Tuesday, September 04, 2007

More Lawsuits In The Works

Advance Indiana learns today that there will be two separate lawsuits filed in coming days, which will be music to the ears of folks fed up with rising taxes. John Price is expected to file a lawsuit later this week challenging the constitutionality of Indiana's property tax on individuals to fund the state's schools. AI is told Price will rely on Section 2 of Article 8 of the Indiana Constitution, which provides a mechanism for the funding of the state's common school fund. Section 2 reads as follows:

The Common School fund shall consist of the Congressional Township fund, and the lands belonging thereto;
The Surplus Revenue fund;
The Saline fund and the lands belonging thereto;
The Bank Tax fund, and the fund arising from the one hundred and fourteenth section of the charter of the State Bank of Indiana;
The fund to be derived from the sale of County Seminaries, and the moneys and property heretofore held for such Seminaries;
from the fines assessed for breaches of the penal laws of the State; and from all forfeitures which may accrue;
All lands and other estate which shall escheat to the State, for want of heirs or kindred entitled to the inheritance;
All lands that have been, or may hereafter be, granted to the State, where no special purpose is expressed in the grant, and the proceeds of the sales thereof; including the proceeds of the sales of the Swamp Lands, granted to the State of Indiana by the act of Congress of the twenty eighth of September, eighteen hundred and fifty, after deducting the expense of selecting and draining the same;
Taxes on the property of corporations, that may be assessed by the General Assembly for common school purposes.

Specifically, the last sentence of Section 2 limited property taxes to support schools to "taxes on the property of corporations." Does it mean the property tax cannot be levied on individuals to support the common school fund? It is worth noting that both state and local government relied on the property tax as its major source of funding in the early history of our state. At the time of the adoption of our current constitution back in the 1850s, legislators were still debating whether there should be a free public school system for all school-aged children. That might explain the specific provisions in Section 2 for the funding of the common school fund. The state's heavy reliance on the property tax as a revenue source changed during the Great Depression when many people were unable to pay their property tax bills. Will the courts buy the argument that the legislature has been violating the constitution all these years by allowing property taxes to be levied on individuals to fund our schools? Probably not, but it does add a whole new dimension to the current debate over the property tax.

The other lawsuit you should look to see filed within a week or two is one challenging the legality of Indianapolis' recently passed $90 million, 65% increase in the county option income tax. As you all know, former City-County Councilor Patrice Abduallah (D) admitted he hadn't lived in his district since at least last January. Without Abduallah's vote for the county option income tax, Mayor Peterson's tax proposal would have been defeated. Backers of the lawsuit contend that Abduallah's vote should be voided since he was not legally serving as a member of the CCC. I doubt this claim will prevail in the courts; however, I think the backers of this lawsuit would be better-served to argue, in addition to the issue of Abduallah's residency, whether public employees, such as city firefighters and police officers, can legally serve on the CCC.

Article 3, Section 1 of the Indiana Constitution reads: "The powers of the Government are divided into three separate departments; the Legislative, the Executive including the Administrative, and the Judicial: and no person, charged with official duties under one of these departments, shall exercise any of the functions of another, except as in this Constitution expressly provided." As was all too apparent during the debate over the increase in the county option income tax, CCC members found themselves conflicted in having to choose to vote for a tax increase, which clearly would help finance their own payraises. One firefighter member, Councilor Isaac Randolph, announced he would abstain from voting because of the conflict of interest. He was ordered to vote on the proposed tax increase ordinance by the CCC President, Councilor Monroe Gray, who is also a firefighter. Randolph ignored the order and abstained from voting. Those who want to invalidate the county option income tax might at least succeed in bouncing some of the most offensive members of the CCC, even if they don't succeed in invalidating the income tax increase.


Anonymous said...

Another excellent post. Thank you.

But please don't praise Ike Randolph. He voted for three years on the budget without batitng an eye, and it was suggested, more than once, that he (and others) shouldn't. His vote was opportunistic, at best.

He also, in his 2003 campaign, accepted a $5,000 donation from Kite Development Corp. That's a huge donation for a council campaign.

When they had a development case in front of the council earlier this year, a highly controversial one, he voted with Kite in a close vote.

And, contrary to what he oft repeats on his numerous radio talkshow appearances, he'd have had a hard time in his district, getting re-elected.

Anonymous said...

The lawsuit challenging firefighters and policemen from holding city-county office would likely fail. A recent decision by the Court of Appeals in Thompson v. Hays specifically holds that a sheriff's deputy does not hold a lucrative office for purposes of the Indiana Constitution. This can obviously be extrapolated to a firefighter or IMPD officer. Unfortunately, any lawsuit challenging this tax increase on a Indiana State Consititutional challenge would likely fail.
For those of you interested, here is the cite - 867 NE2d 654

Gary R. Welsh said...

The "lucrative office" clause you cite from that decision is an entirely different part of the constitution. It wasn't until the 1980s that the legislature changed the law to allow public safety officers to run for public office, notwithstanding the long history of prohibiting it and the constitutional provision I cite.

