- Indiana recently abolished the inventory tax, a major tax on businesses. That means there is a major tax shift from businesses to homeowners this year.
- Marion County was forced to raise local property taxes to pay for State-mandated costs for child welfare.
- The state capped the "property tax replacement credit," which used to provide annual property tax relief to people across the state, two years ago.
- The majority of your bill comes from other units of government the mayor does not control, such as your township government, your school corporation and the State of Indiana.
- Mayor Peterson has done everything possible to make sure that City government did not contribute to the property tax problem. Among many other things, he ordered $83 million in budget cuts (2003-06 budgets), froze salaries for bi-weekly city employees (2004-06 budgets), and merged local police departments and fire departments, which already have saved millions. Without consolidation, take hikes would be even larger!
- As a result, the City government portion of your property tax bill actually shrank from nearly 30% in 2000 to below 24% today!
- The officials with the most ability to lower your property taxes are in Indiana state government.
Where to begin? Mayor Peterson is absolutely correct that the Indiana legislature did away with the business inventory tax, removing about $80 million in local tax revenues. What he doesn't tell you is that he was urged by the state to consider an increase in the county option income tax to offset the lost business inventory tax revenues. This move would have avoided any shift from businesses to homeowners because of the elimination of the inventory tax. Equally as important was the failure of Marion Co. Assessor Greg Bowes (D) to apply equalization factors to Marion County's grossly under-assessed business/commerical property as urged by the state to alleviate the massive tax burden shift to residential property owners which occurred this year.
Next, he complains that Marion Co. had to raise taxes to pay for state-mandated child welfare costs. There were proposals before the legislature this year which would have shifted these state-mandated costs from local property taxes to the state budget. House Speaker Pat Bauer (D) refused to consider a comprehensive approach to property tax reform such as proposed by Sen. Luke Kenley (R). Instead, he came up with a band-aid scheme to fund short-term property tax relief by offering horse race track owners the opportunity to turn their race tracks into racinos by offering slot machines to their customers. The $500 million in promised tax relief generated by this gambling scheme probably won't arrive in taxpayer's mailboxes until next spring, if at all, and will barely put a dent in the huge tax burdens many homeowners are being forced to shoulder this year.
Mayor Peterson complains that the state capped the property tax replacement credit, which means the state-funded relief for property taxes isn't as great as it otherwise should have been. What Mayor Peterson doesn't tell you is that the state subsidized Marion Co. to the tune of nearly $330 million last year alone to provide property tax subsidies to businesses. If the state hadn't offered that mammoth subsidy, your tax bills would be dramatically higher than what they already are.
Mayor Peterson is absolutely correct when he says that a majority of your tax bill is made up of taxes levied by other units of government. Schools, in particular, make up about half of your tax bill. These other taxing units are dependent upon property tax revenues from the same tax base as the city-county government. The city-county government, however, gets to make decisions which can adversely impact the other taxing units' property tax collections. Tax abatement and TIF incentives for businesses are controlled, at least indirectly, by Mayor Peterson. Essentially, these other taxing units simply increase their tax levies to make up for the loss of property tax revenues, thereby shifting tax burdens from businesses to homeowners. Unlike these other taxing units, Mayor Peterson can tap sales, food & beverage, hotel and other taxes and fees to finance city-county government to offset declining property tax revenues.
Mayor Peterson once again makes claims that he has squeezed out millions in savings through budget cuts and through police consolidation. The proof is in the pudding, however. Both city and county property taxes have increased dramatically this year along with those of other taxing units. The truth is he cannot substantiate the millions he claimed in savings from police consolidation. Even more insulting is Mayor Peterson's misleading claim that the city government portion of your tax bill shrank "from 30% in 2000 to 24% today". Hell, shifting IPD's budget to the county sheriff's budget alone achieved that reduction.
Ultimately, Mayor Peterson is right in saying that the Indiana state legislature has the most ability to lower your property taxes. That's because local government leaders like him use smoke and mirrors to piece together their budgets, assume no responsibility for the decisions of unelected boards and commissions appointed by these same local government leaders who make decisions which increase your property taxes (e.g., Metropolitan Development Commission and Marion County/Indianapolis Library Board) and then dump their problems on property owners to solve--the answer always being higher taxes to fuel their bad spending decisions. So yes, if you want to change the irresponsible decision-making of elected leaders like Mayor Peterson, you need a state-mandated solution to place real controls on taxing and spending at the local level. Unfortunately, the only changes Mayor Peterson has in mind is to have the state pick up a greater share of the tab for his fiscal irresponsibility.