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GROWN FOLKS ARE TALKING

For those of you who may not be familiar with the above title, it is likely because you are low on melanin. “Grown folks are talking” is a euphemism from the Black lexicon usually directed at small children who try to butt into adult conversations and the parents have to tell them to go somewhere and sit down before they get hurt. Someone needs to direct that statement to the critics of the Governor Mitch Daniels’ property tax reform plan who have yet to bring one of their own to the table.

The Governor’s plan has four main components. Provide immediate relief, cap assessments, get local spending and borrowing under control and create a uniform system of assessments. Also he’d like to consolidate or eliminate some of the 2,600 units of local government in this state. The Governor has also made it clear that raising income taxes to property tax relief is basically a non-starter.

The Governor’s plan may not be perfect, but I have yet to see a better one. And I laugh at the critics who point out examples of how schools will be hurt and local governments will suffer, but haven’t unveiled a plan to that provides Hoosiers with permanent property tax relief while at the same time reduces the size and scope of the government that’s responsible for the tax increase in the first place.

They snipe and snicker, but bring nothing to the table but empty rhetoric and empty ideas. If you want to criticize, fine. A healthy debate and discussion about the largest issue facing this state is welcome and necessary. But if you have nothing to contribute to the dialogue, do everyone a favor and go somewhere and sit down. Grown folks are talking.

Posted: 01|19|08 at 6:45 am by Abdul Hakim-Shabazz
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  • http://blog.masson.us Doug

    Before being compelled to present a new idea, a decision has to be made about whether the Governor’s proposed plan is better than the current situation. “First, do no harm” and all of that.

    That being said, throwing a progressive income tax into the mix seems more equitable than relying solely on the sales tax. Finally, the circuit breakers might be penny-wise, pound foolish once local governments find themselves paying more on their bonds as financiers regard the bonds as riskier due to the constitutional limitations imposed on property taxes.

  • anonymous

    The current situation is out of control, but with that said, if government was run like a business this country would look a whole lot different. When state employees sit around surfing the net, and temps are told “not to do things too fast” and “make it last”, it is the perfect place for young, recent grads who think they should be paid for showing up for work, and extra for actual doing anything.

    Don’t get me wrong, not everyone has work days like this, but we need the GAO to come in and tell us where there is waste. You cannot leave it to the people in place, they are too busy protecting their territory.

  • http://infredheads.blogspot.com Joel

    Doug, Abdul’s point still holds. Bring it to the table. So your proposal is a progressive income tax, no tax tax increase and what? Eliminate property tax? Drop it a little? How would you ensure that the property taxes don’t bloat again? Is there any fundamental change in the way that spending occurs so that what we pay for government goes down rather than up?

    I would argue that once local governments get their act together (most, I think, are fine. But some are really out of control) the bond rates will be just fine.

  • garry moore

    lets move Daniel’s program and get tax relief and smaller government for citizens of indiana…..and i can’t agree more with the earlier post about worker performance by city and state employees. not all but i know of many times where we all can suggest more effective ways of doing business…such as why in the townships for trash pick up i have one truck with the driver doing all the work, and in the city its three employees with one truck. we need more ideas for improvement.

  • http://indytaxdollars.typepad.com Fred McCarthy

    Abdul, you use the phrase “cap assessments” as part of the Daniels plan. As I understand it, the “cap” is a percentage of the assessment and actually applies to the levy, or the number of dollars to be paid. (The “cap” on an assessed value of $100,000 would be, at 1%, a $1,000 tax levy.) A cap on the levy is precisely what is needed, but as a percentage of a variable – the assessment – I do not see it providing permanent relief. Next year the assessment could be $125,000, or ??? The proposal to professionalize assessors will have no predictable effect on the assessments themselves. (Unless the new “county executive” appoints an assessor “friendly” to his constituents.) But a professional may increase as many properties as he decreases, thereby increasing the levy “cap” otherwise known as the property tax bill. Am I midreading the governor?

  • Leon Dixon

    What constitutional limitations? We had them once but, Rip Van Winkle would be surprised to see that we sure don’t have them now for some reason (s). I have seen estimates that nearly 30% of all property taxes go to paying debts. I’m looking forward to Mayor Ballard’s transparent budget, complete with ALL liabilities clearly stated. Our former Mayor borrowed money to meet operating expenses, that is, bonded debts to pay for day to day expenses. No wonder property owners are being gouged.

