I was recently asked what the number one challenge is for local governments. As a former employee of a city in Indiana, I know without a doubt that the answer is property tax caps.
These caps were first introduced in 2009 and were meant to help taxpayers. While the caps have certainly accomplished that goal, they have had a dramatic effect on local governments, especially those that are not experiencing growth. This has led to lost revenue for many communities.
According to a December, 2015 Indianapolis Business Journal report, DeBoer and retired Community Research Institute director John Stafford stated that property tax caps have hit older, industrial cities hard, while the growing Indianapolis suburbs and thriving college towns are faring quite well.
I’ve witnessed the work of top officials at many cities, towns, and counties as they cut costs and slash budgets. I understand that everyone wants governments to work as efficiently and lean as possible. I believe most are accomplishing that goal.
However, the tax caps have still caused some unexpected damage. For example, neighboring school districts are seeing drastically different property tax revenues per student due to coverage areas. And I think we’re just beginning to see tax cap consequences like these.
So what can local governments do in order to keep providing vital services to their communities? Some, like the Central Indiana municipality I recently worked for, are looking at alternative funding such as trash fees. While every other city and town in the county has charged a trash fee, this city is still facing quite a battle to implement one.
Communities are also taking a closer look at local option income taxes for new revenue. As budgets continue to get squeezed, local government staff members will work to apply for more federal, state, corporate, and foundation grants.
New crowd funding campaigns, like those led by Citizinvestor http://www.citizinvestor.com/, are popping up for community projects such as dog parks, public art, and trails. These have been successful for some local governments as long as they invest the time and effort to promote the campaigns.
Like many organizations and businesses, local governments are being asked to do more with less. Alternative funding sources and grass roots community support will hopefully help us all continue to benefit from public safety services, parks, strong infrastructure, and more.
Amy Shankland is a former Associate with SNF Writing Solutions, LLC and guest blogger.