Welcome to politically speaking.

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

Major changes to Indiana's tax policy are raising new questions for cities like South Bend, where a projected 28 million in revenue loss could impact everything from public safety to schools and libraries.

Meanwhile, South Bend is seeing major investment in housing, infrastructure and downtown redevelopment.

Joining us today is James Mueller, mayor of the City of South Bend.

Thank you so much for being here.

I do want to start with Senate Bill one and the property tax cuts or relief.

We are going to see that homeowners and businesses will see that property tax relief.

But it also may have some pretty serious implications for local governments.

So I wonder what your thoughts are at this point about the recent legislation.

Well, thank you for having me.

And of course, lots of lots of things going on down in Indianapolis, lots of things going on in Washington.

That's going to have a big impact here in the communities like South Bend.

And, you know, the, nobody's liked what's been going on in our economy over the past few years where, you know, we had the inflation, the highest inflation rate in decades.

And, our housing market has we've had, we don't have enough, housing units across the country.

But that's true in South Bend as well.

And that's driving up values, property values and driving up home prices.

And so, there there is definitely a need for targeted relief to, to hit or to protect those who've been hardest hit and most vulnerable to these increases.

But what Senate Bill one is it's not targeted relief.

It's, sweeping anti-growth policy that really is looking to defund police, fire, schools, local economic development and infrastructure.

And so, this policy will have more impacts as time goes on.

You know, some of the more extreme ones don't hit until 2028.

The extreme impacts won't hit until 2028.

And as time goes on, this bill will lead to worse.

Street conditions in our communities will lead to some tough choices, around public safety, as well as slower growth from not being able to invest in economic development at the same level.

It's not a sky is falling, kind of, but it's certainly not a pro-growth, forward looking policy.

What would a more pro-growth, forward looking policy look like if we acknowledge that there was a need for some tax relief to people who are seeing their home values skyrocket?

Well, I mean, first of all, it did nothing to necessarily protect those who are getting hit the hardest or those who are most vulnerable.

So this is an across the board, kind of policy.

And so that that becomes expensive when you think when you're having to pay for relief across the board, whether someone needed it or not.

The price tag of that policy becomes extraordinarily, extraordinarily expensive relative to the little amount of relief.

And so, the folks who needed it most aren't going to see, the relief that they need.

They're going to see a little bit of relief.

Meanwhile, you're defunding critical services at the local levels.

Now, another thing that the legislation did was give local governments and option to use an optional income tax.

Is that something that South Bend will be looking at depending how things progress?

Well, I mean, so it's not in these this has not been fully fleshed out.

I do not believe, but what they're doing is, my understanding is they're getting rid of the current local income tax.

System.

In three years, this doesn't go into effect for three years.

And then giving each of the individual units, different abilities to, to raise revenue.

So I this is another complete overhaul, sweeping, package.

Most of the attention has been on the property tax side so far.

I believe as we move forward and people understand the impacts of the income tax portion, there's going to be a lot more discussion.

And honestly, I think, legislators know they haven't figured out if this part is going to work or not yet.

But, they have a couple of years to hopefully, figure out and make sure that it's going to work.

But as of now, we don't we can't tell you how this is going to work if it's going to even be able to match the funding we currently get from income taxes.

That's something we're working to get analyzed.

But there's no guarantee that the policy they they passed and was enacted in the law earlier this week.

There's no guarantee that even the income taxes are going to meet what we get currently, because it's so there's so many sweeping changes until we go through the full analysis.

We we won't know.

And so, we're diving into that, trying to figure out what it means for South Bend.

I know other communities are doing that as well.

But this is something that could be, you know, this is something that could be, you know, the property tax piece is kind of known or known what the impacts are.

This is kind of a wild card.

What this means for for local governments and services across the state.

Now, if people in cities like South Bend are trying to figure out what it is that those property tax is actually fun, could you give us a sense of where those dollars are going in terms of what they support now and where you're concerned most about potential negative impacts?

Yeah.

So the property taxes are our main source of income for our general fund and our general fund expenditures in the city.

About half is public safety.

So police fire accounts for about half of these portions.

And so, you know, when you're talking about cuts, we can cut all sorts of things.

But if, you know, at some point 50% is a big portion and, you know, we're going to hold off cuts, the core services like public safety as long as we can.

But if this policy, as I said, this policy gets worse over time, eventually it's going to get to the point where there will be tough choices about public safety, infrastructure and schools.

But currently property tax revenue, you know, goes to fund the general fund, general operations of the communities.

We've had to use it to supplement street funding because, you know, the gas tax has not kept up with inflation, has not kept up with higher efficiency vehicles.

