Published: May 11, 2008 10:18 pm            

Council ready for annexation plan

Plan will be close to cost neutral for city

For members of the public wondering if the city of Kokomo is attempting to cash in with an ambitious plan to annex, numbers released this week show the effect will be essentially cost-neutral for the city.

City officials plan to annex 14.2 square miles of the county into the city this year, with the tax impact for newly annexed homeowners expected to come in 2010.

The Kokomo Common Council will hold the first of three readings on two separate annexation ordinances — one for the east side of the city, and one for the west side — at 7 p.m. today in council chambers, City Hall, 100 S. Union St.

When fully implemented, city officials say the annexation will result in about $7.5 million a year in additional tax revenue from the newly annexed areas, but providing services to those areas will cost about $6.8 million a year.

Those costs will include adding 15 additional police officers, 10 firefighters, six emergency medical technicians, two additional fire stations, three additional street department workers, and several new pieces of motor equipment.

All of the financial details of providing services and expected tax revenues were delivered to city council members this week, in anticipation of numerous questions from the public at tonight’s meeting.

City engineer Carey Stranahan said tax legislation recently passed by the Indiana General Assembly — along with several city-imposed cost efficiency measures — will ensure the annexation will be a fair deal for homeowners.

“I don’t know if there are winners and losers when it comes to residents in the annexed areas, or even if you include property owners inside the city,” Stranahan said.

Most homeowners will receive city services — including trash pickup, reduced sewer rates, professional police and fire service and snowplowing — worth as much, if not more, than the additional property taxes they’ll pay.

That’s mainly due, Stranahan said, to the effects of House Bill 1001, which placed “circuit breakers” on the property taxes of various classes of properties.

Commercial properties, he said, will probably see the biggest property tax increases, since the Legislature capped residential properties at 1 percent of assessed value, rental properties at 2 percent, and commercial properties at 3 percent.

“You really have to separate between what HB1001’s going to do, and what annexation is going to do,” Stranahan said. “[HB1001] is a tax shift from residential to commercial in general.”

The Legislature also protected every class of property by shifting some of the tax burden from property taxes to the sales tax, he added.

Stranahan also said about half the city departments won’t receive any additional funding after the annexation takes place, in an effort to improve efficiency. The parks department is the largest department to receive no additional manpower or equipment as part of the annexation plan.

City officials say they are trying to keep costs down in other areas.

The street department would receive two additional packer operators, one truck driver, a new packer, a new lightning loader and numerous additional trash totes to help handle new trash routes. But city officials are also looking at ways to restructure trash routes so that covering each route requires fewer man hours, Kokomo Mayor Greg Goodnight said.

And of the $7.5 million in additional revenue the city expects to receive each year from the proposed annexation areas in 2010, about $4.6 million would come from property taxes.

The rest would come from the city receiving a larger share of federal revenues and local income tax revenues already being collected.

Stranahan said the city’s gross assessed value is expected to increase by 18 percent from the annexation.

If HB1001 wasn’t in effect, and the city chose to tax that entire amount by the current city tax rate, the city would net about $7.7 million in additional property taxes.

Instead, the city will be receiving $4.6 million, meaning the city will be paying almost as much to annex as it will eventually take in, Stranahan explained.

        

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