Councilman Mitch Harper, R-1st, was the lone member to oppose the abatement. He said he would have preferred to hold the issue until the state finalizes its property tax plan. Because the plan could cap the amounts of property taxes people can pay, tax abatements could cost city and other governments needed revenue.
Harper is astutely aware of the property tax cap plan pending in the Indiana General Assembly and the compounded impact of granting abatements. Even without the looming tax cap plan, the fact remains that every time government abates property taxes for one taxpayer, the burden of funding the costs of local government and schools shifts to other property taxpayers. City leaders in Indianapolis need to be more wary about granting tax abatements like the one Fort Wayne just handed out for this project. Last year, Indianapolis approved a $2.7 million, 10-year tax abatement for the Cosmopolitan On The Canal project, which is a mix of apartments and retail, among many other tax abatements. A substantial portion of Indianapolis' downtown has benefited from tax abatements or lies within a TIF district, which diverts property taxes collected on improved properties away from taxing districts to pay for improvements within the TIF district.
Hat tip to Hoosier Access, which has a video clip (via Fort Wayne Politics) of Harper providing a good explanation of how local governments will have to rethink their approach to granting abatements if we truly favor an approach of capping property taxes as suggested by Gov. Mitch Daniels and as passed by the Senate just this week after clearing the House earlier.
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