Marion County GOP's Property Tax Plan

Rep. Jon Elrod (R-Indianapolis) and City-County Councilor Ryan Vaughn unveiled the Marion Co. GOP's property tax plan today. “Our caucus recognizes the pain homeowners here in Marion County and across Indiana are experiencing due to these unacceptable increases in property tax rates, “ said Elrod. “What we have proposed today is the first comprehensive plan to address immediate relief for taxpayers and the need for immediate and long-term government reform to reduce reliance on property taxes.” It's actually a 10-point plan, which includes the following:

• Enact Governor Daniels plan to make the property tax rebate a property tax credit
• Call on Governor Daniels and DLGF to order a reassessment of Marion County property taxes
• Move the due date for this month’s property tax bill two months or until the reassessment is completed
• Place a moratorium on tax sales of homes subsequent to 2007 property tax bills
• Cut all local non-public safety spending by 10%
• Place a freeze on all capital projects, pay raises, and non-public safety hiring
• Sell of all unnecessary Government owned property in Marion County
• Combine the various police pension funds in Marion County, eliminating the need for the income tax hike
• Convene a special session of the legislature to enact long-term property tax reform
• Utilize the tools the Legislature gave local governments to offset the need for higher property taxes

Gov. Daniels' announcement earlier today that he was ordering a reassessment in Marion County, and that taxpayers need only pay what they paid in 2006 until the reassessment is done, seems to take care of the first four points of the GOP plan. I particularly like the idea of selling off unnecessary government-owned property. Let's eliminate Center Township Government while were at it, sell of the buildings which are worth about $12 million and take the $11 million sitting in the bank and put it all towards the unfunded pensions. The GOP's plan doesn't address the consolidation issue; I think it should. Lawrence Township Trustee Mike Hobbs tells me there is movement again on consolidating the Lawrence Fire Department into IFD. He also is not opposed to eliminating his own Trustee's job while they're at it and consolidating those functions as well.

I also feel compelled to address a nasty rumor floated by Bil Browning at The Bilerico Project today, suggesting that Republican lawmakers would block any attempt to address the property tax problem unless SJR-7, the constitutional amendment to ban same-sex marriage and other rights for unmarried couples, is put back on the table for a vote. Browning writes today:

From what I'm hearing, the Republicans are still angry that SJR-7, the constitutional amendment to ban same-sex marriage and civil unions, failed on a tie vote in the House earlier this year. Before they're willing to address property tax reform, they want the amendment back on the table and passed in the same special session. No amendment - no tax relief. And since Republican Governor Mitch Daniels (or "The Blade" as BushCo called him when he worked on their team) is to blame for the dramatic increases in taxes, is it no wonder that the Republicans are desperate for a scapegoat?

I don't doubt that someone Browning considers credible passed along this rumor to him. And given House GOP Leader Brian Bosma's obsession with the issue, it could be an easy rumor to believe. It just may not be true though. I contacted Rep. Elrod about the rumor. He is the only Republican member of the House who openly opposes SJR-7. "There is no truth to that rumor whatsoever," Elrod said. The gay marriage rumor seems to be part of a pattern which has emerged on the part of Democrats in recent weeks to discredit people who are speaking out against the property tax mess. I will give you that it was a complete waste of the legislature's time to devote so much attention to the gay marriage amendment this past session, but that's not the reason real property tax reform didn't happen this past session or any other session over the past several years for that matter.

A couple of weeks ago a lady in Meridian-Kessler was skewered by local Democratic operatives for complaining about her rising property taxes to a local television station. On Monday night, an upset property owner is thrown out of the city-county council committee hearing for articulating his frustration with the mayor and council better than anyone else I've heard from lately. Adding further insult to injury, some in the blogosphere have resorted to labeling him a liar based upon incomplete or inaccurate information. Unfortunately, Jen Wagner of TDW, who I respect deeply, got caught up in the frenzy to discredit this poor guy. She's also running with the gay marriage amendment rumor. I have many gay friends who are as angry as the next guy about their property tax bills. They are prepared to vote Mayor Peterson and the Democrats out of office. I believe someone may have simply made up the rumor and passed it along to Browning in an effort to prevent members of the GLBT community from supporting a GOP candidate for mayor or council in Indianapolis this year. If it turns out I'm wrong, I'll be the first to report it and complain as loudly as Bil Browning is complaining. But as critical as I've been of Bosma, I find it hard to believe that he would be so stupid as to condition action on property taxes to a vote on the gay marriage amendment.

Mayor Peterson: It's Not My Fault

An avid AI reader was kind enough to pass along an e-mail response she got from Mayor Bart Peterson (D) asking him to do something about rising property taxes. Not surprisingly, the property tax buck isn't stopping at his desk. Mayor Peterson offers these reasons why your property tax bills increased so much the year and why you shouldn't blame him:

• 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.

Why Aren't Local Governments Challenging The City Of Indianapolis For Stealing Their Revenues?

A front-page article in today's Metro/State section of the Star says the Mayor's High Performance Government Team has come up with a plan to prevent the library from closing branches because of a budget shortfall it blames on property tax caps. Cutting back hours of operation at the library branches anywhere from 1 hour to 15 hours a week will save $1.9 million to $2.4 million annually. Here's a clue for the library board, school districts and other taxing districts on how to deal with the loss of revenues from property tax caps. Stop letting the City of Indianapolis steal your property tax revenues.

Pat Andrews brings up an excellent point on her blog, Had Enough Indy. The City keeps handing out tax abatements that cost all taxing units millions of dollars in lost tax revenues each year. When those businesses fail to create the jobs they've promised, the City can claw back the benefits it gave to those businesses. Although the City represents only 20% of the property tax levy, it keeps 100% of the funds it claws back from businesses.

There's also the issue of the PILOT revenues the City will receive from Citizens Energy on the sewer utility if the plan to transfer ownership of the water and city utilities is approved. The City is collecting tens of millions of dollars in the form of payment in lieu of taxes from an entity that is otherwise exempt from paying taxes. Yet all of those PILOT revenues are being paid to the City as if the City is the only taxing unit that collects property taxes.

Here's some of what Andrews said about how clever the City has been getting as of late in stealing other taxing unit's revenues:

As property tax caps are now in full effect and a ballot question in November could make them constitutional in Indiana, legal loopholes are being mined by the City of Indianapolis to allow the City to take a tad more than they are due.


The one power that the City of Indianapolis has that no other taxing unit in Marion County has is the right to grant abatements. Which it seems to do with abandon lately. Just look at the Jeff Swiatek's article in yesterday's Star business section, where he reports an abatement for CSO Architects, Harlan Bakeries, Greatbatch Medical, and Sharp's Academy - all in one fell swoop . . .

The 25th floor, under Mayor Ballard, is very very clever when it comes to finding and mining legal loopholes. I don't want to discourage that sort of thing entirely, since the State wields a heavy hand when telling all cities and towns how to go about their business. Finding a good loophole from time to time could be beneficial.


But, in today's property tax climate, we should all be concerned that the tax revenues are meted out proportionately and therefore fairly.

The Ballard Administration found a loophole in the case of 450 E. Market Street (see "Ludicrous or Clever - You Decide" and "MDC Public Hearing On The TM Miller Enterprises Abatement" and "MDC to Hold Public Hearing on Abatement for 450 E. Market") and were set to abate about $6.7 million in property taxes, get paid that very same amount, and use the money to buy an overpriced garage. In short, the City was planning on taking the tax money that would have gone to the schools and library and township and health & hospitals and keep it for its own. On top of it all, it was going to waste that money on buying a garage that it didn't really need. This deal, even though it passed all MDC and Council votes, has not yet been inked down - and that is a very good thing.

The Ballard Administration found another loophole with the $5 million clawback of abated taxes in the case of Navistar. (See "Abatements - Scary Loopholes Need Closing") And they kept it all -- even though the property tax distribution formula would suggest they 'deserved' only about 20% of it. They kept all the money. Then, they wasted that money by sending it on to the Indianapolis Economic Development, Inc. and the Indianapolis Convention and Visitors Association; two not-for-profits living largely off government largess while paying handsome salaries for its operators.

