Published: October 29, 2009 10:54 am      

County official: Financial shortfalls could lead to 'disaster'

The budgets for local governments are squeezed. Some positions are not being filled and further cuts are being considered because of the state of the economy now and the expected funding shortfalls expected in 2011.

The bad financial news was shared by Elkhart County officials when they met with state representatives and senators Wednesday in Goshen.

“We have a lot of shortfalls,” said John Letherman, president of the Elkhart County Council.

He said property tax payments are down and income tax collections are also down because of unemployment.

Because of expected drops in property assessed values in the coming years, even more drops in revenue may take place.

“We are looking at a real disaster,” Letherman told Sen. Joe Zakas, Sen. Carlin Yoder, Rep. Wes Culver and Rep. Tim Neese.

Letherman stressed that state officials should not change the caps on property tax increases from the current percentages. However, Sen. Zakas said the legislation passed by the General Assembly is set to change those figures for next year.

“Everything we do has unintended consequences,” Letherman said. “We have got to stay flexible.

“Further meddling with property taxes will probably cost us in the long run,” he continued. “And try to do something about the gas tax.”

He is urging legislators to increase that tax to provide funding for road maintenance.

“If we don’t maintain our roads and bridges,” Letherman said, “we will spend more to rebuild them.”

County Commissioner Mike Yoder suggested officials may need to do more creative thinking to find funds.

“We need to do something new,” Yoder said. “We need to be more creative. We need more highway dollars.”

“The gas tax is the only thing we can do right now,” Letherman said.

David Hess, Elkhart County auditor, reviewed the drop in the net assessed value of property and buildings in the county in recent years. The lower A.V. could cause higher net property tax rates.

Hess explained that county government will use about $20 million in property taxes, $9 million in County Adjusted Gross Income Tax (CAGIT) and $4 million in Economic Development Income Tax. And officials plan to use some EDIT funds next year to balance the general fund.

Mike Yoder said he feels the balance of taxes “is about as fair as we can get,” and went on to suggest that with the package of local taxes in Elkhart County, county government might be close to raising the income it needs in a normal year.

He said that as the local economy recovers, the property base will increase and income will grow.

“We’re working on ideas to survive 2011,” he said.

“I told the council (at budget time in August) I think they should start now” for planning for 2011, Hess said Wednesday. One idea is to reduce 20 to 25 positions through attrition.

“We don’t know what will happen in the future,” Letherman said. “We will do what we have to do. We’ll keep going. The real trouble will be in the cities. I wouldn’t want to be a mayor in 2011.”

Letherman pointed out local governments can’t “shut off every other traffic light and have police only work on Mondays, Wednesdays and Fridays. We’ve got to have a sustainable income stream.”

Letherman listed the property value trending, cutback in federal and state funding for local governments and the increasing number of tax-exempt properties as concerns of local officials.

Rep. Carlin Yoder said the Legislature’s organization day is Nov. 17 and the 2010 session will begin Jan. 5. He reported that House Speaker Patrick Bauer said this may be the shortest session ever.