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12/28/2010 11:05:00 AM
EDITORIAL: Municipal bankruptcy law would affect Gary


A proposed bill filed last week by state Sen. Ed Charbonneau would offer governmental entities a chance to file bankruptcy. Just like everyday people or businesses, a town, city or other municipal entity could declare it was broke if its income doesn't meet expenses.

Charbonneau denied the bill is aimed squarely at Gary, but no other municipality has asked the state for relief the last two years, as Gary has done with the Distressed Unit Appeals Board. The Gary City Council recently voted to go before the DUAB for a third time next month, in hopes of being allowed to set the city's property tax caps higher than the state maximums.

But this trip downstate would be the last for the city, because the tax caps are now part of the state constitution. When they take effect in 2012, Gary won't be allowed to raise property tax levels, no matter how far short the city falls in its budget.

Much has been made of what Gary would do should it fall short in revenue for 2012. The budget isn't just a little short -- it's more like $10 million over. With emergency services costing about $25 million, getting the budget down to a $30 million total would be nearly impossible.

So Charbonneau's bill would help the city, but it's fairly tough love. The price to stay solvent would include an outside "emergency manager," who would basically take over a city's executive branch.

It's no secret a number of people want Mayor Rudy Clay's job, with perhaps a half dozen already lining up against him for next year's primary contest. But the seat would be virtually powerless should an emergency manager be brought it. That could clear a few potential candidates from the race, although they might not know if they'd need one until after election day.

Mayor Clay says the city is fine and won't need to use the proposed legislation. But come May, the threat of it could affect the primary's outcome.

Related Stories:
• 'Emergency manager' would run bankrupt municipalities under proposed Senate bill
• Daniels supports state takover, bankrupcy law for local governments
• Report details impact of property tax caps for Lake County
• OPINION: Hoosier economic development endangered
• City Council ripped as Gary seeks tax relief from state
• Will Northwest Indiana to-do list get accomplished in General Assembly
• Mayor fuzzy on how lifting tax cap affects Gary business
• Questions remain on 'bankruptcy' bill after Indiana Senate hearing
• Bankruptcy bill could impose 'tough love' on cities, schools
• EDITORIAL: Gary officials should stop passing bucks

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