Bloomington city council’s climate action and resilience committee, a four-member subset of the council, convened a meeting Wednesday night to hear feedback from the public on a possible countywide increase to the local income tax.
About three dozen people attended, maybe a third of them Indiana University students, for whom attendance was a class assignment.
Based on the statutory framework for the county tax council, a simple 5–4 majority on the Bloomington city council would be enough to enact the tax.
The size of the increase that was floated on New Year’s Day by Bloomington’s mayor, John Hamilton, was 0.5 points. That would bring the total amount of local income tax paid by county residents to 1.845 percent.
But the amount of the increase, according to committee chair Matt Flaherty, is an open question, like nearly every other aspect of the proposal—including the timing of a vote by the Bloomington city council, constraints on expenditures, and oversight mechanisms.
The ballpark amount of revenue that a 0.5-point local income tax increase would generate for the city of Bloomington over the next decade was pegged by mayor John Hamilton in his recent state of the city address at $80 million.
From the public podium on Wednesday, Daniel Bingham told the committee it would take a lot more than that.
Bingham has calculated that achieving the goals set out by the Intergovernmental Panel on Climate Change (IPCC) in an October 2018 report would require a $1 billion investment by Bloomington in solar energy over the next 10 years, just to meet the IPCC goal for the local energy sector.
Achieving the goals for the transportation sector would mean an investment of an additional tens of millions of dollars, Bingham said. By way of comparison, Bingham said, the whole city budget is about $90 million a year.
At least two additional questions were introduced at the committee meeting, one from the public podium and another from a committee member.
One new question came during public commentary from Ilana Stonebraker, who recently moved to Bloomington from Tippecanoe County where she served as a Democrat on the county council. She’s now associate librarian at Indiana University’s Business/SPEA Information Commons. Stonebraker said she opposes the tax increase.
Stonebraker zeroed in on the fact that the proposal floated by Bloomington’s mayor is to use the “economic development” category of local income tax, which available in the state statute. The “economic development” category is not currently used in Monroe County. A different approach would be to increase Monroe County’s income tax, not by adding the new economic development category, but rather by increasing the existing category, which goes by the technical name of “certified shares.”
A key difference between the two categories of local income tax is the entities to which the proceeds are distributed. Proceeds from the economic development category would be distributed to four different governmental units in Monroe County: Monroe County, Ellettsville, Stinesville, and Bloomington. Money generated by the certified shares category is distributed to those four entities, but also to all the individual townships, Bloomington Transit, and the Monroe County Public Library.
The library is one of the potential direct beneficiaries that would be left out, if the increase to the local income tax is made in the economic development category, instead of the certified shared category, Stonebraker said. She added, “I believe that sustainability should include all of our government entities, including our libraries…because they are also going to be impacted by climate change in many different ways.”
Other than the presentation made last year by Monroe County councilor Geoff McKim at a transit panel convened by the Greater Bloomington Chamber of Commerce, the choice between increasing the certified shares category and increasing the economic development category hasn’t received much public mention.
A new question that city councilmember Dave Rollo wants to explore relates to a common criticism of Indiana’s local income taxes: A local income tax is applied as a flat percentage, which means that lower-income workers are more vulnerable to the effect of the tax.
Rollo wants to consider the possibility that an exemption to the local income tax could be made for those making $18,500 or less annually. He thinks Lake County takes advantage of such an exemption and wants that possibility to be explored for Monroe County. Later in the meeting, Kevin Curren, director of auditing and finance systems for Bloomington, said he was not aware of that being an option, but said it was early in the process of exploring all the possibilities.
It’s possible that Rollo was referring to Lake County’s residential income tax credit, which is available to those who pay property tax on a residence and have adjusted gross income of less than $18,600, among other requirements.
Among the existing questions touched on at Wednesday’s committee meeting, at least implicitly, was the question of timing for a Bloomington city council vote.
In his New Year’s Day address, Hamilton described his preferred timing for enactment of the tax as “in the next six months.” In his late-February state of the city address, Hamilton said “by summer.”
A couple of hours before the climate action committee meeting, the city of Bloomington announced constraints on public meetings as a part of the city’s COVID-19 pandemic response. It’s not clear that the kind of public input that had been hoped for on the climate action local income tax would be possible in the next four months.
Flaherty said on Wednesday that it’s not certain what the next steps in the public engagement process will be. He said it would be important to have conversations with the two town councils and the county council.
Wednesday’s committee meeting followed last week’s event held at The Mill, which had an “open house” style format. The meeting at The Mill was the first public event focused on the income tax since the mayor’s New Year’s Day announcement.
Another existing question was one of oversight of the money that would be generated by a new tax. One idea floated by Flaherty would be to create a 12-member panel consisting of four city councilmembers, four members of the administration and four members of the public, that would annually guide the spending of the income tax revenue.
Councilmember Isabel Piedmont-Smith said “We have to figure out a way to hold the administration accountable. And I am dedicated to doing that. And I will not vote for this tax, if we don’t have a way of doing that.”
Piedmont-Smith also addressed a common criticism made by some of the public commenters who don’t live in the city of Bloomington. The tax council voting scheme is set up in a way that represents Bloomington residents twice compared to residents of unincorporated areas of the county. And the bloc-style assignment of votes means that even a 5–4 vote on the Bloomington city council would impose a tax increase on the whole county.
About that system, Piedmont-Smith said she didn’t create it, and “It is what it is.” It means that the Bloomington city council needs to reach out and talk to county officials, especially on the topic of improved pubic transit, Piedmont-Smith said.