Tuesday, June 12, 2007

Star Downplays Tax Increase Proposal

A proposed increase in the Marion Co. Local Option Income Tax, which was first reported by Abdul Hakim Shabazz over the weekend, was formally introduced in the city-county council last night. In today's Star, however, you had to search pretty hard to find this small story by Brendan O'Shaughnessy:

Also Monday, the City-County Council introduced a proposal to increase the county option income tax.

Proposal 264 did not include figures indicating how much the tax might go up. The council must wait for the state Department of Local Government Finance to provide certain tax rate information before it can plug numbers into the placeholder proposal.

Council President Monroe Gray delayed the next meeting, scheduled for July 9, until July 23 so that information would be available for consideration. The state law authorizing up to a 0.5 percent increase for public safety needs requires the proposal be passed by Aug. 1.

Vernon Brown, a Democrat sponsoring the proposal on behalf of Mayor Bart Peterson, said raising taxes is not a popular choice, especially in an election year. However, he said, it's the only option to adequately fund necessary public safety improvements.

The Star story doesn't mention how much of a dollar increase the proposed tax rate hike equates to. Shabazz reports it's an $85 million tax increase; however, when factoring in other local option income tax increases already scheduled to take effect, it equates to almost $170 million. Altogther, the COLIT tax rate will increase a full percentage rate to accommodate the tax and spend policies of Mayor Peterson (D) and his Democratic-controlled council.

Meanwhile, you have a front-page story in the Star today entitled "You ain't safe nowhere," discussing a spate of attacks on the elderly in the Butler-Tarkington neighborhood on the city's northside. Remember, a cornerstone of the Peterson Plan eight years ago when Mayor Peterson first ran for office was getting more police officers on the street and cutting the city's crime rate--a task at which he has failed miserably. He hasn't failed, however, at putting over a billion dollars of taxpayer funds into the private investments of some of the state's most wealthy citizens. Note that the Simons, the Irsays and the Dean Whites all live outside Marion County and won't be affected by Peterson's latest proposed tax increases.

UPDATE: I would be remiss if not to point out, as I've been reminded, that Brendan O'Shaughnessy had a story in the Star on May 5, discussing the possibility of an increase in the COLIT. The Peterson administration and others in the media are questioning the $170 million figure thrown out today by Shabazz. "The $170 million number is pure speculation with no basis in reality," according to one media source. "The Mayor's office has told me I have my facts wrong so I've invited them to come on the show tomorrow and tell me why," Shabazz writes today. "Deputy Mayor Steve Campbell will join us from 8:10 to 8:30 tomorrow on WXNT," he adds. O'Shaughnessy's May 5 story in the Star read:

Marion County residents may have to pay nearly double the amount of county income tax starting in October to cover Mayor Bart Peterson's spending plans.

If the tax increase is approved, it would mean a Marion County resident earning $50,000 in annual taxable income would pay $375 more a year for the tax starting in October. The tax would jump from $450 per year to $825.

It is not clear how the City-County Council will react to Peterson's plan to increase the tax to pay for the $85 million needed for the budget deficit and crime fighting measures. He can increase the tax rate, now 0.9 percent, to a maximum of 1.65 percent.

The General Assembly gave Marion County and other counties authority to raise income taxes to keep property taxes down. Another goal was to give local government new revenue options. The bill lets Marion County raise the tax 0.5 percent, but Peterson has said he's not certain whether he will ask for the full amount this summer when the City-County Council plans the 2008 budget. He said other legislative action, budget underspending or unexpected revenue could reduce the amount needed from the county income tax.

"It's clear it will be an income tax increase," Peterson said. "We think the legislature gave us the ability to plug our budget, though we might not need to go to the limit if we find other alternatives."

Peterson said legislators' failure to merge township fire departments with the Indianapolis Fire Department means the city lost out on a potential savings of $15 million. He said residents could have been spared a tenth of a percent increase in income taxes if the measure had passed.

