to politically Speaking.

I'm Elizabeth Bennion chancellor's professor of political science and director of the American Democracy Project at Indiana University.

South Bend.

In the wake of new legislation from Indianapolis, Saint Joseph County is facing a set of complex challenges and opportunities that will shape its future.

From property tax relief and potential budgets shortfalls to massive economic investments, the landscape is changing quickly.

Joining us today are two elected members of the Saint Joseph County Council.

Andy Rutten represents County Council District I and Brian Tanner represents county Council District eight Indian Brian Way.

Welcome, and thank you for joining us.

Andy, I want to start by asking you about the legislature's recent, proposal to provide a $1.2 billion tax relief package for homeowners over the next three years.

Certainly a 10% credit on, property taxes sounds great for homeowners, as does the $300 cap, but it does have some potentially serious, impact for local government in how it functions.

So I wonder if you could share your thoughts on the effects on county government and, how you're thinking about this?

Well good question.

And thanks for, thanks for having us on here to to talk about this.

You know, I'd like to to start out by saying, that property tax, property taxes, the assessments have gone sky high over the last few years, and that's probably the number one thing that people in my district have been talking about and expressing concern upon.

So in a way, you know, I'm excited So in a way, you know, I'm excited that the state of Indiana has heard the constituents and has responded with, tax relief.

On the other hand, it is it is concerning because now the county is going to have to look at and all of the local agencies are going to have to look at what what is necessary.

Find compromise, find ways to, to do more with less and potentially even cut back on government.

We see that in the federal government.

So it's it's kind of a little, concerning to have to approach that here locally.

But on the other hand, you know, I am excited that, that this will provide the opportunity to find what parts of government is important that is the most needed.

What parts could be improved upon and find more efficient?

So, I'm not sure to that, that answer the question or absolutely.

And same question for you, Brian.

What's interesting to me is that this was a state level decision that impacts local governments directly.

This the state does not receive a property tax revenue.

So they're making decisions at the state level that affects the way that we conduct business, within our municipalities or counties or townships or schools.

It is reminiscent of the policy changes that occurred roughly 15 years ago, with the property tax caps, where again, the local governments had to make massive adjustments to the way that we conducted business or the way that we drove the revenue to support the businesses or the business of local government, the way our constituents expect to receive.

It's concerning from the standpoint of local government, at least in this area, whether you're looking at Mishawaka, South Bend, Saint Joe County or the surrounding counties.

Well, over half of our property tax revenue for local government supports public safety.

So to Mr. Rutland's point, we will have to decide what is important.

But I would go so far as to say that everything that we do, we have been doing because it's important.

And it's something that has been unpopular with other local government officials that I talk with, serving on the, Michiana Area Council of Governments policy board.

I meet with and talk to mayors, council members, commissioners from a four county region.

And this was certainly not popular among those local, public servants.

Now, according to the figures that I have, the county government in Saint Joseph County is expected to lose about $23 million over the next three years.

And all local entities, schools, libraries, townships, city and county government, are facing a $108 million shortfall.

So to your point about cutting services.

Do you expect cuts to essential services like public safety, health, libraries?

And, how would, the council, determine what kinds of cuts would be necessary or who would make those decisions and how would those decisions be made?

Well, it actually brings up a separate subject of whether the cuts will be necessary or not.

Yes, there is going to be a reduction in property tax funding.

That is unequivocal based on what was passed.

We will, as things stand today, have slightly more funding next year than what we do this year.

But quite a bit less than if this bill wasn't passed.

The same is true in 2027.

But there's a precipitous drop in 2028 for all of these local government entities with the way that they've staged, the implementation of this, by year three, because costs increase for local government, just like they do for us in our, in our households.

I expect that, we can only cut so much before it's unpopular with the public.

And we'll have to supplement with some other revenue source.

Perhaps there's enough activity with the economic development in Saint Joseph County to offset those losses.

But if that's not the case, then we will have to look at the other tools that the state has equipped us with.

Nobody likes income tax increases because people like renters and those on a fixed income don't get the benefit of a property tax cut, but they will pay income tax increases if that's something that's implemented.

And it's not just a tool for the county level of government.

It's also a new tool that's been provided to cities.

So, cities can, independently of, populations of 3500 people or more, can implement their own independent, local income tax.

