city of kokomo municipal profile - Indiana Fiscal Policy Institute

THEFISCALHEALTHOFINDIANA’S

LARGERMUNICIPALITIES:CITYOFKOKOMOMUNICIPALPROFILE

byJohnStaffordMarch2016

THEFISCALHEALTHOFINDIANA’SLARGERMUNICIPALITIES|CITYOFKOKOMO

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CITYOFKOKOMOMUNICIPALPROFILEMARCH2016

IntroductionThisdocumentisasummaryoffinancialinformationontheCityofKokomoassembledfromseveralpublicsources.ItisintendedtoserveasasupplementarydocumenttotheIndianaFiscalPolicyInstitutereportFiscalHealthofIndiana’sLargerMunicipalitiesreleasedinDecember,2015.ItwasnotpreparedfororvettedbytheCityofKokomopriortoitsreleaseanddoesnotserveinanymannerasapublicationoftheCity.Ratheritistheauthor’sinterpretationofthedatagatheredfrompubliclyavailablesources.EconomicClimateBasedonthisstudy’sCompositeEconomicIndex,theCityofKokomohasbeenfunctioningintheeighthmostdifficulteconomicenvironmentamongtheeighteenmunicipalitiesincludedinthisstudy.In1970,theCityofKokomohad44,042residents.Thattotalrepresented53percentoftheHowardCountypopulation.In2014,theestimatedpopulationofKokomowas57,085.Thattotalrepresented69percentoftheHowardCountypopulation,anincreaseof16percentagepointsfrom1970.Between1970and2014,Kokomogained13,043residents,a30percentincrease.Between2006and2014,Kokomogainedanestimated11,162residentsfora24.3percentincrease.TotalpersonalincomeinHowardCountyincreasedby6.0percentbetween2006and2013.Thiswasthelowestpercentageincreaseamongthefifteencountiesthatcontainedourselectedmunicipalities.Percapitapersonalincomein2013inHowardCountywas$34,488,eleventhhighestamongtheselectedcounties.Thiswas89.3percentofstatewidepercapitapersonalincome.In1970,percapitapersonalincomeinHowardCountywas103.5percentofthestatewidepercapitapersonalincome.HowardCountyhasexperiencedlong-termgaininemployment.In1970thecountywidetotalemployment(fullandpart-timeemployment)was42,282.By2007,employmentinthecountyhadincreasedto51,259.However,thecountyexperiencedalossofemploymentbetween2007and2013toatotalof48,200by2013.Theoverallincreasebetween1970and2013was14.0percent,thefourthlowestrateofchangeamongthefifteencountiesthatcontainedtheeighteenselectedmunicipalities.Theshorter-termdeclinebetween2007and2013was6.0percent,thirdhighestrateofdeclineamongthefifteencounties.ThisdataisfromtheBureauofEconomicAnalysisTotalEmploymentbycountydataandisbasedonplaceofworknotplaceofresidence.TheGrossRegionalProductinHowardCountyin2013was$3,943,080,403.ThepercapitaGRPwas$47,529in2013.ThiswasthesixthhighestGRPpercapitaofthefifteencountiescontainingourselectedmunicipalities.Oftheeighteenmunicipalitiesincludedinthisstudy,Kokomoranked11thonaCompositeEconomicIndexofseveralmunicipalandcountywideeconomicindicators(shortandlong-termpopulationchange,shortandlong-termemploymentchange,totalpersonalincomegrowth,percapitapersonalincome,grossregionalproductpercapita,grossassessedvaluationchange,andgrossassessedvaluationpercapita).Itscored126outofapossible270points.ThisindicatesthattheCityofKokomohasbeenoperatinginarelativelyneutraleconomicenvironmentincomparisonwiththegroupofmunicipalitiesincludedinthisstudy.Someofthesefactors,suchaspercapitapersonalincomerelatecloselytothe


