By Giavonni Nickson
On Friday, February 22, 2019, Mayor Karen Freeman-Wilson delivered the State of the City Address at The Genesis Convention outlining the challenges in the city and its goals for the future.
The fiscal deficit has been a significant challenge in the city and is being addressed in the financial recovery plan. According to Freeman-Wilson, city expenses have been reduced every year.
“We went about the business of looking at our budget very carefully and really thinking through how we could do the things that we needed,” said Freeman-Wilson.
Decreasing casino revenues have impacted the deficit as casino revenues have fallen 35% since 2012. The city’s assessed values have been declining for several years with an effect on the city’s tax rate, but it has no impact on the taxes residents pay. Even though the tax rate in Gary is the highest in the state because of the property tax caps, residents do not pay the highest taxes in the state.
“Our property tax revenue has been down since 2014, but the good news is, we have a plan,” said Freeman-Wilson.
Without corrective action, Gary is projected to end FY2025 with a general fund deficit of $7.6 million. Even with the proceeds from the sales leaseback, the projected cumulative deficit over the next five years is $46.9 million.
The city has budgeted from year to year but now plans to forecast three to five years out.
The plan to look ahead with a five-year forecast and create a sustainable plan will address the deficit.
“We have a plan, and the implementation of that plan will lead to a balanced budget in 2021,” said Mayor Karen Freeman-Wilson.
Based on the fiscal impact estimates developed by the city, if the city incorporated the legislative change to relocate its casino and pursued all of the revenue enhancements and expenditure reductions outlined in its initiative list, it would close the city’s structural gap by FY2021.
Pursuing the financial initiatives developed by the city in its entirety would also allow the city to begin to maintain positive cash balances that would let the city make critical investments in personnel and infrastructure.
The city is using a tool to monitor the plan and model progress. Each week they meet and look at all the numbers that have been included in the financial recovery plan to add those numbers in the model to determine whether or not the city is on track. This tool will be invaluable with economic recovery.
The tool is based upon a model that includes revenue generation, cost reductions, and one-time cash infusions. The city’s revenue generation plan is more significant than cost reduction.
By looking at areas that have the opportunity to bring more money in the city, funding sources have been established with legislative changes, licensing fees and permits, the collection of outstanding fines and fees, damage recovery, waste monetization, and new development.
Mayor Freeman-Wilson acknowledged that the city cannot cut its way out of deficit; instead, the city plans to grow its way out of fiscal deficit.
Some cost reductions have come from the utilization of technology, reduction of service contracts, centralizing procurement and purchasing, review of personnel policy, change in healthcare plans, modification of professional service contract fees, reduction in the footprint of city-owned buildings, and consolidation of department functions.
“We are not just saying we are going to do it, we have identified when it’s going to happen. We don’t only have a plan; we have a way of implementing that plan. We are confident in our ability to get to a balanced budget,” declared Mayor Freeman-Wilson.
The city is utilizing actual timelines and a working document that includes every department to track line items.
ONE TIME INFUSIONS
Sources of revenue from one-time cash infusions include sales leaseback, sales of surplus property, property tax amnesty, hiring freeze, and collections.
Mayor Freeman-Wilson addressed concerns that using a sale-leaseback, if done independently, would create grounds for attempting to borrow out of debt.
Freeman-Wilson says the city is not attempting to borrow its way out of debt. Instead, the city is using the sale-leaseback over the next three years to cover the budget deficit and plans to implement all of the other measures that are outlined in the recovery plan so that in 2022 the city won’t need anything from the sale-leaseback and will be able to pay the loan based on the terms.
The city is not mortgaging the public safety building, and with appropriate debt coverage, the Mayor plans to balance the city’s budget.
The city hired a new internal auditor on February 1, 2019. The auditor is working to manage and improve adherence to internal control as a part of the accountability mechanism with reconciliations, departmental reporting, and mon- thly accounting practices.
Development is the key to growth for the City of Gary utilizing a “grow your way out of the deficit” strategy.
In 2019 the city signed and confirmed $1.5 billion in expanded development such as Amazon and new development like Fulcrum Bioenergy and Alliance Steel. New and expanding business entities create jobs and sustainability.
They also provide an opportunity to increase assessed valuation so the city can ultimately reduce its tax rate, and increase revenue.
The city supports business development through investment in infrastructures such as improvements at the airport general aviation customs facility, and investment in sewers on Clay and Lake Street. NIPSCO, Indiana American Water, and AT&T are partners that have also invested in infrastructure to make things better for residents and easier for businesses to develop.
As a part of the Lakefront development, the city is planning for a riverwalk on the north side of the city in the second district, and a walkable lake street to accommodate leisurely walks. This will be especially beneficial for those utilizing the South Shore Train. This is a part of the transit-oriented development set to occur first in Miller and then in Gary’s downtown area.
The dual opportunity in Buffington Harbor stems from the plans to move the casino to Interstate 80-94 where 100,000 cars travel. The halo around the casino will promote the establishment of local dining and family entertainment to appeal to those that do not gamble. This opens up some of the best opportunity the city has ever seen.
Homicides were reduced this year thanks to Gary for Life which includes the 10 Point Coalition, Gary Police Department and other law enforcement from the state, county, and federal levels, neighborhood watch, and block clubs.
As president of the National League of Cities, Mayor Freeman-Wilson is excited about what it means for the city to be placed on the national stage to receive assistance and be recognized for the things the city is doing well.
The Senior Summit in partnership with AARP last year provided information on health, volunteerism, and community engagement for senior citizens.
Legacy citizens were born in Gary and raised their children while working and volunteering in the city because they love their city.
Mayor Freeman-Wilson urges all residents to show their love for the city by examining ways to improve their block, work with 311 and City Hall to take part in the revitalizing of Gary.
In closing, Mayor Freeman-Wilson stated,“It is the greatest professional honor of my entire life to work on behalf of my church members, former teachers, neighbors, family, and friends. My only effort is to make this place better than I found it.”