Carmel Mayor Jim Brainard presented the 2021 proposed budget to the Carmel City Council at its Oct. 5 meeting, with the $110 million planned for the general fund 2.1 percent lower than the 2020 budget. Some of the drop is occurring because 2021 has one less pay period than 2020 for city employees, and department leaders were asked to budget conservatively because of the effects of the pandemic.
For the first time since 2015 a tax rate cap was not proposed for the following year, although the city council could still propose and adopt one, an option councilors are considering. The city is projecting a tax rate of 78.7 cents per $100 of assessed property value, essentially the same as the 2020 rate. The Dept. of Local Government Finance sets the final tax rate after reviewing the budget, and the rate cannot go higher than the rate adopted by the council.
In 2015 the city council voted against a rate cap at 70.07 cents and projected a tax rate at 71.43 cents when it approved the 2016 budget. The 2016 rate ended up being 83.56 cents. Approximately 6 cents of the increase occurred because the city received approval to increase its tax levy to make up for a miscalculation in taxes during the annexation of West Clay. The 6 cent increase was only charged one year.
This year, the city has asked to increase its tax levy because of a change in the distribution of the local option income tax, which limits Carmel to a 2.5 percent increase for the next several years, a decision that came after the 2020 levy was set. The approval of the increased levy does not mean the tax rate will automatically rise. At the council meeting, officials said a change in the levy could lead to a maximum increase of 1.3 cents in the tax rate, but that is not guaranteed.
Many residential property owners aren’t expected to be affected by the lack of a rate cap because they are already paying 1 percent of the home’s assessed value in property taxes, a cap set by the state. Other property owners whose taxes are capped by the state at 2 and 3 percent could be more affected. At the Oct. 5 meeting, city councilor Sue Finkam asked financial consultant Curt Coonrod to gather information on how many taxpayers would be affected and by how much.
Brainard said his preference is to let the budget set the tax rate for 2021 rather than propose a rate cap. The DLGF will set the tax rate after reviewing Carmel’s approved budget.
“I don’t think (not having a tax cap) will result in much of a change. There might be a slight change,” Brainard said. “It wouldn’t impact most of our homeowners, and it would protect us during the COVID a bit.”
The council is expected to vote on the budget at its next meeting, set for 6 p.m. Oct. 19 at Carmel City Hall.
MAYOR TO ASK FOR BONDS
In presenting the 2021 budget, Carmel Mayor Jim Brainard told the city council he plans to soon seek their approval for bonds to pay for an expansion of the Carmel Police Dept. headquarters and road projects in Home Place. City officials declined to provide an estimate on the amount of the bonds as the plans are being refined. An announcement is expected within a few weeks.
Brainard said the city will soon pay off some property tax bonds, which will allow it to add new bonds.
The mayor announced plans for the CPD expansion project in 2015, but the project stalled when it could not reach an agreement with Huntington Bank to purchase its building next door to make way for the project. The city filed an eminent domain lawsuit in May offering $915,000 in an attempt to acquire the property. The lawsuit is pending in Hamilton County Court.
Brainard told the council that the acquisition of the Huntington Bank building is nearly complete. An attorney for Huntington Bank did not respond to a request for comment as of press time. City officials declined to comment on pending litigation.