Goshen investigating options to raise revenue

Local option food and beverage and income taxes, water and sewer fees at the top of the list. Trash fee a lower priority

Posted on Nov. 12, 2013 at 12:00 a.m. | Updated on Nov. 12, 2013 at 5:20 p.m.

GOSHEN — With the dust settled on the 2014 budget, city leaders are now looking ahead to the future and how to raise revenues to continue providing services to residents.

Before budget hearings began, the Goshen Chamber of Commerce convened a task force to prioritize services.

With the city looking at a funded budget for next year rather than a balanced one, Mayor Allan Kauffman also requested they provide recommendations that could raise revenues in the coming years.

The task force concluded that the city has a revenue problem rather than a spending problem and came up with several suggestions that the city could take advantage of.

A hot topic last year, a trash removal fee is the most familiar of the task force’s recommendations.

The city originally discussed the possibility of instituting a fee last fall.

Though the measure didn’t gain any initial traction, Kauffman has said the issue would likely resurface as the city continued to battle the effects of property tax caps.

Kauffman, however, said discussion on the trash fee has been placed “on the backburner.” The fee, which the task force dubbed an “environmental fee,” falls behind several other options the city will look into.

One recommendation the city will be looking at is a 1 percent local option food and beverage tax.

Kauffman said the tax is estimated to raise between $600,000 and $650,000 a year if the state legislature will allow the tax and if it would pass in the city.

Council president Jim McKee said he would be in favor of establishing the food and beverage tax if the state grants the city the option.

McKee, who also served on the chamber’s task force, echoed others’ sentiments that the tax would essentially be a use tax levied on those who choose to eat out.

“It’s an opportunity for us to share that with our guests and visitors,” he said, adding that 1 percent on a tab would not represent a substantial amount to a group going out to eat.

Another avenue the city and Elkhart County are currently working at is lobbying state legislators for some sort of local option income tax.

County Commissioner Mike Yoder explained the local option income taxes at a recent meeting of the Elkhart County Council.

“We could increase local option taxes by 1 percent, which would generate property tax relief, which reduces circuit breaker losses,” he said.

A second option would be to “pass a levy freeze, which everybody agrees is not a good idea, and then if we pass one of those, we can do a .25 percent increase for public safety.”

Kauffman said the local option income and local option food and beverage taxes would provide the most substantial help to the city.

McKee said he would oppose the local option income tax.

He said the city’s take from the County Adjusted Gross Income Tax (CAGIT) is estimated to increase by 30 percent next year. McKee said that increase, coupled with the food and beverage tax he would support, would put the city in a much better place.

In his mind, the local option income tax would then not be necessary.

Though there are options before the city, the problem is that even if the state allows the optional taxes and the city passes them, Goshen will not see any of the revenues until at least 2015.

Kauffman said that would mean at least another year of a funded budget, rather than a balanced budget. That shouldn’t be a problem, however.

“We’ve got the reserves to do that,” he said.

In the meantime, Kauffman said he’s had discussions with council members about water and sewer rates.

He said they’ve agreed that water and sewer rates are due for an increase and discussions have centered on building a little extra into those rate increases to help with revenues in the short term.

McKee said the chamber task force also discussed the possibility of beginning an incentive program among city employees that would reward them if they found ways to increase efficiency and cut costs within their departments.

Another idea McKee said he’d like investigated is looking at the equipment the city owns.

If there is equipment the city doesn’t use or uses sparingly, he said, perhaps they could look at selling off some of it for further revenue.

“We need to always be paying attention to what’s going on,” he said. “You always have to watch your expenditures.”

Kauffman said he would only propose the trash fee again, then, if the local option taxes would be denied by the state or voted down in the city.

He hopes the bills for the taxes are prepared and submitted by the time the next legislative session begins on Jan. 1 so the city and county can get a jump on the discussion locally.

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