South Bend leaders say the city's budget is in dire straits. Right now, a local option income tax is the only option on the table for raising revenue lost to the circuit breaker.

If a local option income tax raise is passed, leaders say budget cuts in South Bend could be bearable, while the city of Mishawaka could end up with a surplus.

It's a tale of two cities.

In South Bend, city leaders are trying to chop 18 million dollars out of the budget by 2010, while Mishawaka looks at a more manageable 2 million in cuts.

So why is there such a big difference?

“Our last five years have been the biggest construction years ever in our history, this year we’ll triple our biggest construction year ever,” says Mishawaka mayor Jeff Rea.

Rea says the city has also cut back for the last five years, which comes with challenges.

“Everyday people call and say, ‘I want more police patrols, I want improvements to my parks,’ but also that ‘I pay enough taxes,’ so it puts a big burden on all of us to figure out how to operate more efficiently,” explains Rea.

South Bend leaders say they have also made cuts. But with 40 police and 53 firefighting positions threatened by the circuit breaker, Mayor Steve Luecke says it is time to look at other ways to raise revenue.

“We’re really taking a hard look at the option income taxes as a part of the solution for providing the services that our residents and our businesses want, and we need to have South Bend thrive,” says Luecke.

The leaders of two of the three major entities in the county: Mishawaka, the county itself, and/or South Bend, have to approve any income tax hike.

If the maximum is approved, South Bend would try to cut 2 million dollars, while Mishawaka parks, police, and development could benefit from a considerable surplus.

“The option income taxes that we currently have were not voted on by Mishawaka, they were voted on by South Bend and the county, and we benefited from them,” says Rea.

The maximum amount income taxes could be raised under House Bill 1001 is 1.25-percent. South Bend would need the maximum raise to get them to a 2 million dollar deficit, while Mishawaka could break even with just a .25-percent increase.

The deadline for a decision is mid-October, but lots of residents have already made up their minds on the matter.