A FINANCIAL PLAN FOR GARY, INDIANA -...

A FINANCIAL PLAN FOR GARY,

INDIANA

Tonight’s Agenda…

City of Gary – At a Glance

Review of History

Review of Plan

Measuring the Tax Burden Shift

According to the Indiana Legislative Services Agency, there was a

decrease in Lake County Industrial property taxes of $109.4MM and an

increase in the Lake County Residential Property Tax Levy of $95MM

between FY 2002-2003.

Sources: Indiana Legislative Services Agency

Population and Property Taxes

2003

• Indiana state passes new tax laws that shift City’s tax burden from industrial base to residential base as a means to encourage industrial businesses to remain in Indiana.

2008

• Property Tax Caps Approved -State legislature passes laws to limit annual taxes

2009

• Distressed Unit Advisory Board (DUAB) Relief Granted to Gary – Gary is the only city in Indiana to take advantage of DUAB status.

2012

• DUAB Relief Terminates – Gary must manage budget without direct relief from tax caps.

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

1990 2000 2010

Population

$2.17B

$2.06B

$2.19B $2.17B

$1.98B

$1.89B

$1.7B

$1.8B

$1.9B

$2.0B

$2.1B

$2.2B

$2.3B

2012 2013 2014 2015 2016 2017

ASSESSED VALUES (in Billions)

Primary sources of revenue include property and other taxes, grants, and casino revenue

Property Taxes; $26.2M

Other Taxes; $23.5M

Casino; $14.0M

Grants; $22.1M

Permits, Licenses & Fines; $1.5M

LIT; $9.5M

Wheel Tax; $1.3M

Charges for Services; $5.2M

Other Receipts; $7.7M

2017 Revenues (in Millions); Total: $110.9M

Property tax revenue is down 5 percent from 2012, and 16 percent from 2014

$27.7 M$26.5 M

$31.4 M

$30.2 M$28.4 M

$26.2 M

$0M

$5M

$10M

$15M

$20M

$25M

$30M

$35M

2012 2013 2014 2015 2016 2017

Mill

ion

s

PROPERTY TAX REVENUES (in Millions)

Casino revenues have fallen 35 percent since 2012

$21.4 M

$19.1 M

$16.4 M $15.9 M$14.8 M

$14.0 M

$0M

$5M

$10M

$15M

$20M

$25M

2012 2013 2014 2015 2016 2017

Mill

ion

s

CASINO REVENUES (in Millions)

Local Road & Street 1,182,005

MVH 3,040,538

LDA Casino 7,178,378

TIF 4,531,635

ABC Excise Tax 30,921

Cigarette Tax 53,254

Financial Institution Tax 47,832

Aircraft Tax 1,540,713

Commercial Excise 389,757

ABC Gallonage 178,436

CEDIT 4,571,000

Building Community 73,784 (Police community service)

Nat. Wildlife 187,719 (Grant Green Urbanism)

Equal Opportunity Commission 27,300

Emergency Shelter Grant 249,149 (Grant Battered Women Shelter)

Redevelopment Operating 104,663

23,387,084

OTHER REVENUE

1. Consolidated Area (Fund 823) – encompasses the majority of the Downtown Gary CBD and finances redevelopment projects therein including the 504 Broadway bank building rehabilitation, various demolition projects, City Hall repairs, Genesis Center and Hudson-Campbell modernization projects

2. Madison Townhomes (Fund 824) – finances a bond for affordable housing on Madison Street

3. Lakefront (Fund 826) – finances improvements to the areas adjacent to GYY and the industrial footprint, including infrastructure improvements and site preparation

4. Midwest Center (Fund 828) – intended to finance infrastructure improvements in the industrial footprint adjacent to I-65 at 15th Avenue

5. Lancaster Dusable (Fund 830) – finances the bond for a Lancaster Dusable project.

6. County Market (Fund 833) – finances the bond for a grocery store project on 25th Avenue at Grant Street

7. Dalton Arms (Fund 834) – finances a bond for an historic rehabilitation of a mixed-rate residential building on 5th Avenue in the CBD

8. Kenny’s Ribs (Fund 835) – finances a bond for an Empowerment Zone restaurant project on 5th Avenue in the CBD

9. Truck City (Fund 838) – finances a bond for a commercial truck dealership on 25th Avenue at Taft Street

10. Kirk Yard (Fund 854) – finances expansion of the Kirk Yard rail yard south of U.S. Steel.

11. East Lakefront (Fund TBD) – finances infrastructure improvements along US Highways 12 and 20, including the Lake Street commercial district, Miller train station, and Melton Road.