Now the Ballard Administration has found an even bigger loophole whereby proper apportionment of property taxes is set aside to the benefit of the City over the rest of the taxing units. This one makes the $6.7 million and $5 million deals look like chump change. And this is the loophole on the carve out of the sewer utility from the property tax system.

Indiana Code 36-3-2-10, authorizes Payments In Lieu of Taxes (PILOT) from otherwise property tax free parcels in Indianapolis. Indiana Code 36-3-2-10(d)(4), lists "wastewater treatment facility", which at the time, was owned entirely by the City of Indianapolis.

The City-County Council recently increased the PILOT payments from the sewer utility and authorized the money be used to pay off 30 year bonds for infrastructure repairs. (See "City-County Council Should Vote Down Prop 132") The plan is to sell the sewer utility for another $260 million in cash to Citizens Energy. The sales agreement stipulates that Citizens Energy will not attempt to get the Legislature to change the sewer utility from a tax-free, PILOT paying, enterprise into a property tax paying enterprise. Now, this tax-free status is very different from the gas utility and the water utility - both of which currently pay and which will continue to pay property taxes after this sale goes through.

You might wonder why these other taxing entities aren't speaking out and demanding their fair share of these revenues. It's probably because the people who are supposed to be representing their interests--namely, the big law firms in town they pay to lobby on their behalf--have bigger fish to fry from the work they do on behalf of the City of Indianapolis.

It's also important to point out that the property tax reform law that enacted property tax caps also included a provision that required the state to pick up about a half billion dollars in debt the City owed in unfunded pension liabilities. Mayor Peterson planned to spend about $25 million a year from his 65% income tax increase for projected annual debt service on that unfunded liability. The City kept all but a few million dollars of the revenues generated from that tax increase each year, which is why the City's budget appears to be in better shape than many local governments' budgets right now. At the same time, all taxpayers started paying a 1 percentage point increase in their state sales taxes as a trade off for the property tax reforms that included tax caps. Now the next time you hear the Mayor or other city officials mention all of those tax revenues they're losing because of property tax caps, remind them not only of the tax increase it kept to pay for a long-term debt of the City's that no longer exists, but how the City is also stealing millions of dollars each year from other taxing districts and using it on questionable expenditures.

Star Prints Ryan Vaughn's Lie Because It Fits The Agenda

The Indianapolis Star long ago abandoned any thought of reporting "just the facts" when it comes to local government matters in Marion County. It always supports any call for higher taxes. It always supports tax breaks and public subsidies for the downtown real estate deals of political insiders. And it always supports calls for new spending regardless of how merit-worthy it is. So don't expect the Star to disabuse its readers of any misinformation fed to the public by the political insiders with whom it's in bed when the truth conflicts with its agenda.

One of the biggest lies fed to the public continuously by dishonest politicians and the Star is that any revenue problems faced by local government rest entirely at the door of the property tax caps enacted in 2008 as part of a statewide legislative tax reform effort led by Gov. Mitch Daniels and the Republican-controlled legislature. Now that Mayor Greg "No New Taxes" Ballard seeks to raise taxes and fees for the umpteenth time since being elected mayor in 2007 on an anti-tax message, his chief deputy, Ryan Vaughn, tells the Star that a tax increase is only necessary because Marion County property taxpayers are paying too little in taxes as a result of the Republican-enacted property tax cap law. From the Star's John Tuohy:

"Vaughn said tax collections have lagged since passage of property tax caps in 2008. Next year's property tax revenues will be $63 million less than in 2008 -- the homestead tax credit and the police tax were a couple of the only options the city has left to collect additional money, Vaughn said.

Of course Vaughn's statement is a flat out lie and a big hat tip to fellow blogger Pat Andrews for calling him out. And it just goes to show that the Star will print any lie as long as it fits their agenda. What the Star, Vaughn and all of the other lying politicians always neglect to tell the public when they discuss property tax caps is the fact that at least $113 million in annual property tax-funded obligations were shifted to the state, freeing up revenues collected from property taxes and other sources for other expenditures. The only number you need to concern yourself with for purposes of next year's budget is the growth in income and property taxes. As Andrews points out, that figure is expected to grow $34 million next year from $540 million to $574 million, or 6.2%. Ballard wants to raise taxes an additional $30 million, resulting in a net increase of 12% in combined income and property taxes next year.

What they also don't tell you is that funding for local government services is short-changed by the ever-expanding and never-ending TIF districts the politicians created to divert money from the property tax base into their slush funds to finance the private real estate development projects of their campaign contributors. Marion County TIF funds now consume close to $120 million a year in property tax revenues you pay that cannot be used to pay for basic city services, schools, libraries and township government. That also doesn't account for the tens of millions in new property tax abatements that are approved each year by these same politicians that further chip away at local property tax revenues available to fund essential services. So the next time you hear someone blame property tax caps for the lack of revenues to fund basic city services, let them know it's a lie because that's what it is. To the extent there isn't enough money in the budget to fund basic services, it's because the politicians had other spending priorities. You will never read the "rest of the story" in the Star.

The Circus Has Left Town

The Circus has left town--a fitting description for the ball juggling and high wire acts performed by the Indiana General Assembly to piece together a budget for the next biennium. The good news is that it is supposedly a truly balanced budget--at least on paper. The bad news is that it is built on a foundation of quicksand. Yes, lawmakers will boast that they are providing you $550 million in property tax relief over the next two years. But to pay for that relief, the legislature is gambling on two new land-based casinos being established at the state's two horse race tracks at a buy-in cost of $250 million, plus added gaming revenues collected from the casino industry.

If the legislature had done nothing about property taxes, the average property tax bill would rise by 24% when tax bills come out over the next 4 weeks. Under the legislation passed by the General Assembly, your property taxes are still going up on average 24%. What about the $550 million in tax relief? You're going to have to wait until the end of November to receive a rebate check from the state, which will equate to reducing your property tax increase from a whopping 24% to 8%. That's still higher than property taxes have increased in recent years--a figure closer to 5%.

What House Minority Leader Brian Bosma calls a "harebrained idea" is the plan conceived by House Speaker Pat Bauer to deliver the tax break via a "check in the mail" instead of a credit directly on your tax bills. That's because Bauer wants legislators to be able to send a mailing to all taxpayers taking credit for the rebate check. As Bosma pointed out in debate, mortgage companies will immediately recalculate monthly mortgage payments for those homeowners who escrow their property tax payments, as they are required to do so under federal law, for at least the next year to account for a 24% increase in property tax bills, thereby wreaking havoc on homeowner's budgets. This is government at its worst.

More importantly, there is no guarantee the revenues upon which the $550 million in tax relief are based will materialize. If there are delays or financing for the horse race tracks don't materialize, legislators will have to be called back into a special session to fix the property tax problem they refused to fix with this legislation. Even if the funding materializes, it only partially fixes the problem of mammoth property tax increases for the next biennium. All bets are off in two years. Moreover, there is no assurance local governments won't increase taxes further. In fact, that is certain to happen, particularly here in Marion County where Mayor Bart Peterson failed to win support for his IndyWorks plan to further consolidate local government services into Uni-Gov. His plan died because African-American legislators in Marion County were more concerned about protecting the jobs of Center Township Trustee Carl Drummer and other recently elected African-American trustees than in improving the delivery and efficiency of government services. As a consequence, Carl Drummer will be allowed to go on fleecing Center Township taxpayers.

The legislature has also provided local governments with the option of raising additional revenues through the local income tax option. While these increases theoretically could lower property tax bills, the legislation does not ensure this. Marion County has had the local income tax for years, and it has never produced the property tax relief its proponents claimed it would bring taxpayers. So in the final analysis, after all the talk this session, legislators achieved no true property tax reform, and the taxpayers come up the big losers in the end game.

