Mistake will mean revenue shortfall (12/13/05)

A mistake in a state worksheet has left several local governmental units — but especially the city of Dunkirk — in a financial pinch.

The problem with a tax abatement request for Saint-Gobain Containers means that Dunkirk will receive less than 50 percent of the property tax revenue it expected to receive in its semi-annual draw next week.

Also affected will be the Dunkirk Public Library, Dunkirk police and fire pensions, the Jay School Corporation, and the county.

Because of a major change in the way personal property is assessed, a requested tax abatement by Saint-Gobain Containers in 2000 virtually doubled before it was approved by state officials earlier this year ($36 million after an original request of about $19 million).

Each dollar of property tax paid is divided among various governmental units. In the case of Saint-Gobain, the biggest share goes to the city of Dunkirk.

The problem and resulting refund mean on Dec. 21 Dunkirk will receive $181,000 in property tax revenue when it expected to receive $383,000 — a cut of $202,000. Dunkirk’s general fund budget for 2006 is more than $1 million.

Dunkirk could take out a loan to cover the unexpected shortfall in revenue, but that money will eventually have to be re-paid.

Dunkirk Mayor Sam Hubbard said after a council meeting Monday that the city’s 2006 general fund budget was already tight, but now even more belt-tightening would be necessary. Hubbard didn’t specify where the cuts would come from, but pointed out that choices for cuts would involve difficult decisions.

Hubbard said he had been to several meetings with Saint-Gobain officials concerning the matter which he described as a complex example of corporate finances and tax regulations, dating back several years.

Jay County Auditor Freda Corwin said her office filled out paperwork for the abatement request in 2002, and when state officials finally got around to looking at the request in July determined that the state had provided worksheets which resulted in an incorrect calculation of the tax owed by Saint-Gobain.

“This infuriates me,” Jay County Auditor Freda Corwin said. “This isn’t our fault,” said Corwin, who added today that state officials told her there was nothing that could be done after the final determination.

Corwin said she has met with state and Dunkirk officials as well as representatives from Saint-Gobain to try to explain the situation and to determine what can be done.

The total refund owed to Saint-Gobain is $482,737.27, which Corwin said the county has paid. All but $17,000 of those funds will be recouped by the county when the tax draws are given to the taxing entities.

With that payment of the refund, the county’s general fund reflects a negative balance of $240,875.

“We’ll be O.K. (financially),” Corwin said, because the county has sufficient balances in other funds.

Jay County will be receiving a tax draw of $2,128,179 on Dec. 21.

Corwin said she is unsure how Dunkirk will handle the financial blow.

“We asked them (state officials) if we (the county) could loan them the money and were told no because we’re not a lending institution. They will just have to take out a loan,” she said.

“They’ve cut back on so much already,” Corwin said about the financial impact the closing of Indiana Glass Co.’s plant had on the town a few years ago.

The Dunkirk library will receive $24,193 less than it expected, and the school corporation will see $48,715 less in property tax revenue.

Corwin said Dunkirk will be receiving its full amount of tax dollars in June. However, the county still owes Saint-Gobain $147,000.

“That will have to come off next year,” Corwin said. “We just don’t have it this year.”

At the Nov. 28 Dunkirk City Council meeting, Saint-Gobain Containers corporate tax director Jeff Shonkweiler requested an amendment to the firm’s previously approved 10-year tax abatement proposal, as recommended by state officials.

Shonkweiler told council members that the Indiana Department of Local Government and Finance had authorized the filing of a revised tax abatement form for the company, reflecting an increase of approximately $10 million in improvements at the Dunkirk plant than was originally proposed and approved by state and city officials.

Shonkweiler said that in the process of making improvements to the plant, Saint-Gobain spent substantially more money than it proposed in its original tax abatement request. The new amount of the requested abatement, subsequently approved by state officials, reflect these increases in the expenditures for the improvements, Shonkweiler said.

Following Shonkweiler’s presentation at the Nov. 28 Dunkirk council session, councilman Craig Faulkner, a Saint-Gobain employee, made a motion to amend the request. It was seconded by councilman Tom Johnson, and approved. Voting in favor of the proposal were councilmen Johnson, Faulkner and James Doughty. Council members Connie Whetsel and Larry Smith were absent from the Nov. 28 meeting.[[In-content Ad]]