Anonymous said...

AI is correct. There are two portions of the Indiana Constitution that govern public employees holding elected office. One is the lucrative office provision which, as another poster noted, has been interpreted to allow public employees to hold elected office. The other provision of the Indiana Constitution has not been addressed by the Indiana Supreme Court and upon its face appears to prohibit public employees from holding elected office.

I agree with AI, it would make for some very interesting legal arguments!

Anonymous said...

OK, folks, there are legal arguments, and there are ethical arguments.

I can't believe this has to be raised, but no one else is doing it...

WhatEVER the law says, why would anyone who works for the city WANT to be on the council? Why not back away?

I just did a quick check of the council roster. I was shocked when I did an actual count of public-sector employees. If you add in the other non-private sector employees, which to me include union jobs, there are two Democratic councillors working in the private sector: Angela and Mary B. And Mary B.'s husband is a police officer. That's a pathetic number.

I don't know Ron Gibson's job. He used to be a mouthpiece for charter schools, but I'm told that job disapepared when he found himself in legal trouble. His council webpage makes no mention of his job. Plenty of talk about his faith. Spare me. I'm hoping after November I don't have to worry about him.

Anonymous said...

Great job, Gary.

Once again you are ahead of the curve. While others are focused today on regurgitating ancient history...you are moving history forward with an excellent indepth look at this important section of the Indiana Constitution.

John Price will file the lawsuit at 10am at the State House. A Press Conference at 10:30am will be held on the east steps of the State House.

This is indeed VERY good news for the citizens of Indiana. I have every belief it will bring the government to its knees and put the power of control squarely back into the hands of the people.

M Theory said...

ELMINATION: The Property Tax Solution
You Tube Video by Economist Bill Styring


Foremost Indiana PhD Economist
Senior Fellow Hudson Institute
Gold Medal of Freedom Recipient

Anonymous said...

You can tell Wilson is commenting anonymously. Hypocrite

Anonymous said...

To those of you who are slamming public employee political office holders or candidates, I take it you yourselves are candidates, all employed in the private sector? Otherwise, where is your room for argument against public employees?
ANYONE can run for political office, with the exception of a felony record, fyi. Are you running for office?
Or are you of the latte-sipping "intelligentsia" who derides those who actually have the courage to run? If that label doesnt apply to you, I apologize. If it does, I'm still curious as to your derision of public employee candidates. Care to share? If you are concerned about corruption, then RUN for office, make a change! In this county, there is plenty of overt and covert corruption, so hop to it!

Anonymous said...

Article 3, Section 1 of the Indiana Constitution reads in part, ". . . no person, charged with official duties under one of these departments (the three branches), shall exercise any of the functions of another,"

I'd argue that only those elected or appointed to a lucrative office are "charged with official duties", and employees are only carrying out orders from their superiors. Only those who take an oath are "charged with official duties" and cannot run for office.

I'd have to check case law, but I think the plaintiffs will lose this case.

Anonymous said...

I preface this comment by saying I am not a lawyer:

I am not certain I agree with AI's point regarding Article III, Section 1 of the Indiana Constitution. My believe, and it is only my belief, is that the specific provision applies to the STATE government (as a specific entity)- that is, the STATE government is divided into three departments. As such, it would have no impact on local office holders.

As well, assuming that AI's view is correct, then towns in which there is a town council which exercises both executive and legislative powers would be in violation of the Constitution (the town of Fishers, for example, has such an arrangement.)

So, while I cannot speak to the legal side of this (and perhaps there are cases that address this), I can't for the life of me believes that this provision is meant to apply to all units of government. Rather, I think it applies specifically and solely to the state government (and, in fact, the next few articles talk about those specific departments.)

Now, in my view, it is indeed a bad idea for a law enforcement officer or a public safety official to sit on the CCC - I think it's just a serious conflict of interest, and clearly in violation of the spirit of the doctrine of separation of powers.

Just my two cents - you can have your change back if you'd like.


Anonymous said...

It's about time that someone filed a suit concerning the Common School Fund. I've been hammering on that very issue for years. Interesingly, members of the General ASSembly want to amend Article 8, and STRIKE OUT the last funding provision concerning taxes on corporations.

Posted by IndyAries

Anonymous said...

I recently found this website and am glad to see others have noticed what is going on with fines and forfeitures and the common school fund. We have filed a law suit too, that is now at the Indiana Appellate Court waiting a ruling.

However, we have not stop there ,last year 2006, we put forth HB 1792 on floor in the legislature to create “County School Funds” across the state to keep this money locally for schools and tax reduction; but our bill was killed by the speaker of the house, who would not allow it to be heard.

Therefore, we are trying again with the same bill and an amendment to article 8, sections 2 of the constitution. Our amendment only adds four words; “EXCEPT THE COUNTY SCHOOL FUND".

We know that Indiana lets billions of dollars in fines and forfeitures disappear, or simply be misused, so our aim is to bring those dollars back to public education, but at the local level where they could be used to mitigate property tax increases and assist in school funding as the framers of the constitution intended.