Gov. Mitch Daniels has something to crow about. The legislature approved his plan to provide health insurance to the poorest of Indiana's uninsured called "Indiana Check-Up." A 44-cent increase in the cigarette tax will pay for the new program, which is estimated to generate about $220 million. Unfortunately, not all the money raised by the cigarette tax increase will be used to pay for the program. Of the increase, 33 cents will go for the health insurance plan while the remaining 11 cents will be used to fund pet projects of legislators, including increased Medicaid coverage for pregnant mothers and the state's tobacco cessation program.

The Governor also won a partial success on full-day kindergarten. The legislature approved $92 million in funding for FDK; however, it is not a mandatory, statewide program. It merely gives local schools the option of receiving grants from the state if they desire to start up FDK.

And I shouldn't forget the best part of all. Remember, lawmakers earlier in the session approved a pay raise, which will boost their annual pay by at least $10,000 a year, bumping the average pay for the part-time legislators to well in excess of $50,000. Gov. Daniels has already signed that pay increase into law. In the 11th hour, lawmakers came back and provided leaders and key lawmakers an additional $500 bonus. At least a couple dozen legislators in both houses will benefit from this last-minute gift to lawmakers for a job well done.

Ballard Lies: Tells Councilors Homestead Credit Only Benefits The Rich

In an appalling appeal to class warfare politics, Mayor Greg Ballard told a caucus of Republican councilors ahead of tonight's City-County Council meeting where the council  took up adoption of the city-county government's 2013 budget that the homestead property tax credit only benefited the rich, and that middle and lower income taxpayers would not be affected by its elimination. Ballard has proposed elimination of the tax credit, a move that would increase property taxes on homeowners by about $8 million annually. Despite riding an anti-tax wave to win his upset election over former Mayor Bart Peterson in 2007 and proclaiming his mantra of making public safety job one, Ballard has turned into a tax-and-spend liberal, insisting on a tax increase on homeowners to help close a $50-$60 million budget deficit for 2013.

An analysis of the homestead credit by Ballard's own controller proves that his claim that only the rich would pay more taxes if the homestead credit is eliminated is patently false. About 38% of  homeowners, including many of those living in higher taxed areas with higher-assessed homes receive no benefit from the homestead credit because their taxes have already hit the 1% cap imposed under state law. As fellow blogger Pad Andrews' explains, the city controller's figures show that a majority of the tax increase that will result from the elimination of the homestead credit will be borne by those owning homes valued at $150,000 or less. Those figures show that only 99 homeowners will see a tax increase of $100 or more with an average home value of $368,674, while more than 46,000 homeowners with an average home value of $103,2227 will see a tax increase, albeit a smaller tax increase on average than those with higher-priced homes who have not yet reached the state-imposed property tax cap. "So, eliminating the homestead credit has little to do with rich folks paying their due," Andrews notes. "The tax increases will tend to hit those with lower value homes. If you live in a higher tax area, then you'd escape a tax increase for a home value lower than someone living in a lower tax area."

Ballard took office in January 2008 with the benefit of a 65% increase in the county option income tax passed by the Democratic-controlled council and signed into law by Peterson, the so-called public safety tax, which was intended to shore up a budget deficit and to provide sustainable funding for the city's public safety departments. Voter discontent over the income tax increase, coupled with skyrocketing property tax bills, helped Ballard win a narrow victory over Peterson and elect a Republican-controlled council. State lawmakers passed landmark property tax reform legislation that brought permanent property tax relief to property owners; however, all taxpayers were hit with a permanent one percentage point increase in the state sales tax to pay for the tax relief afforded to property owners. Ballard, for his part, made the Peterson income tax increase permanent despite campaigning against its enactment. Despite the promise the tax increase would allow for the hiring of 100 more police officers, the City now has a police force that is 300 officers smaller since enactment of the public safety tax increase. Ballard blamed the economic recession and property tax caps on the lack of funds to adequately fund public safety.

Two years into office, Mayor Ballard pushed through more tax increases to bail out the CIB, which claimed to be running a $47 million deficit and at risk as a going concern because it had assumed full responsibility for the $20 million a year in operating and maintenance expenses on the newly-opened Lucas Oil Stadium, and because it had no revenue stream to cover the added costs after giving billionaire Jim Irsay's Colts rent-free use of the stadium. As a consequence of raising the city's hotel taxes and auto rental tax, Indianapolis now has one of the highest tax rates of any city in the country for visitors to Indianapolis despite the large investment the City has made in expanding its convention facilities to attract more conventions and visitors to the city. Visitors pay a hotel tax rate of 17%, an auto rental tax rate of 15% and a food and beverage tax rate of 9%. The CIB now sits on a $67 million cash reserve, even after making a $33.5 million public subsidy to billionaire Herb Simon's Indiana Pacers, who claims without substantiation that his NBA franchise is losing money and who has threatened to move the team elsewhere if the CIB didn't pick up maintenance and operating expenses for the Fieldhouse, even though the team gets rent-free use of the facility and retains most of the revenues from non-game events hosted at the Fieldhouse.

Rather than eliminating the homestead credit, Democratic councilors proposed an alternative $15 million payment-in-lieu of taxes (PILOT) to be assessed against the CIB on the nearly $1.5 billion in facilities it operates in downtown Indianapolis that are used primarily for the for-profit benefit of the billionaire sports team owners and the downtown convention business. Mayor Ballard immediately denounced the PILOT as a move that would imperil the financial stability of the CIB despite its ongoing private discussions with Herb Simon to re-up the multi-million dollar public subsidies for his Indiana Pacers. In the real world, the Ballard administration and the CIB would be undertaking discussions with the two billionaire sports team owners to pay their share of property taxes like every other business owner in this city, particularly given how much the City is forced to spend every year providing public safety services for the events at these facilities. The Hulman-George family has always paid its fair share of property taxes on the Indianapolis Motor Speedway, which conducts far fewer events annually than either the Fieldhouse or Lucas Oil Stadium. It's not fair that billionaires Jim Irsay and Herb Simon get rent-free use of these facilities for their multi-million dollar business organizations and pay absolutely nothing in property taxes on those facilities. The only people favoring the super rich over ordinary taxpayers in this debate is Mayor Greg Ballard and the Republicans on the council who've followed his misguided fiscal policies over the past five years in lockstep. Time and time again Ballard has chosen the side of the downtown mafia that is filling his pockets with campaign contributions, free tickets, meals and country club memberships and other lavish gifts and overseas junkets over ordinary taxpayers.

I find myself in the unusual position as a life-long Republican and elected Republican precinct committee person siding with the Democratic-controlled council on this matter. Fortunately, the Democratic budget that rejected elimination of the homestead credit was approved on an 18-11 vote. Two Republicans voted with the Democrats, including Councilors Christine Scales and I believe Councilor Jason Holladay, but I'm not certain of Holladay's vote. On a 16-13 party-line vote, the council also approved the CIB budget, which included the $15 million PILOT. The Republican arguments that the PILOT is being illegally imposed was effectively shot down by the council's counsel, Fred Biesecker. Republicans argue that because an assessment on the property was not made by March 1, the PILOT could not be imposed as part of next year's budget. Biesecker pointed out that on one prior occasion, a $4.9 million PILOT was collected from the CIB several years ago. Biesecker noted that no tax had been assessed that year by March 1 on CIB properties before the council adopted the PILOT. He further reminded councilors that a PILOT is not a property tax by definition; rather, it's a substitute payment for services provided to otherwise tax-exempt property. He added that the enabling statute for the PILOT merely imposes a cap on the amount that may be assessed; it does not provide the specific manner for assessing the property. Further, Biesecker says that state law allows for assessments to be imposed on property omitted from the tax assessment rolls for up to three prior years.

UPDATE: The Mayor's office wasted no time putting out a statement to denounce the council's actions tonight on the budget:

"Budgeting is not a one-year exercise.  It requires prudence and a focus on the long-term fiscal health of our city.  The budget in any particular year must help set up future budgets. 

"The Council majority's current plan is unfunded, increases spending, more than doubles the deficit for 2014, and strips support of our downtown economy in order to give tax breaks to a select few. 