I don't know that that would be popular, but that's the challenge that local officials are now faced with.

Cut those services that are deemed necessary or supplement the funding gap with a new tax.

So and obviously, cutting services that people like, particularly local services is an unpopular tax increases also unpopular.

You talked about efficiency.

What process would you like to see in place to potentially scale back, expenses without cutting services that people have come to rely on?

Yeah.

Well, you know, that's, that's a really good question.

The the county council is the, the top legislative and the fiscal body in the county, but there is a number of staff, number of departments.

Some of the department heads are even elected at the county level, who look at all the nuts and bolts of fine tuning these details.

So I think the council doesn't really deli or, you know, determine the specific details of these changes.

We oversee a process, a a public a transparent process.

We encourage involvement by, county officials as well as anybody in the public to come forth with their ideas.

What what things could be, cut back.

What are the the most important ideas?

Services to protect.

And then from that information, it's it's essentially a public hearing.

I don't know if this is going to be one public hearing.

No, I think this is going to be, a very lengthy, repeated conversation.

So hopefully we could have, forums throughout the county, to get this feedback.

And perhaps the most important is to have, department heads, those who are experts in these details.

The financial details to help and communicate to the public where our numbers are at.

And what does it look like if we're cutting back on services?

I mean, right now, there's a lot of potholes in the community.

It's that time of year.

But if we have to look at tightening the belt on road repair, which I don't think road repairs is covered by property taxes, but it is.

It is okay.

It is, but it is one common example that I think that people can relate to.

They might not want, you know, delays in repairing roads when there's a lot of potholes in the spring time.

So I think, the process would be we need to have a lot of open conversation, to communicate, what the scope of what we're looking at now.

Some folks who are critical of the move that the legislature has taken, raise the point that you raised, Brian, which is if the counties and cities are most affected, should the state get involved?

Were you arguing that this really isn't appropriate for action at the state level?

Even though a number of voters, really embraced, the governor's campaign promises to cut property taxes?

Yeah, it's a really good question and gets into the nuance of the situation.

Certainly the state legislature and the, has the right to address these issues.

I don't want to take away what their, the authority that they have under our state constitution to do.

Certainly the governor had this as a priority, as he campaigned in and, election promises that were made and reinforced with the, you know, state of the state, type of, conversations that he's had.

But at the same time, are they the most connected to these communities and the services that we provide?

Andy mentioned potholes within the roadways.

We already have a massive deficiency in our ability to fund local road improvements, just to maintain the ones that we have today.

If you talk to our county engineer, it would take us 50 years worth of our current funding levels to address the infrastructure needs that he's responsible for.

When those roads actually need resurfacing or or fully replaced roughly every 20 years.

That's that's not navigable today with the current funding levels, let alone cutting those levels further.

Most of our, if not all of our local government entities and agencies already operate on a deficiency basis like that.

Our residents already put up with not attaining the level of service that they would likely hope for.

So where those cuts come, it's just going to hurt more than it already does.

And and I feel like our state level government may be disconnected from that because, they're it's not necessarily Indianapolis making this decision for us.

Certainly we have our local elected officials, but and it's a big but it's a shifting of that responsibility for the hard decisions that need to be made.

And this show is called Politically Speaking.

So I'm going to get political here.

15 years ago, there were more Democratic mayors, councils and local governments, not a majority in Indiana, but there were more.

And many of them were forced to make hard decisions then to raise or implement income taxes and other things like that to offset the funding deficiency of the tax caps.

Today, around the state of Indiana, we have more Republican led cities, counties and legislative governments.

That decision is going to be predicated on those majorities.

We have a majority led state government by Republican supermajority.

All statewide offices are held by Republicans and more local offices are run by Republicans.

And whether it's cutting services or increasing taxes, that's going to be lobbied heavily on as their responsibility.

Now.

So let me turn to you to respond.

Oh, it's good stuff.

No, I, I appreciate the rundown.

I mean, that is, a snapshot of where Indiana is today.

And, you know, one of the, one of the guiding principles of the Republican Party is limiting government.

And so now that we're talking about, tax cuts, it provides that opportunity to examine what portions of government are less essential.

Okay.

That can be limited.

I mean, the, the the primary things that I think people in the county, really, really need is they need roads that they can travel every day.

And they need safe neighborhoods.

You know, patrolled by police, so that they can live out their lives, in peace and have privacy.

