Study Backs Constitutional Cap Push

A new study suggests local governments statewide will lose less money from legislatively-imposed property tax caps than originally thought. The state study says local governments will lose $403 million, or $121 million less than the original $524 million they were expected to lose when tax caps are fully implemented in 2010 reports the Star's Mary Beth Schneider. That's good news for the proponents of making the property tax caps permanent through a constitutional amendment.

Even better news is that only two units of government, the Beech Grove Library and the City of Gary, appealed to a new state appeal board seeking relief from the impact of property tax caps. Both are the perfect example of why property tax caps are implemented. Beech Grove Library will lose approximately $176,000 a year by the time the tax caps are fully implemented next year with an annual budget of $850,000. Beech Grove's solution is simple. Merge with the existing Marion County-Indianapolis Public Library. In the case of the City of Gary, it's just the typical gross mismanagement of public funds which comes after decades of corrupt, one party rule. Unlike most Indiana cities, the City of Gary has had the benefit of tens of millions of riverboat casino revenues. When Indiana legalized riverboat gambling, communities were promised significant property tax relief. Gary is now the first in line to complain about property tax caps.

The City of Indianapolis is projected to lose about $20 million when the tax caps are fully implemented next year according to Schneider's report. That's $13.7 million less than what had been projected originally. Mayor Greg Ballard tells Schneider he supports making the property tax permanent and will look for other budget moves to make up the difference. It's worth noting that the City of Indianapolis hasn't let up on the awarding of tax abatements this past year. According to an IBJ report, the City approved new tax abatements totalling $14.9 million last year. That's property tax revenues the City voluntarily gives up to businesses with the promise of new investment and jobs.

While some are using the excuse that we need more time to study the impact of tax caps before making the statutory caps permanent through a constitutional amendment, that's really just an excuse from people who really don't want to make the caps permanent. We know all too well from experience that every legislative attempt made in the past to reduce or limit property taxes (and there have been many) has failed. If we don't adopt a constitutional amendment, you can bet the legislature will begin expanding exceptions and creating other loopholes to get around the tax caps until they become meaningless. Gov. Mitch Daniels is right to seek approval of the amendment this year.