"The budget I proposed to the Council this year was responsible for the long haul and ensured that income tax dollars are being used to support our police officers and firefighters.  There is money for public safety in this year's proposed budget, but only if the Council has the will to make tough choices.

"In the meantime, we must talk frankly about what public safety and criminal justice will look like over the next 20 years.  If we don't, the budgeting process will be painful for the next few years.

"I will spend the next few days reviewing the final document adopted tonight and the many options afforded me by law as Mayor of Indianapolis."
 

Incidentally, the Mayor has no legal authority to veto the CIB budget as it is a separate municipal corporation over which he does not serve as the executive. The audacity of the mayor to accuse the Democratic-controlled council of stripping "support of our downtown economy in order to give tax breaks to a select few." This coming from a man who accepts free floor seats to all the Pacers games and then instructs his appointees to the CIB to hand out a $33.5 million subsidy to the billionaire owner of the team. This coming from a man who gave $6.5 million of our taxpayer dollars to the man who bankrolls his campaign and pays for overseas junkets that he and his wife take after tripling the rates we have to pay to park at the damn metered spots downtown so his money man can build a new parking garage from which he alone will derive financial reward. Nearly 50,000 homeowners, Mr. Mayor, is not a "select few." How dare you attack working class homeowners. You are simply pissed off that the CIB won't have the money to give your buddy Herb another multi-million dollar public subsidy. You don't care about public safety, and you sure as hell don't care about the ordinary citizens who pay the lion's share of taxes in this community. You have turned into the worst enemy of the people who busted their asses to put you in office. You are a worse traitor than Benedict Arnold.

Pence Wants To Increase Taxes On Individuals To Pay For Business Tax Cuts

I'm at a loss as to where Gov. Mike Pence is coming from in suggesting that somehow or another that Indiana businesses are at a disadvantage with other states when it comes to tax burdens. He recently announced that he would seek the elimination of the business personal property tax as part of his 2014 legislative agenda. Many legislators, Republican and Democrat alike, reacted negatively to the proposal because of the $1 billion void it would leave in funding for local governments. Only days after calling for the elimination of the business tax, he announced that he was making a $141 million cut in state spending to offset a shortfall in projected budget revenues. Now he says that he's open to raising local income taxes on individuals to make up for the elimination of the business personal property tax.

Gov. Mike Pence refused to rule out county income tax hikes as a replacement for the more than $1 billion Indiana schools and local governments stand to lose if he succeeds in eliminating the business personal property tax.

The Republican, who spent his first months in office fighting to reduce the state income tax rate, told reporters Wednesday that terminating property taxes on business and manufacturing equipment is the top item on his tax reform agenda, but he will leave the details to the Republican-controlled Legislature.

Pence repeatedly dodged follow-up questions asking if he'd accept a plan that calls for higher local income taxes if it meant eliminating the business personal property tax.

"I don't want to prejudge that debate; I want to be open to ideas in the legislative process," Pence said. "There's ... different kinds of taxes that could replace that, that wouldn't be such a barrier to economic growth."

The governor claims Indiana's business personal property tax — which produces 17.5 percent of Lake County's property tax revenue and 13.4 percent of Porter County's — discourages businesses from locating in the state, despite Indiana's otherwise top-rated business tax climate.

"I think most people know that the business personal property tax is a barrier to the kind of investment that creates jobs in Indiana," Pence said. "How we go about phasing that out is a subject of an important discussion in the state of Indiana, and I look forward to having that with people across the state and with their elected representatives in the upcoming session."

Pence's public positions are completely at odds with his incessant rhetoric about being an advocate for the middle class. To the contrary, his policies seem to be at war with the middle class. His refusal to set up a state health care exchange to implement the federal Affordable Care Act and his support of a lawsuit filed by Attorney General Greg Zoeller to render those Hoosiers who choose to enroll through the federal health care exchange set up in place of a state-run exchange for insurance coverage ineligible from receiving any subsidies they may qualify for under the federal law smacks at mean-spiritedness. Middle class Hoosiers are frightened to death for their economic well-being and Pence seems only concerned about doing whatever he can to pass out tax breaks and tax giveaways to businesses. His support of the $100 million tax giveaway to the Hulman-George family for its Indianapolis Motor Speedway against this backdrop drives the needle in deeper into an already raw nerve. Hell, he even provided a public subsidy for a daily flight service from Indianapolis to San Francisco for the benefit a single company in Indianapolis that has already received millions of dollars in state tax breaks. If this is what he defines as conservatism, count me out.

Hogsett Beats The Drum Beat That Property Tax Caps Are Bad

Indianapolis Mayor Joe Hogsett sat down and met with all of the public school superintendents in Marion County yesterday. It's an overture for which he should be applauded. I don't think that happened once under former Mayor Greg Ballard, who lied to the editor of this blog about the partnership he planned to form with public schools when he became mayor. He was quickly schooled on the campaign finance bonanza presented by the peddlers of charter schools and abandoned that campaign promise like almost every other promise he made in that 2007 mayoral campaign.

What I wanted to draw attention to in this post-press conference Mayor Hogsett conducted surrounded by the public school superintendents was his return to that common meme of our dishonest politicians to blame property tax caps for the perceived funding woes of schools and local units of government beginning at the 3:50 mark. We must call them out every time they repeat this lie. Property tax caps involved a major trade off under which state government relied on a higher state sales tax to pick up entirely the education expense component of local schools, as well as the county welfare costs previously paid for by local property tax levies.

Those fundamental changes included in those property tax reform measures freed up a good deal of the potential property tax levy to be absorbed by other units of government, and they have fully taken advantage of it to the point of ensuring that most homeowners are taxed at the maximum possible amount permitted under state law. School districts have repeatedly been hitting up taxpayers by referendum to exceed those property tax caps, sometimes with success, sometimes without success. School districts have placed those ballot initiatives on the ballot in very low turnout primary elections rather than general elections at which more voters participate, creating a loophole of sorts to slip property tax increases passed the voters, which the state legislature ought to close.

So whenever you hear a politician like Hogsett castigate property tax caps, get in their face and call them out for the liars they are, armed with the knowledge of what's really transpiring. Any supposed shortage of revenues has more to do with the ever-expanding use of TIF districts to replenish the slush funds used to reward their campaign contributors, along with the overly generous use of tax abatements, which only serves to shift the tax burden to the rest of us left to foot the bill.

Daniels Won't Back Repeal Of Property Tax

Gov. Mitch Daniels' long-awaited property tax plan will be announced this evening live at 6:00 p.m. Those hoping for his support for a repeal of the property tax will be disappointed. The Star's Brendan O'Shaughnessy writes, "Although details were not released, one thing appears certain: The governor will not suggest the elimination of property taxes, which raise about $6.billion annually to fund such things as schools and police and fire departments." A constitutional amendment in some form, however, is expected to be proposed by Daniels to control local spending and property taxes.

If you stop to think about it, when has government ever repealed a tax once it is enacted? So many people make their living off the existence of there being a property tax. I'm convinced that's why efforts to date to repeal the federal inheritance tax have failed. There are so many people in this country who make their living off the fact that people with money and property have to plan for their death because of the insidious tax, and they all lobby Congress on a day-to-day basis.

There's going to be a lot riding on Daniels' property tax plan. If he fails to get meaningful changes through prior to next year's election, he might not win another term. Will House Speaker Pat Bauer risk derailing true property tax reform this year to prevent Daniels from having that re-election card to play? Or will he prove to us his Democratic majority can deliver true property tax reform in hopes of boosting his own party's majority in the House? It should prove to be an interesting legislative session.