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relativeincometaxperformanceandotherssuchaschangeingrossassessedvaluationimpactbothpropertytaxleviesandcircuitbreakercredits.AssessedValuationThegrossassessedvaluationfortheCityofKokomowas$4,008,813,800in2014pay2015.Thiswasa2.4percentdecreasefromthe2007pay2008grossassessedvaluation.Grossassessedvaluationwas$70,225percapitain2014pay2015,ranking5thamongtheeighteenselectedmunicipalities.In2007pay2008thestandardhomesteaddeductionswere10.2percentwhilethe2014pay2015combinationofthestandardandsupplementalhomesteaddeductionsrepresented20.2percentofKokomo’sgrossassessedvaluation.In2007pay2008thecitycapturednogrossassessedvaluationintaxincrementfinancingdistrictsandin2014pay2015itcaptured0.5percentofitsgrossassessedvaluationinsuchdistricts.Netcertifiedassessedvaluationin2007pay2008was65.0percentofgrossassessedvaluation(lessthegrossassessedvaluationcapturedintaxincrementdistricts).By2014pay2015,thishadfallento57.9percent.Figure1illustratesthechangesinnetassessedvaluationforKokomofrom2005pay2006throughthecurrentyear.ThecertifiednetassessedvaluationfortheCityofKokomoGeneralFundis$2,314,093,488for2014pay2015.Thatisdownfrom$2,721,415,740in2005pay2006.Between2007pay2008and2008pay2009,wheretheimpactoftheincreasesinthehomesteaddeductionsenactedinHEA1001-2008firstoccurred,thecertifiednetassessedvaluationforAndersondeclinedby5.6percent,thefourthlowestimpactamongtheeighteenselectedmunicipalities.Between2008pay2009and2014pay2015,theCityofKokomo’snetassessedvaluationcontinuedtodeclinebyanadditional8.2percent,thefourthhighestrateofdecreaseamongtheselectedmunicipalities.NetassessedvaluationpercapitainKokomowas$40,538in2014pay2015,ranking5thamongtheeighteenmunicipalities.Overthepastyear,netassessedvaluationfortheCityofKokomoGeneralFunddeclinedby2.8percent.In2014pay2015,0.5percentoftheCityofKokomo’sGeneralFundnetassessedvaluationwascapturedbytaxincrementfinancingdistricts.Thiswasthelowestoftheeighteenselectedmunicipalities.


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In2006pay2007,theCityofKokomo’scertifiednetassessedvaluationwas60.4percentofthenetassessedvaluecountywideinHowardCounty.By2014pay2015,theCity’sportionofthecountywidenetassessedvaluehadincreasedto69.5percent.AnnualPropertyTaxCertifiedBudgets,LeviesandRates2007CertifiedBudgets,LeviesandRatesforPropertyTaxSupportedFundsFund Budget CertifiedLevy Rate/$100AVGeneral $37,397,652 $24,729,840 $0.9358FirePension $4,598,235 $3,197,596 $0.1210PolicePension $3,107,872 $1,997,837 $0.0756Park&Recreation $3,089,088 $2,597,717 $0.0983Aviation/Airport $544,920 $510,030 $0.0193Cemetery $412,325 $325,045 $0.0123PlanCommission $413,131 $206,126 $0.0078Total $49,563,223 $33,564,191 $1.27012015CertifiedBudgets,LeviesandRatesforPropertyTaxSupportedFundsFund Budget CertifiedLevy Rate/$100AVGeneral $40,413,295 $37,398,065 $1.6161FirePension $4,132,505 $698,856 $0.0302PolicePension $3,210,575 $448,934 $0.0194MVH $4,588,265 $2,198,389 $0.0950Park&Recreation $3,922,261 $3,399,946 $0.1037Aviation/Airport $658,367 $548,440 $0.0237Cemetery $510,964 $199,012 $0.0086PlanCommission $605,784 $148,102 $0.0064Total $58,042,016 $44,039,513 $1.9031 Source:DepartmentofLocalGovernmentFinanceAnnualBudgetOrders