So when it comes to cutting back on those, I think those would be very unpopular cuts.

But if you have, services that don't necessarily apply to everybody in the county, that that could be provided by, a nonprofit or, or other, you know, entities that besides the county government, then then perhaps those are some things that we can look at cutting back on or even removing entirely.

And then limiting the focus of the county government to the, the essentials that are used by everybody in the county with libraries, for example, or schools fit into that category of things.

Nonprofits should be stepping up to do more.

Or do you see those as a central county type?

So so those are those are traditional mainstays of of the government agencies.

They don't fall under the the county government.

Schools are their own entities, libraries.

I think they're they're dotted line to the county government that they do operate kind of quasi independently.

So I think those schools are used by everybody at some point in their life, but not every day all throughout their lives.

Right?

So I think that's a part of why it's they've been separate from the county government libraries.

You know, my family, we go to libraries, fairly regularly.

So that's something that we, we do enjoy.

I think some people don't use libraries very often.

Okay.

So then it's a question of how many people are actually using the libraries right now.

And if we can encourage more usage I think that would be great.

But if it is something that's not used by everybody in the county, then I think we we need to have that that painful conversation about priorities.

And I think that speaks to a point that I'd like to make, which is what kind of community are we?

Who do we want to be?

What attracts people to stay here, return here after school, or desire to come here for a job opportunity?

What kind of a community do we want to be?

And things like schools, good, solid public schools?

Not that everybody utilizes them, certainly not throughout their entire span of life.

We as a community benefit from strong public schools because they're more than 80% of the student population in Saint Joseph County, attends public schools.

If there is not strong, then what kind of a community are we going to be if we don't have a strong library system that supports people beyond school or as a supplement to school, what kind of a community are we going to be?

So we really have to ask ourselves that question of what attracts people to stay here, to move to here, or to return here for this to be a vibrant community.

And I think it requires all of these additional services.

I think I think they all are all essential services.

To be more specific about it.

Now, Saint Joseph County has attracted some major investors recently, particularly when it comes to investment in things like the $11 billion Amazon Web Service Data Center.

These large scale economic projects receive generous multiyear tax incentives.

So what tax incentives did was receive to locate in the county.

And do you think that those incentives, will be worth it based on the people that they're bringing into the community, the jobs they're bringing in, to the community?

So I wonder if maybe Brian, we'll start with you and then go to Andy.

Start with that.

Sure.

And I asked to start just because, I wasn't on the council and that half.

So I just wanted to get in a little bit, and then I'd like to hand that off to Brian, who I think has more, background on that.

But my understanding was, is it was a, tax abatement that the county offers, for Amazon.

And I don't know if the GM factory, so they have to provide certain things to the county government.

In exchange, there will be a temporary a reduction in the the taxes that they pay.

But, I, you know, I'd like to hand it off to you because I don't know a lot of details on that, so.

Sure.

And and I appreciate that.

And the, the, the abatement process that specific to Amazon, was a 50% abatement on real property, the physical land and the improved structures of the property.

And that gets implemented as each building is constructed and comes online.

There's a lot of debate over the value or the validity of tax abatements, but, what often is the case is the abatement is a phasing in of new taxes for projects that may not have happened without the incentive, as well as an enhancement that allows the project to be larger than what it otherwise would have been without the abatement.

So there were some concerns and some nay votes.

Last year, when it came time to approve those abatements for the Amazon Web Services project, but I think what those votes lacked was, their, their argument was that, the project's going to happen anyway without these.

Why should we provide an abatement for them if it's going to happen anyway?

But a project may already have broken ground and it may still happen.

But will it happen on the scale that is desired and has the biggest benefit for the community in the long term?

So is a 50% abatement, meaning that, starting next year, because these structures are coming out of the ground now, millions upon tens of millions of dollars of additional tax revenue is going to be generated for Saint Joseph County just from the property taxes alone, let alone the additional income taxes from the people who are working there and the potential growth in population construction and other tertiary businesses that come online because of major projects like that.

I think, the Chamber of Commerce is, made the point in the past that, industry investment and jobs related to in this, industrial work, tends to have A3X5X or ten x multiplier on the economy because of the other supplemental service hospitality restaurant.

And similar jobs that grow by way of that manufacturing or industrial investment.

