Friday, March 14, 2008

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.


Anonymous said...

Amen my man! Couldn't have said it better if I tried.

Vox Populi said...

I have to say I look forward to replacing Mayor Ballard in 2011. Part of me feels that David Orentlicher might be running for Congress to boost his name recognition for a city-wide run. He knows that fighting the Carson Machine will be difficult.

I am very happy though that a property tax deal was reached.

Gary R. Welsh said...

Good luck on that one, vox populi. The Carson political machine typically decapitates anybody who dares to challenge them. We'll see what David and Woody look like in 60 days.

Anonymous said...

AI, you give the legislators too much credit. They were all in the same hot water as the governor.

Bauer wisely realized that his party's slim majority (hence his speakership and personal power) would evaporate if he were the reason no tax deal materialized.

What I find amusing is the whining from the business-lobbyist community. The failure of the township assessors to value commercial property fairly for most of a decade, taken together with the elimination of the inventory tax, really gave commercial property owners and businesses a big break at the expense of homeowners.

All this deal does is restore some equity to the overall system. As the fair-tax folks never tire of pointing out, gone are the days when a taxpayer's (farm) property produced food and income for his/her family. Yet commercial property is an "input" into producing goods and services and it has a clear value for such purposes.

The main thing this whole mess points out is that the Indiana Constitution is long overdue for a re-write, not just tinkering around the edges. The structure of local and state government needs an overhaul. Likewise with the whole structure of state and local taxation and spending.

Anonymous said...

I think your bi-partisan praise is laudable, but the result is less practical for me.

Ya see, when the nutterballs wanted to amend our constitution, a sacred documen, for marriage issues, I was appalled. I'm equally angry at amending it for property tax caps.

Anyone who reads the papers of the Indiana or federal Founding Fatheers (yeah, there were no mothers, but that's another subject), will tell you these folks didn't want the Constitutions to deal with the everyday issues like tax policy. A broad statement on free and appropriate public education, for instance, was inserted into the Indiana Constitution. No mention was made of how to pay for it, although it's assumed it would be taxes.

Taxes which would ebb and flow with the time, thereby more able to adapt to shifting pressures and needs.

What we really needed was about 3/4 of the state's school boards and superitenndents, to be forced out. Ditto with the legislature. A 1-2-3 Constitutional Amendment, which will surely pass overwhlmingly, doesn't really deliver the kind of answer we needed. My bill will be stablied, but the policies behind my tax bill won't get a thorough scrutiny. Which we still need.

We let these irresponsible schol boards, superintendents and legislators off the hook. Their feet were placed close to the fire but we let them out of danger.

WIthin five years, they'll be scrambling back to find other taxes and fees to impose.

And the decision makers at the time won't have any more guts than today's.

Anonymous said...

Dream on if you actually think this will be approved a second time and actually make it into the Constitution. This plan is so unworkable that they'll have to change it next year to avoid complete disaster for local municipalities.

Anonymous said...

Greg Ballard? Barf!

Anonymous said...

How did we win?
Spending wasn't reduced, just shifted.
The cap on property tax is a joke, all they have to do now is just raise the assessed value of you home and we're right back were we started.
Every official from the mayor on up has their own little club.


Anonymous said...


Could you shed some the caps kick in based on the assessed value of a home after exemptions such as homestead & mortgage are factored in?

Gary R. Welsh said...

As I understand it, you are entitled to a homestead credit equal to the amount your tax liability would exceed 1% of the gross assessed valuation of your home once the caps fully take effect in 2010. So if I own a $200,000 house and my tax liability is $2,500, I would receive a credit of $500 to reduce my liability to 2,000, or 1% of the gross assessed value.

Anonymous said...

Property tax reform is incomplete without massive local government consolidation and government spending cuts.