And so the traditional source decades ago of what went to fund our streets and our infrastructure, the tax on, on every sale of gas or a gallon of gasoline hasn't been keeping up.

And so we had a choice.

You either let the streets completely fall apart or you find alternative revenue sources.

In this case, it is the general fund.

Both the income and the property taxes that we've been discussing.

And so this, you know, local government is lean.

They, the state made reforms under Governor Daniels and did the property tax caps.

And there were a lot of cuts made at the local level back in the late 2000.

And so there is not this, this surplus of dollars that I think the legislature and the governor believe there is, you know, these cuts, when we're forced to make cuts, they're cuts that will be services that I believe everyone supports.

And those that we need.

So those property taxes then, are not just funding the city services that you mentioned, but also things like county libraries or schools systems.

How does that affect folks living in cities like South Bend?

Yeah.

So schools, other government, other local government units also collect property taxes.

And so schools, libraries, townships, and so on, county government as well.

So, you know, they deliver other core services, obviously education is critical to our future and our kids, need to have a quality education to be able to move up in life, so that those are critical investments that could be undermined by this policy.

The county government has a lot of core services, whether it's, public health to their own infrastructure needs, to to courts, to our judicial system.

So, the these aren't, you know, optional or discretionary programs.

These local government delivers core services that residents depend on each and every day.

Now, one of the things that we've seen in South Bend is, a need for housing.

You mentioned housing earlier in terms of, a lack of housing stock and the prices that are driving up.

There are some estimates suggesting that Saint Joe County will need 34,000 new housing units in the next decade, many of those in South Bend.

So what's the city's long term strategy to meet the demand for housing, and to make sure that this is something that people of all incomes can afford?

Yeah.

So our our approach is pretty simple.

It's an all the above approach where we need housing of every type.

And so we need affordable housing.

We need market rate housing.

We need multifamily housing.

We need single family housing and everything in between.

And so that's the strategy that that South Bend has adopted is making sure that we're a place that's open for investment and making sure we're facilitate, the housing options across the spectrum, whether it's single family, multifamily, affordable to, to market rate.

And so, you know, we've seen some success, but, the housing market is fundamentally broken.

And that means that, it's hard to for folks to build housing units without some level of subsidy from whether it's the federal government, state government, or local governments.

And so, that's something also that the conversation about SB1, you know, we haven't been waiting for the federal government and the state governments to come in and solve this problem.

We've been using some of those general fund dollars to to dedicate to getting more housing moving in South Bend.

And so housing is another aspect that will be slowed.

Our efforts will be slowed.

And, you know, again, sky's not falling won't mean that, we'll stop.

We won't be able to do anything.

But it does mean that we won't be able to invest as much in the housing as as we have been or as we plan to do.

And that will slow growth, because if you don't have housing units to have people move into that, by definition, you're not going to be growing.

I mean, this is a pretty simple, you know, this is everyone when you put it that way, people like, of course.

So that's that's not growth.

We're a lot of times folks think, you know, and in some cases taxes are do inhibit growth.

But in this case, in South Bend, Indiana, the tax rate is not what we already got a pretty low tax rate relative to our peers across the state.

It's not the tax rates that are impeding our ability to grow.

It's our ability to actually make house, you know, build housing units.

It's our ability to make this, an attractive community, community of choice where people want to stay, who grow up here and people want to move here who aren't from here.

Now, as we think about growth that is happening in South Bend, there are several major projects going on, the Madison Lifestyle District and Beacon Health expansion.

For example.

How why is that important to the city and how will those particular projects benefit the city as a whole?

Yeah, that's a great question.

I mean, the, the first and foremost, if you ask someone to go into a city and see and then a visitor and then ask them, how do they think the city's doing?

Usually it's it's the job center.

It's the culture center.

It's that urban core in which a city gets judged and for good reason, because that is where a lot of economic activity happens, and that is where a lot of the pieces of the place, the culture of the place, take place as well.

And so, building back our urban core, we've, we had a strong urban core, before our decline.

And so now that we're back on the rise again, making sure that that urban core is strong is critical to our future, not just for the downtown area, but for the entire city.

Because without a strong job and cultural center, it's going to be hard to be successful in the neighborhoods around downtown and beyond.

The other pieces, it's a simple math.

The issue is, you know, a vacant parking lot in prime real estate doesn't pay much in property taxes.

And if there are no jobs occurring on there, they're not paying, in the into an income tax.

Or if there's no retail going on, there's no sales tax generated.