The People Won Out

For a change, I think I can say that the people won out over the special interests in the just concluded session of our General Assembly. The legislature and the Governor screwed up badly last year when they ignored the looming property tax problem and attempted to band-aid over the problem the same way they had for decades, causing the citizenry to take to the streets to protest. To his credit, Governor Daniels understood the gravity of the situation and ordered reassessments in Marion County and a number of other counties last year when it became clear there were serious problems with the quality of the assessments. He established the Kernan-Shepard Commission to reinvent the way local governments in Indiana do business. And he came up with his own comprehensive property tax relief and reform plan as a long-term fix to the problems that ail our property tax system. In the final analysis, he achieved more success than any governor in recent memory in tackling these problems.

To the surprise of many, including me, Democratic and Republican legislators worked in a bipartisan fashion to make property tax reform and reduction possible this year. House Speaker Pat Bauer, Rep. Bill Crawford and Sen. Luke Kenley, in particular, deserve a lot of credit for working out an agreement which produced strong bipartisan support in both chambers. It would have been easy enough for Bauer to turn his back and walk away. Doing little or nothing would have posed a big problem for Gov. Daniels as he faces a tough re-election. Indeed, Democratic gubernatorial candidate Jim Schellinger selfishly appealed to Democratic lawmakers a week ago to put off any permanent fix of the problem until next year. Fortunately, Bauer and Crawford put the public's interest ahead of political expediency.

A big winner in this year's legislative session is Mayor Greg Ballard. His unlikely election last year was a product, in part, of property owners concerns with rising property taxes. His presence and steadfast support for a permanent solution was a constant reminder to lawmakers of the consequences of failing to act. He didn't get a repeal of property taxes, but the 1-2-3 caps on property taxes, which will eventually become a part of our state constitution, provides some certainty and predictability to homeowners and businesses on what to expect from their property tax bills. The caps were critical because much of the property tax savings are being financed with a 1% increase in the state's sale tax rate. A referendum requirement for larger bond issues will empower the public to help control local government spending. With an average savings of about 30% from these changes, in addition to the reductions most homeowners will realize from the reassessment and additional homestead credit this year, and the long-term savings from the caps, property taxpayers will see real results this year. More importantly, the state is picking up Indianapolis' public safety pension liability, which threatened to consume an average of $30 million a year from the city's budget for decades. Having that monkey off his back will allow Mayor Ballard to reduce the county's local option income tax or divert those revenues for further property tax reduction, assuming he is able to find significant cuts elsewhere in the budget.

Mayor Ballard came up short in his effort to further consolidate local government in Indianapolis, but the groundwork has been laid to go much further next year. Marion County's assessors weren't eliminated, but at least voters will have the opportunity to take that next step in a referendum in the November general election. Hopefully, next year we can get rid of township government altogether. Let's face it, if Mayor Bart Peterson could have gotten all that Mayor Ballard got from the legislature this year while he was still mayor, he would have been one happy man coasting to re-election. City finances are now manageable for Mayor Ballard. He should not give up on his goal of finding at least $70 million in cuts. The City's economic future is dependent on his ability to scale back the tax increases enacted by Peterson to stem the flow of people and businesses to the suburban counties and revitalize many distressed neighborhoods.

It's The Spending, Stupid

Former Indiana GOP Chairman Rex Early reminds us that spending by local governments is the real culprit of high property taxes in a column he pens in today's Star. "Local spending in Indiana has increased from $2.1 billion in 1984 to $7.9 billion last year," he writes. "These massive increases are neither fair, nor sustainable to the property taxpayers of Indiana." He adds, "That's why I support Gov. Mitch Daniels' proposal to cut property taxes for every Hoosier homeowner, capping them forever at a maximum of 1 percent of a home's value."

Early's column notes that currently more than 55% of Indiana homeowners are paying more than 1% of their homes assessed value in property taxes. I would add that is not necessarily saying much because most of the homes in my neigbhorhood are assessed well below the fair market value of the home and the taxes are still too high. Once the tax cap is enacted, you can bet that those same homes will soon find their assessed value creeping much closer to their fair market value. Early likes an aspect of Daniels' property tax reform plan which would mandate that tax boards in each county review all local spending plans to keep budgets in check and protect homeowners from overspending.

The Star's editorial writers today remind lawmakers that nothing short of real property tax reform will be acceptable. They agree with Early on the need for tax caps. "Yet, as Daniels understands, any reform package that doesn't impose at least semi-permanent caps on property taxes falls short of providing a lasting solution," the editorial reads. "Past reform attempts have proven temporary at best." "Tax cuts have been replaced over time, and sometimes quickly, with sharp increases in property tax bills."

And it becomes more and more apparent that some lawmakers just don't get it. Gov. Daniels wants to get rid of our archaic, political system of electing township assessors and replacing them with a single, appointed professional qualified to do the job. This is a system that allows a completely unqualified high school janitor to get elected as assessor in one of the state's largest townships simply because his candidacy had the blessings of local political bosses. An out of touch Sen. Connie Lawson (R-Danville) told the Star she thinks it is unlikely Daniels plan for assessors will be approved. "I've got some concerns about whether we can make significant progress," Lawson said. "Some really good information came out about the value of the township assessors and what they do." Sen. Mike Young (R-Indianapolis) adds, "Why is it better to have somebody non-elected who I don't know versus someone elected who is keeping me informed?"

Many HHC Nursing Homes Rate Below Average

You can add another lie HHC CEO Matt Gutwein has been telling voters in Marion County as part of his campaign to pass the Wishard referendum during the November 3 special election, a vaguely-worded question that asks you to approve property tax levy increase to support the issuance of more than $700 million in general obligation bonds to fund a new county hospital, although you would never know that after reading the referendum question. Gutwein has repeatedly bragged about how the quality of care provided by the nursing homes HHC "owns and operates" is better than other nursing homes. "Nursing homes are a growing part of Marion County Health and Hospital Corp.'s bottom line," Star business reporter Dan Lee writes. "Yet almost half of its nursing homes -- 17 of 35 -- were rated below average, according to a Star review of Indiana State Department of Health records for the past three years. Eleven of the homes ranked in the bottom 25 percent of the almost 500 facilities reviewed in the state's Nursing Home Report Card system." Lee explains how critical the revenue from these nursing homes are:

Income from nursing homes is an important part of Health and Hospital Corp.'s strategy to pay for a proposed new Wishard Memorial Hospital. The $754 million complex would replace the existing one on West 10th Street.

Marion County voters head to the polls Tuesday to vote yes or no on giving the Health and Hospital Corp., Wishard's parent organization, the authority to issue bonds needed to finance the new hospital.

Corporation officials have said the project can be completed without using additional property tax revenue, and they view their nursing home operations as part of the reason why.

In 2009, nursing homes will account for roughly 42 percent of Health and Hospital
Corp.'s projected $848 million in revenue, according to Dan Sellers, the corporation's chief financial officer.

As income from nursing homes has increased, Wishard has relied less on property tax revenue. In 2009, Wishard received $24.9 million, or 5 percent of its revenue, from property taxes, down from $51.9 million, or 15 percent, in 2003, according to hospital documents.

According to Lee's story, HHC plans to acquire even more nursing homes in the coming years, as many as seven more by next year. His story is deceptively misleading, however, because of what he fails to mention in his story. Here are some of those facts:

• Lee continues to claim that HHC owns these nursing homes and simply has management agreements with American Senior Communities to operate them. What he doesn't tell you is that HHC actually leases the nursing homes from an entity owned by Eagle Care, Inc., an entity owned by the same people who own ASC. HHC merely creates a legal fiction to make it appear that it owns the nursing homes so it can qualify to receive upper limit payments from Medicaid, which effectively doubles the Medicaid reimbursement rate of its nursing homes compared to other nursing homes. Former HHC CEO Mitch Roob has called this a scam on the federal government.
• Lee conveniently omits the fact that virtually all of these nursing homes are located outside of Marion County, some in the far reaches of the state. HHC is a municipal corporation that is suppose to operate for the benefit of Marion County residents. Would we expect the City of Indianapolis to operate water and sewer services in Fort Wayne or Evansville? So why is our municipal-owned corporation doing business all over the state?
• Lee conveniently omits the fact that HHC recently closed Lockefield Village, one of the few nursing homes it operates within the municipal corporation. HHC built the nursing home, which is adjacent to the Wishard hospital campus, in only 1995 at a considerable cost to taxpayers. When HHC closed it, it received a rating of just 1 out of 5, the lowest possible rating for evaluating the nursing home's quality of care.
• Lee repeats the myth that because the nursing home scam has been so wildly successful, HHC has been able to reduce property taxes in Marion County by more than $50 million a year. Like Gutwein, Lee conveniently omits the fact that most of that reduction is the result of the passage of the 2008 property tax reform and relief law that mandated a roll back in certain tax levies, including one imposed by HHC. Taxpayers were forced to pay a 1% higher sales tax to help pay for the replacement tax dollars HHC is now receiving from the state. The truth is that HHC has banked most of the nursing home revenue windfall to spend on the hospital--nearly $150 million to date--rather than reduce our property tax burden.
• Lee continues the Star's campaign of deception by giving people the impression they are not voting to approve a property tax levy increase if they vote to approve a referendum.