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TheCityofKokomo’s2015propertytaxrateof$1.9031rankedastheseventhhighestamongtheeighteenselectedmunicipalities.Kokomo’spropertytaxrateincreasedby$0.6330between2007and2015.Thiswasa49.8percentincrease.Theincrease,incentsper$100assessedvaluation,rankedfifthhighestamongtheselectedcommunitiesandwastheseventhhighestasapercentageincrease.TheCityofKokomocontinuestolevypropertytaxestosupportsomePolicePensionandFirePensionFunds.ItalsoleviespropertytaxestosupportitsMotorVehicleHighwayFund.Asofthe2015CertifiedBudgetKokomohasnotadoptedaCumulativeCapitalDevelopmentFund.In2015Kokomodoesnotlevypropertytaxestosupportdebtservicefunds.


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CircuitBreakerImpactsIn2015,theCityofKokomolost$8,865,350inpropertytaxrevenueduetoCircuitBreakercredits.Thatwas20.1percentofitsCertifiedPropertyTaxLevy,theseventhhighestamongtheselectedmunicipalities.Afteradjustingforinflation,the2015totalCertifiedLevynetofCircuitBreakerCreditswas91.8percentofits2007CertifiedLevy.In2015CircuitBreakerCreditsallocatedtotheCityofKokomowere$155percapita(seventhhighestamongtheeighteenmunicipalities)and$383per$100ofassessedvaluation(alsoseventhhighest).TheCityofKokomolostanother$103,672inpropertytaxrevenueduetotheCircuitBreakersinitstaxincrementfinancingdistricts.


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LocalIncomeTaxesHowardCountyhasadoptedtheCountyOptionIncomeTaxatarateof0.7%andtheCountyEconomicDevelopmentIncomeTaxatarateof0.2%.HowardCountyhasalsoadoptedaPropertyTaxReliefLOITat0.5%buthasnotadoptedthePublicSafetyLOIT.Italsohasa0.2%SpecialPurposeLOITthatfundsoperationandmaintenanceofcountyjailandjuveniledetentionfacilities.NofundsfromtheSpecialPurposeCOITaredistributedtotheCityofKokomo.TheKokomoCityCouncilhasacontrolling54.9percentofthevotesintheHowardCountyIncomeTaxCouncil.


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In2008,theCityofKokomoreceived$8,165,437inlocalincometaxdistributions.By2015thesedistributionshaddecreasedto$8,045,229.The2008distributionwouldhaveneededtobe$9,050,407in2015tokeeppacewithinflation.Localincometaxrevenuerepresented18.9percentofKokomo’s“coreincome”(certifiedpropertytaxlevyplusincometaxrevenue)in2008.Thisproportiondeclinedslightlyasincometaxrevenuerepresented18.6percentof“coreincome”(certifiedpropertytaxlevylesscircuitbreakercreditsplusincometaxrevenue)in2015.

FiscalCapacityIndexAfterexploringthechangeswhichhaveoccurredtothepropertyandincometaxrevenuestotheCityofKokomo,whathasbeentheoverallimpactonthefiscalcapacityofthismunicipality?Tobetterunderstandthatimpact,asimple“FiscalCapacityIndex”hasbeencreated.“Coreincome”asdefinedinthisstudyisthecombinationof(1)annualcertifiedpropertytaxleviesnetofcircuitbreakercredits;and(2)annuallocaloptionincometaxcertifieddistributions.Inaddition,propertytaxlevieshavebeenadjustedtoremovethe2008leviesforthosePoliceandFirePensionFundsthatweretakenoverbythestatein2009toallowforamoreaccurateyear-toyearcomparison.Thesetwosourcesrepresentthetwokeyrevenuesourcesformostmunicipalities.Thepropertytaxcomponenthasbeenimpactedbytheenactmentofthepropertytaxcapsandbythechangestoassessedvaluationbothoccurringthroughthe2008legislationtoincreasehomesteaddeductionsandbytherecessionholdingdown“natural”growthinassessedvaluation.Secondly,theimpactofthepropertytaxcapshasbeenincludedbyreducingpropertytaxrevenuebytheamountofCircuitBreakerCreditsattributabletoeachmunicipality.Lastly,therecessionalsohadadepressingeffectonpersonalincomewhich,inturn,reducedincometaxrevenues.Aftertheannual“coreincome”wasdeterminedforKokomo,thisrevenuewasthenadjustedforinflation,creatingtherealvalueoftheannualrevenueforcomparisonoverthe2008-2015timeframe.Figure8illustratestheinflationadjustedcoreincomefortheCityofKokomofrom2008through2015.