12. Northwest Indiana Industrial Complex (Fund TBD) –potential to finance a bond associated with the creation of light industrial, warehousing, and logistics park along Chase Street at 11th Avenue.

Over half of expenses go towards employee wages, health insurance, and infrastructure

Wages & Salaries; $42.8M

Health Insurance;

$14.3MCapital Outlay; $12.1M

Contract Maintenance;

$7.0M

Utilities; $5.0M

Professional Services; $4.4M

Debt Service Interest; $3.4M

Supplies and Materials; $1.4M

Judgements; $0.8M

Gasoline; $0.8M

Property Insurance; $0.8M

Other Expenditures; $31.9M

2017 Expenses (in Millions); Total: $124.6M

Outstanding Debt 2012

Description $ Obligation

Potential & Outstanding Judgments

$3,800,00

Outstanding Insurance Claims & Utilities

$2,200,000

Outstanding Bonds – 5th/3rd

Bank (Excludes TAWS)$7,300,000

Intergovernmental Liabilities –GSD

$7,800,000

Internal Liabilities $11,400,000

Regional Development Authority

$6,800,000

TIF Repayment – Majestic Star $3,800,000

Total Debt $43,100,000

Gary’s Balance Sheet Projected as of December 31, 2011

Outstanding Debt in 2018

Description $ Obligation

Potential & Outstanding Judgments

$1,000,000

Outstanding Insurance Claims & Utilities

$2,764,000

Outstanding External Debt(TAWS & LEASES)

$5,400,000

Intergovernmental Liabilities –GSD

$5,000,000

Internal Liabilities $7,500,000

Regional Development Authority

11,325,000

Total Debt $26,239,000

Gary’s Balance Sheet Projected as of December 31, 2011

UNAPPROVED TRANSFER OF EMS FUNDS -$8,160,403.37

USE OF DOLLARS AMOUNT PERCENTAGE

GENERAL FUND PAYROLL

$4,527,720.79 55%

BLIGHTELIMINATION

$1,285,478.86 16%

SPECIAL REVENUE $1,940,000 24%

GENESIS, REDEVELOPMENT,GLEASON,MARQUETTE, SECTION 108

$407,203.72 5%

Total $8,160,403.37 100%

$132.2 M $133.3 M

$148.6 M

$124.2 M $127.5 M $124.6 M

$126.1 M $121.5 M$131.5 M

$110.1 M $108.4 M $110.9 M

$0M

$20M

$40M

$60M

$80M

$100M

$120M

$140M

$160M

2012 2013 2014 2015 2016 2017

Mill

ion

s

REVENUES VS EXPENSES (in Millions)

Expenses

Revenues

COST REDUCTIONSREDUCTION$3,415,000

VALUE TARGET DATE

Centralization of Procurement/Purchasing

$190,000 1/1/19

Review of PersonnelPolicy

$200,000 1/1/19

Change in Healthcare Plan

$750,000 1/1/19

Reduction in Professional Service Contracts/Fees

$150,000 1/1/19

Reduction in Footprint of City-Owned Buildings

$1,500,000 1/1/20

Consolidation of Departments/Functions

$450,000 1/1/19

REVENUE GENERATION

SOURCE OF REVENUE

DOLLAR VALUE TARGET DATE

Legislative Changes $3,750,000 1/1/20

Licensing, Fees, &Permits

$640,000 6/15/19

Collection of Outstanding Fines &

Fees

$800,000 1/1/20

Damage Recovery $100,000 1/1/20

Total $5,290,000

ONE TIME INFUSIONS

SOURCE OF REVENUE

DOLLAR VALUE TARGET DATE

SALE/LEASEBACK $25,000,000 9/1/18

SALE OF SURPLUS PROPERTY

$2,100,000 1/1/19

NEWDEVELOPMENT

TBD 1/1/20

PROPERTY TAX AMNESTY

TBD 7/1/19

HIRING FREEZE $125,000 PER PAY PERIOD

CURRENT

COURT AMNESTY TBD 9/1/18

MYTHS

• GARY RECEIVES $200,000,000 IN REVENUE ANNUALLY

• THE MAYOR HAS AN UNLIMITED PROFESSIONAL SERVICES FUND

• HIGH SALARIES DRIVE DEFICIT