This demonstrates how important it is for the taxpaying-public to look elsewhere for your information on this issue. The local news media simply cannot be trusted to give you the facts on the Wishard referendum. They are all in the tank with the HHC officials and are doing everything they can to hoodwink you into voting for the referendum under the mistaken impression that it does not call for a property tax increase. It does. It authorizes what could become one of the largest property tax increases in Marion County history. That increase will not be protected by the state property tax caps. You will pay these higher taxes on top of that increase. Get the facts so you can make an informed decision.

Morgan County Leads The Way

When you think of forward-thinking places in Indiana, Morgan County isn't usually the first place which comes to mind. On the issue of property tax reform, however, Morgan County is leading the way just as the legislature intended. Unlike neighboring Marion County, Morgan County is using a new state law which allows the county option income tax to be used to reduce local property taxes. In Morgan County's case, the property tax reduction will be 30%. And property taxpayers there weren't even complaining or protesting like Marion Co. taxpayers. As the Star explains the Morgan way of dealing with rising property taxes:

Morgan County has adopted three local income taxes and will use the money to blunt increased taxes on homes and other property.

The County Council voted unanimously Tuesday to adopt the taxes expected to raise nearly $14 million a year beginning in 2008.

Combined, the actions total a countywide income tax of 1.45 percent, with revenues divided among the county, city, towns, schools, libraries and other government agencies.

Morgan County Commissioner Jeff Quyle said the council's actions make Morgan one of the first counties in the state to use property tax reduction tools passed by the last session of the Indiana General Assembly.

He also estimated that added revenues from income taxes will result in a cut of about 30 percent in the property tax rate . . .

Many Morgan County property owners saw increases this year, and assessed values jumped as much as 30 percent or more in some cases.

For example, property owners in Green Township in the northern part of the county, a booming area of home and potential business development, reported tax increases of 38 percent and more Appeals have been filed about the newest tax assessments on approximately 1,000 parcels this year.

However, Morgan hasn't witnessed the taxpayer rallies and outcry this summer like the reactions in neighboring Marion County. And Morgan officials didn't report assessed value increases of up to 90 percent, as in neighboring Hendricks County.

The goal in Morgan Co. was to reduce property taxes to help lure new businesses. The income tax replacement will give it the lowest property taxes in the Indianapolis region, and it's income tax rate will still be 0.2% lower than Marion Co.'s 1.65% rate. Obviously, this will make the county more attractive to Marion Co. residents fleeing high taxes here. I particularly like how the schools are participating in the income tax replacement option. The schools represent about half of the property tax bill.

Star Editorial Raps Lawmakers' Antics On Property Tax Relief

A Star editorial hits the nail on the head today in criticizing recent political gamesmanship by both Republican and Democratic lawmakers which only undermines efforts to achieve real property tax relief and reform. As for the House Democrats altering of Gov. Daniels property tax cap idea to limit property taxes to 1% of household income instead of 1% of the home's assessed value, the editorial has some pretty sharp words:

It may qualify as the worst property tax idea on record.

But the House Ways and Means Committee actually approved a proposal last week that would base homeowners' tax bills not on the value of their properties but on household income.

How would such a radical shift affect tax revenues? Would most Hoosiers' tax bills increase or decrease? Could high-income homeowners create a tax shield by shifting property titles to low-income spouses? Why should the state penalize property owners who decide to invest more in their children's education than in house payments? Or reward those who overextend themselves by buying more expensive houses than they can afford?

Democrats on the Ways and Means Committee, who not only hatched this nonsense but also successfully amended it to SJR 1, couldn't answer such questions. The committee chairman, Bill Crawford, admitted that an analysis of the proposal's fiscal impact, a basic step with any legislation that would affect revenues, had not been completed.

Gov. Mitch Daniels described the amendment as "poorly conceived.'' That's a kind criticism under the circumstances.

House Republicans also quickly and appropriately derided the amendment.

Their criticism didn't end there. Republicans took a few knocks as well:

But the GOP caucus doesn't have much room to criticize. The House version of SJR 1, which would write tax caps into the state constitution, died after Republicans tried to add a series of unrelated amendments to the resolution. One GOP proposal would have even tacked a same-sex marriage ban onto the property tax amendment.

Such distractions underscore the fact that even on an issue as urgent as property tax reform, and even after voters have warned legislators to act now or face defeat on Election Day, the game-playing in the Statehouse continues.

Lawmakers would be well-advised to heed the advice given by the Star editorial, particularly lawmakers from Marion County.

Legislature Flunks Property Tax Reform Test

The Indiana legislature set out to do something big with property taxes this year. They promised to overhaul the system, make local governments less reliant on the tax and provide meaningful relief. Instead, they've come up with a plan that is a band-aid approach at best which rewards favored special interest groups and creates more problems than it solves.

The plan lawmakers have crafted promises over $500 million in property tax relief over the next two years. That's all lawmakers can say it does because of the shaky finances upon which it is based. To fund the tax relief, legislators are selling out to the owners of Indiana's race tracks in central Indiana by granting them a right to purchase franchises at $250 million a piece to operate land-based casinos at the tracks, which to hear the track owners complain, have never made money. You see, it's the duty of Indiana taxpayers to come to the rescue of these selfish track owners every time they come running to the legislature to complain they need help. Only legislators tainted by the influence of shady lobbyists would base a property tax relief bill on an expansion of gambling for the sole benefit of two privately-owned horse race tracks.

And remember, this is a one-time windfall. Don't buy the promises of new gaming revenues generated from these two land-based casinos, and don't be surprised when the newly-opened casino in French Lick closes down as a result of the extra competition. Every expansion of gaming in Indiana has been met with similar promises, and each time the result is the same. We don't have enough money to fund our schools with state funds, our property taxes keep rising and the quality of our public schools keeps getting worse.

Making this so-called property tax relief plan even more pathetic is a plan to mail rebate checks to property owners rather than reducing their tax bills. According to the Star, the rebate checks will have the effect of reducing the average increase in tax bills from 24% to 9%. "The idea -- conceived by House Speaker B. Patrick Bauer, D-South Bend -- is lawmakers' latest attempt to resolve a looming property tax crisis brought on by a number of legislative decisions made in previous years," the Star reports. "What could be more ridiculous than billing people (and) sending part of it back?" Bosma asked. And he's right. Many homeowners pay their tax bills by escrowing payments out of each month's mortgage payment. Mortgage companies will still increase your monthly mortgage payment to satisfy the double-digit increase homeowners will experience this year. You'll have to wait until late in the year to get your rebate check--at which time lawmakers will no doubt send out a taxpayer-financed mailing to take credit for the check you just received in the mail. Big deal. My taxes still went up, and you chose a method which wreaks havoc on my monthly budgeting.

And I forgot the best part of the plan. Your income taxes are likely to increase as well. Local governments will be allowed to increase local option income taxes to pay for public safety costs and their unfunded pension liabilities. You're supposed to get a tax break on your property taxes to offset the increased income tax. If you believe that's going to happen, you also believe in the tooth fairy. That promise has been made and broken every time the local option tax has been tapped by local governments.