And so, from a sustainability standpoint, a fiscal sustainability standpoint, we need to have investments and have density so that we have the tax base to support all the services that we need.

So that investment there in that urban core provides revenue that can be used out in the neighborhood citywide, absolutely provides a tax base, but also provides, a more appealing market in which, investors will want to invest in the neighborhoods throughout the city.

Now, in recent months, we have seen several broad immigration sweeps.

People often think of immigration as a national issue, and certainly that's where enforcement takes place.

But we're seeing more demands from the federal government to enforce immigration laws, at the city level.

And I wonder how the city of South Bend plans to work with or set boundaries for federal immigration enforcement within the city limits.

Well, you know, immigration policy is in the jurisdiction of the federal government.

So I believe there is widespread support for a secure border and making sure we have a system that works and can can monitor who's coming in and out of our country.

We know I think there's widespread, across the political spectrum that knows that our current immigration system is broken.

And, you know, there's we've been talking about, for decades, immigration reform, everyone knows it's broken.

But so far, Congress has not been able to step up on solutions to fixing the system.

But.

And here in South Bend, we fully cooperate with our federal partners on law enforcement across the board.

Not just on immigration, but other services.

But when there's a lawful constitutional order, of course, we're going to to work with them.

If there are questions about a constitutional or they haven't gone and gotten done their due diligence or done what they needed to do, that's that hasn't happened as of yet here.

But that's something that we, we are going to continue to support individual rights, the constitutional rights that every, every person here in South Bend is afforded.

And, I hope that we're not asked to choose between, someone, you know, protecting constitutional rights or, you know, not working or defying a federal order.

So far, you know, that has not happened.

So we want to be, we want to work with the federal government, and we do work with them in terms of keeping our community safe.

But at the same level, you know, you gotta win elections to set the policy.

And unfortunately, you know, from my view, the Democrats did not win the last election.

And the current group is enacting a bunch of policies that, again, are anti-growth.

If you look at South Bend, the immigrant community supports about 10% of our, our economy today.

And if you look at our growth over the past decade or so, the immigrants account for 80% of our growth.

And so if you think we're going to be a growing community, if we close, you know, completely closed down our economy, and we not only do we stop new people from coming in, but we start deporting all sorts of people.

We're going to be a declining city again.

And so this is just simple math.

There aren't enough people to have us be a growing city.

If we're going to say, no more new immigrants and the immigrants, a lot of the immigrants that are here, we're going to we're going to kick you out.

And so, this is a problematic employers know this.

They have, positions to fill, and they need workers.

And so, this is something that it's fine to campaign on things.

You know, people can campaign, but when you actually get in the position of your elected office, you have to govern.

And when you govern, you're stuck with reality.

And the reality of this is the numbers don't add up.

We don't we don't have the people.

We don't have the workers.

If you if you take an extreme policy like those of the current administration to creating new jobs doesn't do much good if there aren't people to work them.

Yeah.

I mean, and, you know, there's been a lot of studies showing that, the immigrant community in particular creates new jobs, too.

So not only do you need them to fill jobs, but they have a big role in creating new industries.

And making sure that there are jobs of the future.

So, this is, kind of it feels like sabotage, to be honest, because you wouldn't think you'd be going after the things that have, proven to be successful for our growth.

But here we are, we're debating whether this was good for.

We all know this has been a big part of our growth throughout our country's history, and in particular over the past several decades.

And we're the envy of the world.

We're the richest economy in the world.

We've, you know, things aren't perfect, obviously.

You want things to improve, and, but it's it's, to say that, this has been a failure.

I think, is just wrong.

And, folks need to put a little more attention to how did we become and maintain our dominance in the world's economy.

And then I think you would say a lot of these policies are being pursued right now, are undermining our ability to continue our dominant position.

We've seen some threats from the Trump administration in terms of any federal fund being or grants to cities or states that don't comply with specific orders, even if leaders there consider them to be unconstitutional.

Are you concerned that this could happen, to the city of South Bend?

Like I said, we're we're going to follow all lawful, we follow the law.

We believe in the law.

And so, we're going to follow it if it's lawful and if it's, unlawful, the courts will determine that.

And if there's a disagreement, that's why we have the courts.

And then at the end of the day, we will abide by what the courts determine is, is the lawful approach.

And so that's this.

It's kind of strange that we're talking about this because that is the rule of law.

I mean, that is, it shouldn't be a question about whether anyone is on both sides.

I mean, to be fair, there are some, some cities and some mayors who say we won't we won't do this even if the law, you know, in some ways it's they don't say it explicitly, but they're saying we don't believe in this.

We're not going to do this even if the law tells them to.

