The city of Goshen released information on its 2014 budget Monday night that includes some recommendations for new ways to produce revenue.
In a letter, Mayor Allan Kauffman explained that the budget was not balanced. However, Kauffman explained that the budget is paid for through use of new revenue and reserve funds to pay for expenses.
A task force made up of Chamber of Commerce members, community residents and several city council members reviewed Goshen’s finances to learn more about each department’s services and needs.
Chamber president David Daugherty said the task force met with the departments to find out where they had made cuts and where they could potentially make further cuts to decrease spending.
“It’s not a spending issue, it’s a revenue issue” said Daugherty. According to Daugherty the departments have done a great job over the past few years working with each other to accomplish tough goals.
“When you look at staffing levels compared to other cities it became very apparent, in almost every case, we were doing more with less,” added Daugherty.
Goshen officials want to maintain the same level of services currently offered to residents. But due to revenue shortfalls caused by property tax caps, the 2014 projected expenses are about twice the revenue anticipated.
There will be multiple changes made on the department level: the council will receive a $500 stipend per council member for technology, a full-time inspector position will be created out of a part-time one in the building department, and staffing will be increased in the police department. An additional $100,000 will be added for local roads and streets, which won’t come from property taxes.
To pay for these additions now and in the future, the task force worked out several recommendations for alternative revenue sources.
The first recommendation is to ask the State Legislature for a one-percent food and beverage tax at restaurants. The second is to ask legislators to simplify the process for Elkhart County to adopt a new local option income tax to be used for public safety. Officials are also considering adopting a trash collection fee on a residential level.
FOOD AND BEVERAGE TAX
Daugherty said the one-percent tax on food and beverages won’t apply to groceries. He said by taxing restaurant checks it bases the tax on what people spend.
“You have the ability to spend more or less so it’s really dependent upon your lifestyle and on how you choose to spend your money” Daugherty added.
J.B. Miller works in Goshen and said the food tax wouldn’t deter him from eating out, “Taxes get added so easily that you don't really think about it.”
Restaurants and café’s expressed both positive and negative reactions to the tax.
“I don't really think that that would have a big effect. I think people are still going to come. Especially when it's just like one cent onto a cup of coffee I don't think that's going to affect much of our business,” said Michelle Oyer at the Electric Brew.
Bill Mattern at Mattern’s corner deli’s gut reaction to the tax was that there already too many taxes and one more is too much.
According to Daugherty the trash fee is the last revenue option being considered. It would turn out to be a $7 to $12 per month charge for residents to have their trash collected and would be a “fair” tax since every household pays the same fee. Some members of the task force were concerned that it might negatively impact families with low incomes, while others thought the charge to be nominal.
The case for a local option income tax is slightly more complicated. Daugherty explained that when property tax caps went into effect several years ago it limited the amount of revenue that could be brought in. At the time counties were allowed to pass a quarter of one percent local option tax to be used only for property tax reductions. Now that Elkhart County has adopted the tax caps, Daugherty said it makes more sense to use a quarter of one percent tax to generate revenue for the general fund or public safety purposes.
“When the initial discussion was undertaken about tax caps the discussion was that taxing districts were getting too much of their funding from one source,” explained Daugherty, “we needed a more fair way of getting revenue into those districts.”
So it wasn't the original idea that areas should have tax caps and just lose the revenue, instead it was that they should have tax caps but allow for other revenue sources to help supplement.
MORE BUDGET IDEAS
Another recommendation the task force made is to establish a program similar to that of IU Goshen: which has its employees provide input on how to do things more efficiently. Daugherty said it not only offers rewards to employees to participate, but it also leads to valuable insight on how to cut costs.
The city has several reserves to help cover its current shortfalls.
“Those reserves don’t’ mean we have to cut everything immediately, we have time to work with the State General Assembly to get some bills passed, some time to see how the economy improves,” said Daugherty.
Officials say the city can survive a few years without making any drastic changes. But for now they’re looking forward to prevent drying up the “well-saved” money.