With a heavy heart, Mayor Julie Struck made it official that the city is looking to bring forward a Business and Occupation Tax that could possibly generate as much as $300,000 to the future of South Bend. In a letter of information and justification penned earlier in the day, Mayor Stuck brought the B&O Tax question to the city council and the attending audience.
"The City of South Bend has been hamstrung by inadequate financing (in particular the general expense fund) for the last few years," stated the letter, "The city has been using reserve funding to cover revenue shortfalls each year. That reserve funding is exhausted."
The letter continues to point out that with inflation increasing on the average of 2.1% annually for 2010, by 2013 it equates to an 8.4% increase. The mayor noted that compared to 2009, expenses have increased 11% and revenue has decreased 24%.
"The city cannot continue on this trajectory," she said.
The tax would implement the state restricted .002% on South Bend businesses and any company that conducts business within the city limits, starting in 2015.
The guidelines are set for a business that generates $50,000 in revenue to pay $100 in tax. A small business that makes less than $5,000 per quarter would be exempt, as well as non-profits would be exempt. Those under the threshold will pay an annual business license fee of $50.
The tax is scheduled to be collected quarterly and is estimated to generate a possible $300,000 dollars that should keep the city afloat for the time being. During the council and public discussion it was pointed out that South Bend is possibly one of only three cities in the area that does not have a B&O tax.
"Most cities that we looked at during the process of setting up this possibility have had a tax like this since the 1980's," reported clerk/treasure Dee Roberts.
When questioned why this had not been done earlier in the history of the city, Councilman Robert Hall offered his opinion that when the council did try this earlier people just saw it as a new tax that they did not want, and they never really looked at it.
On the agenda, two new ordinances, #1486 and #1487, scheduled as a first reading, were moved to their second reading during the meeting. It was further announced that the question of invoking the B&O tax will be open for public discussion at the next city council meeting on October 27, at and the November 10 meeting to gain additional input from the community.