The city's tentative contracts with the Fire and Police departments were contingent on the fire department merger bill passing. The projected savings were supposed to provide the millions necessary for raises. Peterson said he believes new income taxes will produce enough money to pay for the pay hikes.

Gaining authority to raise income taxes was absolutely necessary to pay for public safety costs, he said.

"There was no plan B," Peterson said. "It was life or death. You can't just shut down public safety."

Phil Borst, the City-County Council's Republican minority leader, said he doesn't know how a proposal to increase income taxes will fare in the council. He said he could not say how he stands on the proposal until he learns more about it.

"It's becoming the same as the property tax," Borst said. "The income tax will be our next crisis. It's doubled and then some in the past few years."

The county income tax was 0.7 percent until 2005, when the council voted to raise it 0.3 percent over three years, ending this July, to pay for improvements in the criminal justice system. The goal, ending early releases from a crowded jail, has been achieved -- there hasn't been an early release since August.

Additional county income tax was approved for other expenses, including a contingency fund, pushing the tax to 1.15 percent.

The new spending will provide $35 million per year to pay off police and fire pensions, $35 million to pay for already implemented improvements in the criminal justice system and $15 million for new anti-crime initiatives.


Wilson46201 said...

Mitch Daniels' state taxation authorities are strangely late in releasing required data and permissions so that local entities can proceed on tax calculation. budgeting and collection. Everybody is operating in the dark until the Statehouse tax guys get off their duff!

Even the temporary property tax rebate fix was the result of lat-minute scrambling after the state taxation folk dropped the devastating info on the Assembly just a couple of weeks before adjournment. Why are Mitch's folk dragging their feet?

Advance Indiana said...

According to the Indiana Legislative Insight:

"The Governor has never been quite as keen on the need for property tax relief (especially with the State paying for it) as legislators have been, and he is less likely than lawmakers to be directly blamed for the lack of relief if the tracks back off."

Anonymous said...

Appears Crime was the top priority in 1999. Beyond angry cops concerned with the IPD and Sheriff consolidation, how is he really doing?

The Peterson Plan
Building a World-Class City
Neighborhood by Neighborhood


Anonymous said...

Wilson, that's an outright lie. As you well know, only a handful of counties made their deadline to provide the information to the state. The state people had to work their butts off to make up for the lost time.

Wilson46201 said...

If the state taxation system is set up that only a few of the 92 counties can make your required deadlines, there is something really wrong in that administration. Local officials really do try to do the right thing but when a majority can't comply, there's something wrong with the state's demands!

Anonymous said...

Wilson - It's not my deadline, it's the state's. And it's nothing new. As you know, even under a democratic administration, there were problems with the last re-assessment.

You may be the most partisan person I've never met.

Anonymous said...

Perhaps one of the problems is that the Indy Star's "political analyst," Matt Tulley, is on vacation.

Oh, wait.

Matt is ALWAYS on vacation. Even when he's not.

Oh, never mind....

Anonymous said...

Yet another Indiana tax increase.
Indiana is on a downward spiral.
The legislature does not have the insight to see what more increases in taxes are doing to the average resident.
With the new property tax increase in a state that already has one of the highest mortgage default rates and an increasing income tax, Indiana is heading for troubles soon.
Already our property values have dropped 20 to 40% due to the large amounts of properties on the market by banks looking to unload the properties that have been foreclosed upon.
Now with the increase in property taxes from 12 to 120% this glut of bank owned properties is sure to rise. I know of 15 people so far that are in deep trouble due to increas in monthly taxes at $300 to $600 per month. I even know of a few that have monthly tax payments higher than the actual mortgage note.
Add an increase in income tax to the already struggling tax payer and you just add salt to the wound.
As for me, I am moving far away from Indiana as soon as I can sell the properties I have. This seems to be the general thought in Indiana now. Get out before you no longer can.