Muncie proposing income tax increase to cover unexpected losses

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MUNCIE, Ind. (Sept. 1, 2015)- The city of Muncie is proposing an income tax increase after a multi-million dollar loss in revenue due to circuit breaker losses.

Mayor Dennis Tyler said during the past four years, the city has lost $50 million in circuit breakers losses. Tyler said the losses are part of the general fund revenue that pays for public safety, parks programs, and recreation programs.

“Makes it very difficult for you to sustain yourself and to sustain your community if you’re dealing with those types of circuit breaker losses," Tyler said.

The mayor said in 2012, the city allocated enough dollars to the general fund to cover losses, but it wasn't enough. He said the circuit breaker losses were too significant and the city couldn't keep up.

“With us allocating and being approved for our maximum levy, we thought we would be okay, however, that didn’t happen. our circuit breaker losses continued to increase," Tyler said. He added, “we haven’t overspent, we haven’t over budgeted. These are general fund dollars.”

Tyler said in order to keep basic services like police and fire protection, the building commissioners office, and city controllers, a city income tax increase is necessary.

"Implementing this will allow us to capture approximately 20 percent of our circuit breaker losses, which would be right around $16 million," Tyler said.

For those who make an average of $50,000 per year, they would see about $240/year out of their paychecks. That equals about $20 per month.

While the city explored other options, Tyler said this was the only option approved by the state general assembly. Muncie is also not the only city dealing with losses.

“It’s not something that we’ve looked forward to doing, but you have to invest in yourself to expect other people to invest in you and we think this is the best way for us to continue to move forward," Tyler said.

There will be a public hearing on September 14. All paperwork would need to be turned into the state by the end of October for the tax increase to move forward. Tyler said it could be implemented by the start of 2016.