Goshen News, Goshen, IN

Local News

September 15, 2013

County Council told deficit will likely continue

GOSHEN — Elkhart County Council members Saturday received some sobering news regarding the county’s 2014 budget and the significant shortfalls that will likely be facing the county for at least the foreseeable future.

According to Elkhart County Commissioner Mike Yoder, when looking forward to next year’s budget, the county’s ability over the past year to shrink its already hefty shortfall has been significantly less than he had hoped.

“The problem is, from my perspective — looking at next year what we’re going to do — my expectations and hopes for this year was that we would be shrinking this shortfall in a little greater degree than what we did,” Yoder said. “And we did not.”

With that in mind, Yoder noted that the next question that has to be asked is whether the county can grow its way out of this current situation of funding shortfalls, and if so how many years will it take?

“The reason this is important is because we are going to probably deplete all of our reserves next year,” Yoder said. “So in 2015, I see we have a problem.  Number one we have no more reserves, we have a continued shortfall in revenues — it’s going to be in the millions — and we’re going to have increasing costs.”

As an example, Yoder noted the county still has some increasing health care costs that have not been put into next year’s budget because it’s unclear what they’re going to be.

“I think we will grow out of it, but (Goshen) Mayor (Allan) Kauffman and I were doing some numbers on growth of AV (Assessed Value), and if we look at some of the best years and project that out, we may be looking at needing a 10- to 15-year period of steady growth, with no economic downturns or economic blips, to get us back to where or revenue on the property tax side would be able to help us on these shortfalls,” Yoder said. “So we’re at a point where we need to face the fact that this balance of income tax rates in our county and public tax revenue is not in balance for us, so we need to look at additional revenues. I don’t really see us having much other alternative.”

Along those lines, Yoder noted that it appears the county currently only has about three or four options from which to generate additional revenue.

“We’ve got a couple Local Option Income Tax options, none of which are very good,” Yoder said. “We do have a Public Safety Income Tax, which would really be good and be really helpful for us.”

Yoder also noted there is a possibility that it might be time for the county to do a levy freeze.

“If we would freeze the levy, and our AV would continue to grow, our circuit breaker losses would begin to decline and we’d pick up some revenue on the property tax side,” Yoder said. “But we’re really tying ourselves into a dangerous situation if there’s any kind of economic downturn.”

Yoder made the suggestion that with the 2014 budget hearings set to begin next week, the council try very hard to familiarize itself with all the available options for cutting the budget and generating additional revenue before jumping head-first into the budget talks.

Tax phase-ins

In other business, council members Saturday voted to amend a recently approved tax phase-in for an Elkhart plastics extrusion company in order to update the deduction schedules for the phase-in request.

The company in question, Lifetime Industries Inc., a plastics extrusion subsidiary of the Boyd Corp., is located at 53208 Columbia Drive, Elkhart.

The Boyd Corp. is a large multinational corporation with facilities located across the United States as well as in several other countries. In addition to plastics extrusion, the corporation also has its hands in the aerospace, appliance and industrial transportation fields, among others.

According to county attorney Craig Buche, Lifetime Industries is looking to expand its operations at its Elkhart plant with the promise of approximately $1.6 million in new real estate investment, $1.76 million in new machinery and equipment investment and $20,000 in new information technology equipment investment.

With its expansion, the company has indicated plans to hire approximately 30 new full-time positions for an expected annual payroll increase of $947,000.

The council initially approved the tax phase-in request during it’s Aug. 10 meeting, however a need to update the deduction schedules for the contract required that the tax phase-in request once again come before the council for approval.

As updated Saturday, the amended contract now states that the company’s deduction for redevelopment or rehabilitation improvements will be allowed for up to six years, as will the company’s deduction for new machinery and equipment and new information technology equipment. The start date for both deductions in retroactive to June 30, 2013.

Smart Cabinet LLC

Also approved Saturday was a resolution supporting a tax phase-in agreement with Smart Cabinet LLC, a cabinet construction company wanting to build a facility at the northeast corner of C.R. 23 and C.R. 50 south of New Paris.

According to county attorney Craig Buche, the approved agreement involves a 10-year tax phase-in for redevelopment or rehabilitation improvements and an eight-year phase-in for new manufacturing equipment and new information technology equipment.

Through the project, the company has indicated plans to invest nearly $5.4 million in real estate rehabilitation, $4.6 million in new manufacturing equipment and $180,000 in new information technology equipment.

As for jobs, the project would also reportedly create up to 90 new full-time positions with an estimated annual payroll increase of approximately $5 million.

Pison Stream Solutions

Last to be approved Saturday was a resolution supporting a tax phase-in agreement with Pison Stream Limited, a renewable energy/military chemical coating company to be located at 28335 Clay St., Elkhart.

According to Buche, the company plans to invest approximately $1.19 million in redevelopment or rehabilitation of real estate at the property, as well as $2.25 million in new machinery and equipment and $1.4 million in new information technology equipment.

As part of that investment, Buche said the company also plans to create approximately 90 new full-time positions at the new facility with an estimated annual payroll of $2.8 million.

The company’s deduction schedule has been set at seven years for the redevelopment or rehabilitation improvements and seven years for the new machinery and equipment and new information technology equipment investments.

In order to qualify for the tax phase-in, Pison Stream Solutions has agreed to stay in operation at its Elkhart facility for no less than 11 years or risk forfeiture of the agreement.

 

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