Legislature Flunks Property Tax Reform Test

The Indiana legislature set out to do something big with property taxes this year. They promised to overhaul the system, make local governments less reliant on the tax and provide meaningful relief. Instead, they've come up with a plan that is a band-aid approach at best which rewards favored special interest groups and creates more problems than it solves.

The plan lawmakers have crafted promises over $500 million in property tax relief over the next two years. That's all lawmakers can say it does because of the shaky finances upon which it is based. To fund the tax relief, legislators are selling out to the owners of Indiana's race tracks in central Indiana by granting them a right to purchase franchises at $250 million a piece to operate land-based casinos at the tracks, which to hear the track owners complain, have never made money. You see, it's the duty of Indiana taxpayers to come to the rescue of these selfish track owners every time they come running to the legislature to complain they need help. Only legislators tainted by the influence of shady lobbyists would base a property tax relief bill on an expansion of gambling for the sole benefit of two privately-owned horse race tracks.

And remember, this is a one-time windfall. Don't buy the promises of new gaming revenues generated from these two land-based casinos, and don't be surprised when the newly-opened casino in French Lick closes down as a result of the extra competition. Every expansion of gaming in Indiana has been met with similar promises, and each time the result is the same. We don't have enough money to fund our schools with state funds, our property taxes keep rising and the quality of our public schools keeps getting worse.

Making this so-called property tax relief plan even more pathetic is a plan to mail rebate checks to property owners rather than reducing their tax bills. According to the Star, the rebate checks will have the effect of reducing the average increase in tax bills from 24% to 9%. "The idea -- conceived by House Speaker B. Patrick Bauer, D-South Bend -- is lawmakers' latest attempt to resolve a looming property tax crisis brought on by a number of legislative decisions made in previous years," the Star reports. "What could be more ridiculous than billing people (and) sending part of it back?" Bosma asked. And he's right. Many homeowners pay their tax bills by escrowing payments out of each month's mortgage payment. Mortgage companies will still increase your monthly mortgage payment to satisfy the double-digit increase homeowners will experience this year. You'll have to wait until late in the year to get your rebate check--at which time lawmakers will no doubt send out a taxpayer-financed mailing to take credit for the check you just received in the mail. Big deal. My taxes still went up, and you chose a method which wreaks havoc on my monthly budgeting.

And I forgot the best part of the plan. Your income taxes are likely to increase as well. Local governments will be allowed to increase local option income taxes to pay for public safety costs and their unfunded pension liabilities. You're supposed to get a tax break on your property taxes to offset the increased income tax. If you believe that's going to happen, you also believe in the tooth fairy. That promise has been made and broken every time the local option tax has been tapped by local governments.

The sad part is that legislative leaders will be patting themselves on the back for a job well done before the day's over. A group of grade-schoolers could have come up with a more reasoned plan than the plan devised by this sorry group. But just like our public school systems, there's always a reward for bad performance. You see, lawmakers will enjoy a $10,000 a year pay raise they enacted for themselves this year if they fool us into re-electing them to office for another two years in 2008. And the same problems they set out to fix this year will be back bigger than ever before when they convene in 2009.