The sad part is that legislative leaders will be patting themselves on the back for a job well done before the day's over. A group of grade-schoolers could have come up with a more reasoned plan than the plan devised by this sorry group. But just like our public school systems, there's always a reward for bad performance. You see, lawmakers will enjoy a $10,000 a year pay raise they enacted for themselves this year if they fool us into re-electing them to office for another two years in 2008. And the same problems they set out to fix this year will be back bigger than ever before when they convene in 2009.

Indiana GOP Hits Gregg's Legislative Record

Indiana State GOP Chairman Eric Holcomb believes Democratic gubernatorial candidate John Gregg is embellishing his record during his tenure as Speaker of the Indiana House of Representatives, particularly on the issues of fiscal restraint and property tax reform. "Speaker John Gregg has consistently embellished his record as speaker, trying to claim credit for balanced budgets and reforming property taxes, but his Fiscal Report Card shows a record riddled with gimmicks and delayed payments, massive deficits and a refusal to repeal a tax harmful to Hoosier farmers and families," Holcomb said. He continued:

Holcomb says that when Gregg became Speaker back in 1996, Indiana had a $1.7 billion budget surplus. By the time he left office, the state had a budget deficit of nearly $1 billion, contradicting Gregg's claim that he always balanced the budget when he was Speaker. The final state budget under Gregg's leadership spent about a half billion dollars more than the state collected in revenues. When Gregg was asked by a reporter as the time where the money went, Gregg responded, "Well, it was spent."

After the state's property tax system was declared unconstitutional by the Indiana Tax Court, Gregg promised real property tax reform, but in the end Gregg chose "tweaking" of the existing system through "assorted tax reductions and controls" rather than comprehensive reform. Holcomb cites a special session called by former Gov. Frank O'Bannon in 2002 to provide relief to homeowners facing skyrocketing property taxes due to the inaction of the legislature under Gregg's leadership. "Gregg is trying to claim credit for reform when all he did was kick the can down the road a little further," Holcomb said. Holcomb also hit Gregg on his opposition to a repeal of the inheritance tax, which Gregg said at the time had "a big price tag on it."

Gregg denounced Holcomb's criticism of his record by calling him a "hatchet man." "Rather than own up to that record and defend it, John Gregg's campaign lashed out," Holcomb responded. "Is this the kind of rhetoric we should expect from a candidate for governor?" Holcomb asked.

House Democrats Continue Assault On Property Tax Reforms

As I've stated before, the House Democrats under the leadership of House Speaker Pat Bauer are determined to undo the property tax reforms adopted by the General Assembly ahead of the 2008 elections to squash voter anger over burdensome property taxes. They say we don't need a constitutional amendment to make property tax caps permanent. And now they want to take away your right to vote at a referendum on proposals to borrow money for capital projects and levy higher property taxes to pay for the debt, which bypass the limits posed by the property tax caps. The Star's Bill Ruthhart reports on yesterday's party line vote:

The state's new voter referendums, aimed at giving Hoosiers the power over whether to raise taxes for publicly funded projects, would be tossed out the window under a bill approved by the Indiana House on Wednesday.

School and other public construction projects no longer would be subject to the referendums -- approved last year as part of sweeping taxpayer relief legislation -- as long as the buildings meet certain energy-efficiency standards.

House Democrats pushed for House Bill 1730, saying they wanted to remove the hurdles posed by referendums so that local school districts and governments can more quickly spend federal stimulus dollars on "green" projects.

But the bill makes no mention of federal stimulus money and would apply only to projects funded by property taxes. The bill's author later said he was open to amending the legislation so that it applies only to projects that receive money from the federal stimulus.

The House passed the bill on a 52-48 party-line vote. The legislation now moves to the Senate.

This is precisely the reason we need those property tax caps made permanent in our state constitution. The property tax reform law is barely a year old and they're already undoing it. The reason Democrats want to undo the law is very simple. They are bought and paid for by the teachers' unions, which want to make it as easy as possible to raise property taxes for schools. Notice that all four of Marion County's newly-elected members of the House of Representatives, John Barnes, Cherrish Pryor, Mary Ann Sullivan and Ed DeLaney, voted to take away your right to vote at a referendum on these tax issues. Barnes and Sullivan received more special interest money from the teachers' unions than any other special interest group. DeLaney, too, received significant financial support from the teachers' union.

In last year's election, Marion County residents living in IPS listened to the arguments and approved a referendum that will allow the school district to borrow money and raise taxes to fund several hundred million dollars worth of capital projects. It's not like voters collectively are incapable of making rational decisions. If you're not upset by the House Democrats' action yesterday to deny you the right to vote and decide these issues, then don't complain the next time you get a property tax bill with which you are unhappy.

Another Township Fire Department Merger: Higher Pay for Firefighters, Higher Taxes For Taxpayers

Next to the transfer of the utilities to Citizens Energy, the consolidation of township fire departments into the Indianapolis Fire Department rank pretty high in the various frauds that have been perpetrated on the taxpayers of this city. With each new deal, we're told about all of the savings and property tax decreases that will come from "synergies" created as a result of consolidation. The problem is that none of these deals ever result in any savings to the taxpayers or property tax reductions despite the claims of the politicians who sell these deals to us. The latest case in point is the merger of Lawrence Township's Fire Department into the Indianapolis Fire Department. WRTV reports on its impact:

In a unanimous vote, the Lawrence Advisory Board passed a resolution to merge, a move that drew applause from the crowd. More than 100 firefighters would be affected if the measure received final approval.

Very excited, long time coming," said Lawrence Township Fire Chief Michael Blackwell.


Under the consolidation plan, 18 of 127 firefighters would remain with the city of Lawrence with the rest rolling into IFD.

Lawrence Township firefighters were facing layoffs and took a 16 percent pay cut this year. Financial woes would go away if the merger goes through.

"They'll see a significant pay increase and a pension base increase," Blackwell said.

Supporters contend that consolidation saves taxpayers money by sharing services.

Trustee Russ Brown said there would be a slight cost increase the first year but that the decrease would be significant in the following years – about $150 on property tax bills.

IFD officials said consolidation brings enhanced fire safety and cuts duplication that already results in the two departments responding to the same runs.

Did you catch that? "They'll see a significant pay increase and a pension increase." That's the basic problem with all of these mergers. IFD absorbs firefighters from the townships and boosts their pay and pension benefits considerably to match those of IFD's firefighters. Lawrence Township Trustee Russ Brown notes the higher taxes property owners will pay the first year, but he assures us the property tax bills will decrease by about $150 on average in subsequent years. Is he talking about Lawrence Township ratepayers or Marion County ratepayers? Yeah, that's what I thought? He's talking about Lawrence Township ratepayers.

Unfunded pension liability for public safety employees is what got Indianapolis into deep trouble before the state agreed to pick up about a half billion dollars in pension debt during the first part of the Ballard administration as part of a property tax reform plan that required all taxpayers to pay a higher state sales tax as a tradeoff for tax caps. Every time IFD absorbs another one of these township fire departments, it means the IFD taxing district will be paying more over the long haul to make up the difference in extra pay and pension benefits for those added firefighters, not to mention the cost of maintaining services in the primary areas of the county experiencing real growth. That translates into the need to raise property tax rates or find the money elsewhere in the city-county budget if the property tax cap law won't allow the fire district to raise the amount needed to pay for these expanded services. It's just more "Alice in Wonderland" fantasies. And we fall for it every time.

Ballard: Hiring More Police Officer Won't Solve Crime Problem, But He''ll Use That Excuse To Raise Your Taxes Anyway

Mayor Greg Ballard seems to be offering the public contradictory views on crime. Last week, he sent out his public safety director and police chief to push a plan to raise taxes by at least $25 million annually to hire an addition 100 to 200 additional police officers to address the city's growing crime problem. Yet he tells reporters today that more officers won't help with the crime problem. From the Star:

Indianapolis Mayor Greg Ballard rejected the notion today that simply adding more police officers would solve the city's violent crime problems. 

