State Rep. Kreg Battles, D-Vincennes, attended the city council meeting here Monday night to discuss House Bill 1001 and the impact it will have on the city in the next two years.

Battles said he attended to discuss with council members and citizens the loss of $177,000 in 2009 for the city and the loss of $286,000 in 2010.

"Because of the circuit breakers, the city of Bicknell is looking at a loss of 14 percent of their budget in the first year and an additional 24.8 percent of their budget in 2010," Battles said. "That is nothing compared to the $750,000 loss Vincennes is facing but I wanted to inform them of the numbers so

they could prepare accordingly."

Battles was one of a handful of lawmakers to vote against House Bill 1001 in March. He argued that the long-term consequences of the bill far out weigh any short term benefits property owners may receive and that in the end, property owners will probably end up paying more in property taxes.

Battles said city council members have three options with regard to addressing the budget shortfall.

"They can make cuts and it will be up to them to decide where those cuts can be made," he said. "They can start charging fees for services that they previously provided for free or stop offering some services altogether. Lastly, they can discuss adopting a local option income tax (LOIT) with the county council."

Battles said he also informed council members about the newly-formed Distressed Unit Appeal Board.

"Any entity that is going to see a five percent loss or greater in their budget can appeal for remedy through the DUA board," he said. "They can ask for increases in the circuit breakers of House Bill 1001 which will cutback on the shortfall and put money back into the city coffers."

Battles explained that the circuit breakers are facets of the bill that allow for caps on taxes collected on certain properties.

For example, there is a one percent cap on a property owner's homestead tax, a two percent tax cap on rental property and agricultural properties and a three percent tax cap on business properties.

"If I own a home with an assessed value of $100,000 then I will never pay more than $1,000 in homestead tax," Battles said. "The city can ask that those caps be increased to say - one and a quarter percent, which would increase the revenue money coming into the city through property tax."

Battles said the city could also ask that a portion of the budget shortfall be re-mediated

"At a loss of $177,000 they can request to get 10 percent of that back," he said. "The final option for the city is to ask for any debt that has already been incurred be set aside outside of the circuit breakers."

Staff writer Jennifer Gordon
Vincennes Sun-Commerial