So, abatements help ensure that those projects happen and happen at the scale that has the most benefit.

It sounds like you think even with the abatement, the additional effects, both of the taxes that AWS pays and the jobs and the businesses that their workers might support, that your hope is that this will offset the amount of cutting that the county might have to do.

Yes and no.

I think that it's going to add a tremendous amount of new taxes to our property tax rolls for Saint Joseph County, however, and this particular area that see, Indiana economic, territory around New Carlisle, it is almost all bound by a tax increment finance district.

So there is a pro and con to that.

Yes.

It will be additional revenue for the county to offset some of our expenses, but it will be largely limited to the expenses related to the infrastructure, the fire services, the, policing, and maybe some educational and other things.

But for that specific area, I think the law around Tiff says that the spending of those revenues must be in service to that territory.

So it's not strictly bound by that geographic area, but it's largely bound to services that support that geographic area.

So it's going to offset the county's expenditures out of our general fund that would go to that area, which does help us more broadly, but it doesn't have a direct impact for the rest of the county.

Is that the biggest reason why tips themselves are often controversial?

They it can be, it's one of those things to where they must be used in balance before they have a net negative or a detrimental impact on general fund, revenues.

Mishawaka, for instance, roughly a third of the land mass within the city of Mishawaka is contained within, Tiff district.

It kind of connects through your commercial corridors and major roads.

So it's all one contiguous, Tiff district, and it helps to fund a lot of the quality of life and quality of place improvements that you've seen in a city like Mishawaka.

So that was a strategic decision that was made well over a decade ago that, if we want Mishawaka to be the place that people desire to live in today and return to that kind of, investment in that territory must take place because it gives you bonding capacity to do projects that wouldn't otherwise be possible without the Tiff district and the bonding from that growth, the types of projects that are going to happen in the New Carlisle area are possible because of the bonding capacity, created through the development of that Tiff district and the future value increases of it.

The other side of it is if it outperforms that, you can, pay off those typ tiff bond obligations early and dissolve the tiff before that time limiting factor of it.

And it can have a it can have a benefit to the broader community earlier in the process than what is typically a 20 or 25 year process that a Tiff boundary is established.

One last question about, the AWS facility, which is that there was a lot of concern among those who opposed the project, despite all the jobs about the water usage, energy usage.

Do you feel like the county has good plans in place to deal with those things and moving forward?

Yeah.

I mean, you know, it's it's standard, development, for industrial use, I think I think the the keep in mind, though, is that the scale of it is huge.

This is the the largest single project investment project that I think that has occurred in Indiana.

So the scale of it's kind of, hard to, to overstate that.

But when it comes to the, the engineering that goes behind that, setting up the, the infrastructure, the roads, I think there's been an incredible amount of involvement.

And because I don't know if it's the scale of it or, the location, but, the state has been involved substantially in this.

So, so sometimes you'll have, commercial industrial development that's, you know, concentrated just within the county.

But this one is so massive that the state is also heavily involved overseeing everything.

So you you have multiple layers of government that are overseeing all this development, and they're having public hearings on all major issues to make sure that, it's done thoroughly.

And I will say this is kind of the culmination of 15 years or more of effort, planning, engineering, public involvement for 15 at least the last ten years in a concentrated way.

But Amazon, like any other major developer, had to go to Indiana, Michigan Electric and get those commitments to can you supply the power that we require without having a negative effect on your other, service areas?

Is there enough water, working with, Peerless Midwest in the county to determine the aquifers ability to supply enough water?

And there's an abundance of that above and beyond what those concerns or what that utilization is going to be, and whether it's the Amazon Web Services project or other economic development projects throughout the county.

That's a that's a common practice.

And I think what we hope for, what we plan for, is that while the development may be concentrated in that IEC area, that the development and the investment will happen around it to that is outside that Tiff district, and there is that broader benefit to the community at large.

Well, we'll certainly be watching over the next months and years to see what develops in Saint Joseph County as you navigate this new investment, as well as changes in the role of the state government in terms of involvement in these projects and taxation, because that is all the time we have for this week's Politically Speaking.

I want to thank our guests, Saint Joseph County Councilman Andy Rutten and Brian Tanner.

I'm Elizabeth Bennion, reminding you that it takes all of us to make democracy work.

See you next time.

This WNIT local production has been made possible in part by viewers like you.

Thank you.