But on the other side, of course, there's, you know, if if you're not concerned with constitutional rights, that's a big problem.

For our rule of law and and for the protections of our people.

Now, you're in your second term as mayor as you think about the challenges and the opportunities that South Bend faces now compared to when you started, how do things look different and in what ways have your priorities shifted now in your second term?

Well, I'll I'll just say we are in a great position, as a city and if you would ask me, would we be in this kind of position where we have all of these opportunities in front of us?

Just five years ago, as we were entering into the pandemic?

You know, forget the pandemic, if the pandemic never happened, even then, if you said in five years we'd have all of these tremendous opportunities in front of us, I would have said, that's great, but how do we get there?

So, we're on a very good path.

We have a lot of great opportunities in front of us.

And then if you had told me we'd have a once in a century pandemic in the middle of it and still be here, I would have said, now you're just crazy.

I don't know what you know what, what's going on with you?

But there's something, you know, not quite right.

So, it's exciting time to be mayor of South Bend.

Certainly.

The best time to be mayor of South Bend in my lifetime, in terms of all the different opportunities and growth occurring.

The challenges are some of these, fundamental issues that, you know, uncertainty and disruption is not good for business and not good for a private business, not good for local government businesses.

You know, we depend on having some degree of understanding because we can adapt, we can innovate around new things.

But if we have no idea what's coming tomorrow, that's a problem.

Like if something someone is going to post something on social media, our president, for example, and the stock market tumbles by 10% because of it, that we didn't the day before.

We didn't say, oh, tomorrow the stock market there was no reason why the stock market was going to decline except for this one action.

And so when there's no certainty, there's no stability.

That is a huge challenge because we can't we have no idea what's coming tomorrow, much less a week from now, a month from now, a year from now.

So it's hard to make plans when you have no idea what's coming next.

As we think about opportunities for this city of South Bend, what role does that faster path to Chicago through the South Shore train play and are there ongoing conversations about connecting the urban center, to the South Shore?

Absolutely.

I mean, the City of South Bend's position has been we believe that the trains are meant to go downtown to downtown.

There's a reason why the Chicago terminus is in downtown Chicago.

And similarly, we believe that the terminus in South Bend should be, in the downtown.

The there are a lot of challenges, and certainly cost is among them.

The cost to get it downtown is extraordinary.

And so there's no easy or obvious plan to get the dollars necessary to bring it downtown.

But there are there are folks trying to get it down and we're supportive of getting the commute time down to under 100 minutes, if we can.

And that may involve, in the short term, changing the location from one side of the airport to the other.

But even let's just say that moves forward.

That does not preclude the ability.

It's in the plans of that potential project.

That long term, it could still come downtown and the city has purchased Union Station, the historic train station building.

We're we're working with Amtrak.

But again, that's, depends on a lot of federal government and, in and so, that's there's a little more uncertainty regarding Amtrak these days, given the change of administrations.

But nevertheless, if things are, you know, relatively, you know, not completely upended.

Amtrak wants to be downtown.

We want them downtown.

And we hope that we can find a way to make that that happen.

Why would that be important in terms of the city of South Bend?

What advantages are there to really bringing that downtown?

Yeah, I mean, connections to the world economy.

I mean, there's growth opportunities there.

So whether you're thinking about, products or whether you're thinking about people and in this case, this is passenger rail.

And so this is about people and, being connected to the third largest market, of our country is huge for us because as you see, across the country, you have these, these centers of, of commerce, these centers of, growth.

And there's a lot of spillover, effects, whether you're thinking of suburbs, of major cities or, and beyond.

And so that being connected to that source of economic activity, being better connected to that and integrated to that only helps grow our local economy here in South Bend to potentially more commuters who would live downtown, more tourists going downtown, coming this way for the day.

Both.

Yeah, I mean both.

And you know, in people sometimes people think of it as, you know, South Bend going to Chicago, but there is also Chicago coming to South Bend.

And I that's a piece that as we continue to grow and continue to have more, more opportunities and more employment and more jobs, more good jobs that, there would be more people coming this way, as opposed to going the other way.

And that's something that we have to offer here in South Bend is is a good quality of life.

And a reasonable, reasonable affordability.

That's how we ended up on, on our those top lists about the best places to live.

A big portion of that was good quality of life.

And the affordability here relative to other cities.

So interesting times for sure.

Lots of opportunities as well as challenges.

I'll look forward to having you back on some other time for an update, because that is all the time that we have.

For this week's Politically Speaking.

I want to thank our guests, South Bend Mayor James Mueller.

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

We'll see you next time.