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TheCityofKokomo’stotalcertifiedpropertytaxlevy,netofcircuitbreaker,plusincometaxrevenuewas,afteradjustingforinflation,96.3percentofthe2008total.1ThiswasthetenthhighestFiscalCapacityIndexrankingoftheeighteenselectedmunicipalities.Between2009and2015thecumulativegainofcorerevenuecomparedwiththe2008totalwas$9,926,801.Thiswastheequivalentof25percentof2008corerevenue.

1SomePoliceandFirePensionleviesforKokomocontinuedafterthe2009takeoverofsomepensionobligationsbytheState.


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Year-EndBalances,AnnualReceiptsandAnnualDisbursementsThe2014year-endbalance,includingreservedandobligatedfunds,intheCityofKokomo’sGeneralFundwas$12,883,000.ItsRainyDayFundended2014withabalanceof$4,681.Thecombinedtotalbalanceforbothfundsatyear-end2014was$12,887,681.Thiswas31.7percentofannualreceiptsfrombothfundscombined,rankingasthe9thhighestoftheeighteenselectedmunicipalities.Thecombinedtotalrepresented$226percapita,thefifthhighestranking.ThecombinedGeneralandRainyDayfundbalancesincreasedby$6,980,032between2009and2014.Thiswasthefourthhighestrankingamongtheselectedmunicipalities.

The2014year-endbalanceforallGovernmentalFundsfortheCityofKokomowas$29,312,807.Thiswas$513percapita,rankingfifthlowestamongtheselectedmunicipalities.GeneralFunddisbursementsrepresented56.8percentofallGovernmentalFunddisbursementsin2014.Theyear-endbalanceforallGovernmentalFundswas37.0percentofthe2014receiptsinthosefunds.TotaldisbursementsfromallGovernmentalFundsin2014were$84,091,950Totaldisbursementsfromallfunds,includingGovernmentalandEnterprisetypefunds,was$97,331,341in2014.


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TotalreceiptsfromallGovernmentalFundsin2014were$79,193,479.Thiswas$1,387percapita,rankingasthefourthlowestamongtheselectedmunicipalities.Corerevenue(certifiedpropertytaxesnetofcircuitbreakercreditspluscertifiedincometaxdistributions)represented55.0percentofallGovernmentalFundreceiptsin2014fortheCityofKokomo.

IntergovernmentalRevenueTheinformationinthissectionwasobtainedfromtheIUPUI’sPublicPolicyInstituteFiscalBenchmarkingProject.2012intergovernmentalrevenueforKokomowas$9,840,962andrepresented11.3percentoftotalrevenue.Intergovernmentalrevenuein2011-2012averaged14.2percentoftotalannualrevenue.


