The Circus Has Left Town

The Circus has left town--a fitting description for the ball juggling and high wire acts performed by the Indiana General Assembly to piece together a budget for the next biennium. The good news is that it is supposedly a truly balanced budget--at least on paper. The bad news is that it is built on a foundation of quicksand. Yes, lawmakers will boast that they are providing you $550 million in property tax relief over the next two years. But to pay for that relief, the legislature is gambling on two new land-based casinos being established at the state's two horse race tracks at a buy-in cost of $250 million, plus added gaming revenues collected from the casino industry.

If the legislature had done nothing about property taxes, the average property tax bill would rise by 24% when tax bills come out over the next 4 weeks. Under the legislation passed by the General Assembly, your property taxes are still going up on average 24%. What about the $550 million in tax relief? You're going to have to wait until the end of November to receive a rebate check from the state, which will equate to reducing your property tax increase from a whopping 24% to 8%. That's still higher than property taxes have increased in recent years--a figure closer to 5%.

What House Minority Leader Brian Bosma calls a "harebrained idea" is the plan conceived by House Speaker Pat Bauer to deliver the tax break via a "check in the mail" instead of a credit directly on your tax bills. That's because Bauer wants legislators to be able to send a mailing to all taxpayers taking credit for the rebate check. As Bosma pointed out in debate, mortgage companies will immediately recalculate monthly mortgage payments for those homeowners who escrow their property tax payments, as they are required to do so under federal law, for at least the next year to account for a 24% increase in property tax bills, thereby wreaking havoc on homeowner's budgets. This is government at its worst.

More importantly, there is no guarantee the revenues upon which the $550 million in tax relief are based will materialize. If there are delays or financing for the horse race tracks don't materialize, legislators will have to be called back into a special session to fix the property tax problem they refused to fix with this legislation. Even if the funding materializes, it only partially fixes the problem of mammoth property tax increases for the next biennium. All bets are off in two years. Moreover, there is no assurance local governments won't increase taxes further. In fact, that is certain to happen, particularly here in Marion County where Mayor Bart Peterson failed to win support for his IndyWorks plan to further consolidate local government services into Uni-Gov. His plan died because African-American legislators in Marion County were more concerned about protecting the jobs of Center Township Trustee Carl Drummer and other recently elected African-American trustees than in improving the delivery and efficiency of government services. As a consequence, Carl Drummer will be allowed to go on fleecing Center Township taxpayers.

The legislature has also provided local governments with the option of raising additional revenues through the local income tax option. While these increases theoretically could lower property tax bills, the legislation does not ensure this. Marion County has had the local income tax for years, and it has never produced the property tax relief its proponents claimed it would bring taxpayers. So in the final analysis, after all the talk this session, legislators achieved no true property tax reform, and the taxpayers come up the big losers in the end game.

Gov. Mitch Daniels has something to crow about. The legislature approved his plan to provide health insurance to the poorest of Indiana's uninsured called "Indiana Check-Up." A 44-cent increase in the cigarette tax will pay for the new program, which is estimated to generate about $220 million. Unfortunately, not all the money raised by the cigarette tax increase will be used to pay for the program. Of the increase, 33 cents will go for the health insurance plan while the remaining 11 cents will be used to fund pet projects of legislators, including increased Medicaid coverage for pregnant mothers and the state's tobacco cessation program.

The Governor also won a partial success on full-day kindergarten. The legislature approved $92 million in funding for FDK; however, it is not a mandatory, statewide program. It merely gives local schools the option of receiving grants from the state if they desire to start up FDK.

And I shouldn't forget the best part of all. Remember, lawmakers earlier in the session approved a pay raise, which will boost their annual pay by at least $10,000 a year, bumping the average pay for the part-time legislators to well in excess of $50,000. Gov. Daniels has already signed that pay increase into law. In the 11th hour, lawmakers came back and provided leaders and key lawmakers an additional $500 bonus. At least a couple dozen legislators in both houses will benefit from this last-minute gift to lawmakers for a job well done.