1

CITY OF GARY

SUMMARY OF PLANNED STEPS IN DEALING WITH 2002

REASSESSMENT AND PROPERTY TAX ISSUES

June 1, 2004

2

CITY OF GARYBudget Adjustments for 2004 and

2005

$5,416,000 budget cuts for balance of 2004 (7.68% reduction).

$8,102,000 budget cuts for 2005 (11.49% reduction).

180 positions to be eliminated. Police and Fire overtime to be paid

with Casino Funds - $4 and $5 million in 2004 and 2005, respectfully.

3

CITY OF GARYOther Financial Steps

Encourage all taxing units to reduce their budgets by 7.5% and 11.5% in 2004 and 2005, respectfully - the same percentage cuts as the City of Gary.

Continue discussions with State Officials to allow the $53 Million USX Settlement to offset 2004 property tax levies instead of 2006.

4

CITY OF GARYOther Financial Steps (Continued)

Ask the State (DLGF) to rectify the USX tax abatement on personal property.

All government units must aggressively pursue regionalism.

5

CITY OF GARYComparison of Net Tax Rates

$7.53

$3.29

$6.81

$2.87

$6.28

$2.66$3.56

$1.51

$0.00

$1.00

$2.00

$3.00

$4.00

$5.00

$6.00

$7.00

$8.00

2003 2004 NoBudgetCuts

2004Scenario 1

2004Scenario 2

Net Total Tax Rate Gary Net Tax Rate

2004 – No Budget Cuts

2004 Scenario 1 – 7.5% Budget Cuts and No USX Settlement

2004 Scenario 2 – 7.5% Budget Cuts and USX Settlement Applied to Tax Levy

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CITY OF GARYComparison of Net City Gary Tax Rates

$3.29

$2.87$2.66

$1.51

$0.00

$0.50

$1.00

$1.50

$2.00

$2.50

$3.00

$3.50

2003 2004 NoBudget Cuts

2004Scenario 1

2004Scenario 2

2004 – No Budget Cuts

2004 Scenario 1 – 7.5% Budget Cuts and No USX Settlement

2004 Scenario 2 – 7.5% Budget Cuts and USX Settlement Applied to Tax Levy

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CITY OF GARY - CALUMET TOWNSHIP

Calculation of Estimated Real Property Taxes for Selected Ranges of Net Assessed Values

Estimated Scenario 1 Scenario 2 Percentage

2003 2004 2004 2004 Reduction

Net Taxes Net Taxes (1) Net Taxes (2) Net Taxes (3) Scenario 2

Estimated Net 7.5344$ 6.7961$ 6.2815$ 3.5568$ 2004 over

Value of Standard Mortage Assessed Less: 16.15% Less: 16.15% Less: 16.15% Less: 16.15% 2003

Real Property Deduction Deduction Value Homestead Credit Homestead Credit Homestead Credit Homestead Credit Net Taxes

35,000$ (17,500)$ (3,000)$ 14,500$ 916$ 826$ 764$ 432$ -52.84%

50,000 (25,000) (3,000) 22,000 1,390 1,254 1,159 656 -52.81%

75,000 (35,000) (3,000) 37,000 2,338 2,108 1,949 1,103 -52.82%

100,000 (35,000) (3,000) 62,000 3,917 3,533 3,266 1,849 -52.80%

150,000 (35,000) (3,000) 112,000 7,076 6,382 5,899 3,340 -52.80%

200,000 (35,000) (3,000) 162,000 10,235 9,232 8,533 4,831 -52.80%

(1) Estimated 2004 net tax rate per $100 of assessed valuation without any budget reductions.

(2) Scenario 1 - 2004 net tax rate per $100 of assessed valuation with 7.5% budget reductions (all taxing units) and without USX tax settlement.

(3) Scenario 2 - 2004 net tax rate per $100 of assessed valuation with 7.5% budget reductions (all taxing units) and $53 million USX tax

settlement applied to 2004 tax levy.

Note: The net taxes in the above examples are net of Property Tax Replacement Credit and the 16.15% Homestead Tax Credit.

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CITY OF GARY – CALUMET TOWNSHIP2003 Net Tax Rate

$1.83 , 24%

$0.41 , 5%$0.60 , 8%

$0.52 , 7%

$0.89 , 12%

$3.28 , 44%

City of Gary Gary School County

Cal. Twp. GSD All Other