw an increase in their tax rates when the territory formed: the rate went from 16 cents per $100 assessed valuation to 24 cents.
A “perfect storm” happened in 2008, where statewide tax reform caused the fire territory rate to skyrocket, said Buzz Krohn, the city’s contracted utility controller.
But after hearing both sides, the state decided Center Township property tax rates were too high.
Clerk-Treasurer Larry Breese said if the state tax court doesn’t make a decision on the city’s appeal soon, some major decisions will have to be made. The city’s 2013 budget will be reviewed early next year, which will give city council members a picture of whether staff or programs need to be cut.
Roberts is “getting very nervous at this point” when it comes to the department’s budget. And so are his employees.