  • Jim

    Here’s “grown folk” with an idea: http://www.advanceamerica.com/rpt/index.php

  • Dave Crutchfield

    While not an economist or accountant, I’ve read and participated more since the summer tax bills. My guess is the Governor’s proposals would be a big help, but shuffling types of taxes and associated belly-aching constituencies still won’t pay all the bills.
    More “permanent” repair is also going to require national tax reform: an enactment and (more importantly) perception of fairness. Without perception of joint sacrifice along economic, political,and racial spectrums, we can’t glean support for reduced spending and greater efficiency in entitlements, health care, immigration, energy, and foreign policy. A reacquirence of the societal ability to say, “No”.
    The electoral rumble this past November must be fair and push beyond school district, township, county, and state.

  • thundermutt

    The statehouse is a little short on “grown folks” sometimes. I sincerely hope this isn’t one of those instances.

    The unanimous passage of the governor’s plan out of the House committee probably has more to do with political reality and re-election posturing than anything else, though. Indiana’s 2008 Democrat version of the Kerry defense: “I voted for far reaching reform, but the Republicans in the Senate amended (fill in blank) into the bill and I just couldn’t support that, so I voted against the final bill.”

  • JW

    “It’s better to remain silent and thought a fool than to open one’s mouth and erase all doubt.” If, after all the discussion that’s taken place about property taxes, people still don’t know that the STATE employees/agencies are not a factor in the waste and bloat in LOCAL government that has caused this property tax fiasco then they are part of the problem: taxpayer ignorance and malaise which have combined to allow this lack of accountability to grow unchecked for decades. Run along now, grown folks are talking.

  • Dave

    Characteristically, the only legitimate relationship between constituents and elected representatives, in our republic, is peer rather than paternal. What quality of policy can we expect from “don’t snitch” government, where roaring at mice (township govt., 2.17% of county govt. statewide) rather than herding elephants (the state’s aggregate bond indebtedness, a problem estimated, in the absence of full state / DLGF / LSA disclosure, to be 65 times bigger !!!, than the problem, albeit MUCH SMALLER, of twnshp govt.), is a distraction that doesn’t CITIZENS, but the unwritten, prevailing law of special interests? More on this to come, from citizen concerned sources within the state house.

  • thundermutt

    JW, you’ve got it backward. Local government is a creation of the State, and the structural problems (too many local taxing districts, too much leeway to raise taxes) must be corrected by the State legislature by law or by change to the State Constitution. The overall structure of tax policy in Indiana (property vs. income vs. sales or other taxes) is most definitely a matter for the Legislature and Governor to hammer out. Then local units of government will have to figure out how to play by the new rules, which will no doubt limit their options severely.

    Shhh. The grownups are talking.

  • Becky

    Abdul, A better plan for the assessing part of local government was presented. I know because I presented it. The problem is no one paid any attention.

  • anonymous

    Becky, are you the township assessor? If you are, I have a question for you. If a better plan for the state meant elimination of your position would you be for it? We ARE talking about future of our state and it has to start now.

  • JW

    TM, I agree with what you’re saying. We’re just saying it differently. My response was to those who claimed operational waste/inadequacy in state government agencies was responsible for this fiasco. State agencies are not the problem with our property tax bills, overall taxing/spending structure in this state is the problem. However, in the day of “all politics is local” thinking wherein every locality wants control of taxing/spending (and therefore power) and every state legislature is willing to give it to them since they were part of that network at some point in their political careers, nobody can say with a straight face that operational decisions at the local level are the fault of the various State agencies (except, perhaps, for DLGF).

    As of now, we have too much out of control, semi-unaccountable local spending taking place. Did the State decide to go on a spending spree for local school building projects? Did the state decide to allow unchecked growth from developers dropping subdivisions in the middle of cornfields which now need new or widened local roads and other infrastructure in order to survive? Did the state decide that township government should provide services that are in many cases duplicated by the state, county or other local municipality? So, while overall structure is culpable, the true fault lies at the feet of local authorities.

    BTW, while the Governor’s plan is fairly comprehensive and the best current option overall, I still don’t like it because it leaves in one significant “ox” and therefore one of the fundamental structural problems. Leaving in “assessment” (capped at 1.25% of a homes value) leaves in a level of subjectivity and long-term uncertainty that need not exist. Even for fixed income individuals, the capped assessment may grow over time to be greater than they can afford if they live a few decades into retirement. Why can’t we have a system like California’s which caps your property taxes at 1.25% of a homes original selling price or the construction price in the case of a new home? That system does not penalize current owners for the natural increase in property values, unlike the governor’s plan.