He said it was "the definition of insanity" to keep going back to the same idea of expanding the police force, which he called a "default option" unsuccessfully relied upon for decades to cut crime. 

 "None of this is the issue," Ballard said, later adding, "You cannot keep going back to default options ... and think that's going to solve the problem."

Ballard's statements today came as his administration announced support for contributing $10 million to IUPUI, a state-owned university that pays no property taxes, to make $10 million in street improvements around the campus, including a new rain garden, and make at least $20 million in repairs to the university's Natatorium, although city officials claim none of the money being paid out of the City's downtown TIF district will be used for the Natatorium.

The definition of insanity is to raise taxes yet again for the purpose of hiring additional police officers and expecting a different result. Ballard came into office nearly 8 years ago with about $90 million a year in additional revenues from a public safety tax enacted by his predecessor. That plan was supposed to be used to hire at least 100 additional police officers. Ballard and the City-County Council placed their spending priorities elsewhere, such as investing more than a half billion dollars in subsidies for TIF-related projects and even more in property tax abatements rather than hiring more police officers. In fact, Ballard until this past year continually boasted that the city's crime rate had fallen under his leadership without hiring additional cops. The mayor's plan to provide future pay raises to current police officers and to build a new criminal justice system will more than consume the additional tax dollars the proposed tax increase will generate.

UPDATE: WTHR-TV's Rich VanWyk's report at 6:00 tonight showed Ballard becoming visibly angry when Van Wyk questioned him about needing more police officers to reduce crime; however, VanWyk threw out some totally false numbers to offer an alternative explanation on why there isn't enough money to hire more police officers without raising taxes again. The video has not been uploaded to WTHR's website.

But the city's been getting a lot less money to pay for fire, police and other essential services. We looked over some of the city's finances and budgets. The recession and tax caps has slashed property tax revenue by $43 million. Income taxes are down $31 million. According to spending numbers, public safety has fared better than most city services.

While tax revenue dropped 13 percent since the start of the recession, IMPD funding increased 11 percent. The police department receives more than a fourth of local tax dollars.

We asked the mayor, given the alarming increase in violent crimes, if there was more money, would you hire more police officers?

"That's not the issue," Ballard answered, sounding irritated. "You guys keep going to that. It's not the issue. If you want to stop violent crime, you have to rethink what people are saying over and over again."

There they go again blaming the recession and property taxes on reduced income and property tax caps. What Van Wyk's numbers fail to disclose is that the 2008 property tax reform law that imposed property taxes required the state of Indiana to take over tens of millions of dollars in annual outlays for unfunded public safety pension liabilities and county welfare services that had previously been locally paid. As usual, no attempt is made to explain where all of the public safety tax revenue increase dollars went. Van Wyk's numbers ignore the nearly $120 million in property taxes that is diverted from funding basic city services each year to the TIF slush funds that are used to reward the politicians' campaign contributors, and the tens of millions in new tax abatements that are approved annually by the Mayor and City-County Council.

City-County Council Approves Property Tax Increase

We're not going to get any answers about how Mayor Greg Ballard and the Indianapolis City-County Council pilfered the hundreds of millions of dollars raised by the 65% increase in the county option income tax increase that was supposed to have been dedicated to public safety in 2007. Instead, the City-County Council is taking the first step in passing another round of massive tax hikes like they did last night when they approved the expansion of the special police taxing district for IMPD. This allows new tax levies to be imposed on all of the Republican areas of the county who foolishly believed that by electing a Republican mayor and Republican council members during the 2007 tax-uprising election year that they were electing fiscally conservative leadership. We now know that when it comes to tax, spend and borrowing matters, Republicans in this city think no differently than Democrats, and that their number one priority is making sure that there are plenty of tax dollars available to pass out as subsidies to the pay-to-play club members who finance their campaigns and the billionaire sports team owners who give them free tickets to Colts and Pacers games.

The council members who voted for this property tax increase will tell you that it means more money for police, but it's a lie. Council members who voted for this tax increase will tell you that it's a matter of fairness. That's another lie. They argue that when they merged IMPD and the Sheriff's Department in 2006 they didn't extend this tax levy to the new service areas because of the nearly half-billion dollar public pension debt that needed to be paid off--one of the reasons they gave for passing that 65% increase in the county option income tax in 2007. The police merger was supposed to achieve tens of millions of dollars in savings, but that was a total lie. That half billion dollar debt vanished with the passage of the 2008 property tax reform package passed by the state legislature. But why didn't our taxes go down if we know longer had to repay that debt? The short answer is that the people you elect to run your local government are very dishonest people who play shell games with our money. For one thing, the current special police taxing district's tax base has been gutted by the ever-expanding TIF districts that accumulate hundreds of millions of property tax revenues in slush funds that are used to reward the corrupt politicians' campaign contributors. The special police taxing district has to be expanded to find more suckers to pay taxes that are used to fund the corrupt endeavors of our elected officials. Dedicated revenue is a loosely-used term by dishonest elected officials who tell you one thing as they are voting to raise your taxes and then use the money for something else. You ain't seen nothing yet. The even larger tax increase is coming up next. This is what happens when you elect dishonest, corrupt people to run your local government.

Here's how your council members voted last night (15-12) on this latest shell game move. I've included their party affiliation, but as you can tell by the way the vote was taken in the video above, it's just a game for these people. It took more time to take the vote than to debate the tax increase when they finally arrived at that magical 15th vote needed to pass the measure. To be more precise, there was no debate over this tax increase. Most of them are playing for the same team, and that team doesn't include the average taxpayers who foot the bill:

Yes:

Adamson (D)
Cain (R)
Freeman (R)
Gooden (R)
Mansfield (D)
McQuillen (R)
Miller (R)
Moriarty-Adams (D)
Oliver (D)
Osili (D)
Pfisterer (R)
Sandlin (R)
Scales (R)
Shreve (R)
Simpson (D)

No:

Barth (D)
Brown (D)
Evans (R)
Gray (D)
Hickman (D)
Holliday (R)
Lewis (D)
Lutz (R)
Mascari (D)
McHenry (R)
Robinson (D)
Talley (D)

Absent:

Hunter (R)
Mahern (D)

UPDATE: I went back and checked on what the actual figure for the savings from the merger was supposed to be. At the time, proponents claimed the police merger would save $9 million annually. It became apparent the very first year that cost savings were wildly inflated. They had anticipated that former sheriff's department employees would stop participating in social security once they become IMPD employees but that never happened. They continued to participate in both social security and their government-funded pension, which meant the city had to continue paying their matching contribution to social security. Of course, the biggest hint that no real savings were achieved came when they told us we had to raise the county option income tax the following year by 65% for public safety.

The independent-thinking Councilor Christine Scales (R), who got booted out of her own caucus for daring to think like a Republican, shared these comments on Facebook today in response to the criticism by Acting Mayor Ryan Vaughn concerning the City-County Council's decision to only go along with extending the boundaries police special taxing district and not approving the elimination of the homestead property tax credit that Ballard is demanding the council eliminate.

Did Vaughn really have the audacity to claim that the Democrat's budget plan consists of "spending like there's no tomorrow?" The reason we're in this mess is because that is exactly what the Mayor has been doing since the day he came into office. The Mayor campaigned as a fiscal conservative, one who vowed to put 300 officers on the street without raising taxes. That was his number one stated priority. He has handed out tax dollars to already wealthy developers as incentives to build more of what the city already has. He failed to negotiate a better deal with the already wealthy Pacers owners to save the city a few million dollars. If only he had negotiated with our sports teams in as hardball a fashion as he has negotiated with police officers. They aren't coming around after a deal has already been agreed upon, asking for more. They only ask for the salaries they were promised in a contract, but he is forcing them to accept less. The slap in the face that stings the hardest, I'm sure for our first responders is that in the toughest of budget times, the Mayor can choose to spend scarce budget dollars on cricket over cops. Just curious, when Vaughn made his comment, did he say it with a straight face?