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Kokomorankedasthe9thmostdependentonIntergovernmentalRevenueamongtheselectedmunicipalities.2The2011-2012averageannualintergovernmentalrevenuepercapitawas$208,alsorankingKokomoasthe9thlowestamongtheselectedmunicipalities.HighwayFundingThedistributionofstatetaxesonfuelbacktolocalgovernmentshastraditionallybeentheprimaryrevenuesourcetosupportmunicipalroadmaintenanceandenhancements.Whilemostmunicipalitieshavefounditnecessarytosupplementthissourcewithotherrevenues,particularlyasdistributionsfromtheMotorVehicleHighway(MVH)andLocalRoadandStreet(LR&S)fundshadnotbeenkeepingpacewithinflation,thissourceremainsamostimportantrevenuestreamfortheCityofKokomo.In2008,theCityreceivedacombinedtotalof$1,711,740fromtheMVHandLR&Sdistributions.By2012,thesedistributionshaddeclinedto$1,639,392.ThechangestotheMVHAccountmadebytheGeneralAssemblybeginningwiththe2013-2015StateBudgetincreasedthedistributionstolocalunits,includingtheCityofKokomo.By2014,thefirstfullyearthattheincreasewasineffect,Kokomo’scombineddistributionshadincreasedto$2,109,393.Thiswasa23.2percentincreaseoverthe2008distributions,rankingasthe10thhighestpercentagechangeamongtheselectedmunicipalities.Afteradjustingforinflation,thiswasa12.1percentincreaseoverthe2008combinedMVHandLR&Sdistributions.Thecompositeinflationadjustedincreaseforalleighteenselectedmunicipalitieswas15percent.TheCityofKokomodoeslevypropertytaxestosupportitsMVHFund.In2015,itslevyforthisfundnetofcircuitbreakercreditswas$1,755,844.

2TherewasnodataavailableonIntergovernmentalRevenuefortheCityofLafayette.


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DebtPerinformationavailableontheIndianaGatewaydatabase,asofJuly1,2014,theCityofKokomohadtotaloutstandingdebtof$54,183,056.Thiswas$952ofoutstandingdebtpercapita,rankingasthefourthlowestamongtheselectedmunicipalities.Ofthetotaloutstandingdebt,53.4percentwassupportedbywastewaterrevenues,nonewassupportedbywaterrevenuesandnonewassupportedbytaxincrementfinancerevenues.ThetotaloutstandingdebtpercapitafortheCityofKokomo,excludingdebtsupportedbywastewaterandwaterrevenues,wastheeighthlowestamongtheselectedmunicipalities.AsofJuly1,2014,theCityofKokomohad$25,227,285inoutstandingdebtsupportedwithCountyEconomicDevelopmentIncomeTaxrevenues.Thiswas12.7timestheCity’s2015CEDITcertifieddistribution.

The2024projectedtotaldebtpaymentsofallcurrentoutstandingdebtis50.8percentofthe2015projectedpayments.AccordingtheIUPUIPublicPolicyInstitute’sFiscalBenchmarkingProject,the2012DebtServiceRatiofortheCityofKokomois3.9percent.SummaryObservationsTheCityofKokomohasbeenoperatinginarelativelyneutraleconomicenvironmentincomparisonwiththeothermunicipalitiesincludedinthisstudy.ItrankedeleventhontheCompositeEconomicIndex.OfparticularimportancewastherelativelyslowgrowthintotalpersonalincomeinHowardCountybetween2006and2013,thelowestamongthefifteencountiesthatcontainedoneormoreoftheselectedmunicipalities.Conversely,Kokomo’s2014grossassessedvaluationpercapitarankedfifthhighestamongtheeighteenmunicipalities.Between2007pay2008and2014pay2015,theCity’sgrossassessedvaluationdecreasedby2.4percent,oneofsevenofthemunicipalitiestoexperienceadeclineoverthisperiod.TheCityofKokomo’snetassessedvaluationwasonlymodestlyimpactedbytheincreasesinthe


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homesteaddeductionsthatwereincludedinHEA1001-2008.Its5.6percentdropinnetassessedvaluationtheyeartheincreasedhomesteaddeductionsbecameeffectivewasthefourthlowestimpactexperiencedbyanyofthemunicipalitiesincludedinthestudy.However,Kokomocontinuedtoexperienceadeclineinnetassessedvaluationfrom2008pay2009tothecurrentyear.Its8.2percentdecreasewasthefourthlargestdeclineamongtheincludedcities.Thiswasnot,however,acontinuousdeclineasisillustratedinFigure1.TheCityonlyrecentlyhascreateditsfirsttaxincrementfinancingdistrictandasof2015hascapturedlessthanonepercentofitsnetassessedvaluationinaTIFdistrict.Thisisthelowestpercentageofanyoftheeighteenmunicipalities.TheCityofKokomo’s2015propertytaxrateof$1.9031/$100AVistheseventhhighestoftheselectedmunicipalities.Itscertifiedpropertytaxlevygrowthof35percentbetween2006and2015washigherthanthatofthecompositeofalleighteenmunicipalitiesandrankedasthesixthhighestrateofincrease.ThecircuitbreakercreditimpactontheCity’s2015certifiedpropertytaxlevy–a20.1percentlossinpropertytaxrevenue–isjustslightlylessthanthecompositerateoflossinpropertytaxrevenueforalleighteenmunicipalities.Kokomoisinthemid-rangebothintermsofrankorderandinthepercentageofcertifiedlevylost.TheannualcircuitbreakercreditlossestoKokomohavebeensteadilyincreasingeachyearsince2009withtheexceptionof2012.In2008,theHowardCountylocalincometaxratewas0.9percent.By2015theratehadincreasedto1.6percentwiththeadditionofa0.5percentPropertyTaxReliefLOIT,anda0.2percentSpecialPurposeLOIT.TheCityofKokomodoesnotreceiveadirectdistributionoftheSpecialPurposeLOITbutdoesindirectlybenefitfromthePropertyTaxReliefLOITasitreducesthecircuitbreakercreditlossesthatwouldotherwiseoccur.In2008,theCityofKokomoreceived$8,165,437inlocalincometaxdistributions.By2015thesedistributionshaddecreasedto$8,045,229.The2008distributionwouldhaveneededtobe$9,050,407in2015tokeeppacewithinflation.Itwasoneoffivemunicipalitiesoftheeighteentoexperienceanactuallossinincometaxrevenuein2015comparedwith2008.Kokomo’s“corerevenue”in2015was96.3percentofits2008corerevenueafteradjustingforinflation.Thisplacedittenthoutofeighteenonthisstudy’sIndexofFiscalCapacity.KokomowasabletosignificantlyincreaseitsGeneralFundyear-endbalancefrom2010($3.8million)through2013($20million).TheGeneralFundbalancedid,however,dropbyalittlemorethan$7millionbetween2013and2014.IthadonlyanegligiblebalanceremaininginitsRainyDayFundattheendof2014.Kokomo’scombinedyear-endbalanceinthesetwofundswas32percentofannualreceiptsin2014,abovethecompositepercentageforalleighteenmunicipalitiesandcertainlyalevelconsideredtobefiscallyhealthy.Kokomowasoneoffiveoftheselectedmunicipalitiestohavemorethan$5millioninadditionalcombinedGeneralandRainyDayFundbalancesattheendof2014thanattheendof2009.Kokomo’s2014disbursementspercapitafromallGovernmentalFundsof$1,473rankedinthebottomthirdofallselectedmunicipalities.In2008,theCityofKokomoreceived$8,165,437inlocalincometaxdistributions.By2015thesedistributionshaddecreasedto$8,045,229.The2008distributionwouldhaveneededtobe$9,050,407in2015tokeeppacewithinflation.AsofJuly,2014,theCityofKokomohadoutstandingdebtof$949perresident.Thatrankedasthefourthlowestoftheeighteenmunicipalities.Thestrongfundbalancepositionalongwiththerelativelymodestimpactofthecircuitbreakercreditsonitspropertytaxrevenuesmorethanoffsettheinabilityofitslocalincometaxrevenuestokeeppacewithinflation.ThesefactorsallcontributedtoKokomoplacingeighthoutofeighteenonthisstudy’soverallIndexofFiscalHealth.

city of kokomo municipal profile - Indiana Fiscal Policy Institute

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