    Lastly, this entire property tax “fiasco” is not as bad as people think; Indiana’s property taxes are very low on average relative to most of the country when adjusted for property values and cost of living.

  • http://indytaxdollars.typepad.com Fred McCarthy

    Abdul – You use the phrase “cap assessments” as a part of the governor’s plan. JW is exactly right. There is no cap on the assessment and the appointment of a “professional” assessor by the new “county executive” gives no indication that there will be one. The cap must be on the property owner’s tax bill – formally known as the “levy.” Using a percentage of a variable figure – the assessment – as a cap is meaningless. Locally the assessor seems to be a minor part of the problem. It makes little difference as to assessment techniques or levels while the last three mayors and their appointees at the Metropolitan Development Commission are setting up multiple TIF districts, abating property or taking it completely off the rolls in huge chunks. Does anyone REALLY know what the dimensions of the problem might be if we went back to EQUAL participation by all property owners and elimination of using the property tax system to direct economic activity geographically?

  • Becky

    anonymous 11:42
    Yes, I am an assessor and the plan I submitted does do away with the elected township assessor. Most of the legislative action regarding township assessors is a cover your butt move. I have no problem with my job being eliminated, HOWEVER I want it done right. The other plans will only make it more expensive and less efficient and much much more political.

  • thundermutt

    JW, I guess we do agree some. I especially agree with you about the California system. It is the only fair one, though I’d also add to purchase price the value of any building permits pulled during ownership of a property.

    The only “true market value” of a house is determined when it is sold between a willing seller and a willing buyer; it is unreasonable in the extreme to tax an owner on the imputed value increase before s/he sells. As you said, if either of us pays off our house anticipating a long retirement there and gets whacked with a tax increase of $200-400 a month (as many people in Meridian-Kessler have had TWICE now in the past 5 years), that’s just unreasonable.

    I think the local spending authorities were kind of like out-of-control teenagers; no one was watching, so they did what they wanted. It’s time for “Dad” (the legislature and the executive) to take away the car keys.

    I don’t agree that 4+% of actual market value (the rate in Center Twp.) is “low” by any standard of taxation. Yes, the actual dollars may be lower because our homes are valued under the national median…but our median household income is also below the national median.

    Our combined state and local tax burden (including sales and property taxes) can run between 10-20% of income depending on personal spending habits and the relationship between home value and household income.

    If your house is worth 2x your annual household income, a low qualifying range, that means your tax burden before exemptions is 8% of income. Even knocking a third off that for exemptions leaves 5.3% of your income going to property tax and another 1.65% to local income tax. Add 4+% for state income tax, and 7% sales tax on maybe 50% of your income (spending other than housing and taxes), and the local/state tax bite is around 15%. And that doesn’t count state gas tax or auto excise tax.

    Hefty by my standards.

  • http://www.hoosiersforfairtaxation.com Tax Activists

    Abdul ask the tough questions:

    We want to know what percentage of our property tax dollars is used to secure bond debt? (Hint: it is many times greater than what is being spent on township government)
    .
    We want to know who authorized citizens’ homes (property taxes) to be used as collateral (without consent) against the state’s bond debt.
    .
    We want to know which bond banks are writing loans that guarantee repayment with our property as collateral.
    .
    We want to know how much money the state has off budget according to the CAFR (Comprehensive Annual Financial Report).
    .
    We want to know where the money that is off budget is kept and how much interest it draws.
    .
    We want to know who prepares the CAFR in its current format.
    .
    We want to know why the format of the CAFR changed.
    .
    We want to know why the CAFR appears to be purposely prepared so that no one clearly understands it.
    .
    We want to know why our politicians are not obeying the Indiana Constitution which states:
    .Article I, Section 22, of the Indiana Constitution: FORBIDS the seizure and sale of homes for payment of taxes. Article 8 taxes only corporate property, not personal property, for public schools. Most of what Indiana government now does is clearly forbidden by both the Indiana and federal constitutions our politicians swear to uphold and defend.
    .
    Please Abdul, ask the tough questions. We can’t seem to get the truth out of our politicians. We just get games, stalling, and ramming policy we don’t want down our throats.
    .
    Do you think it could be that the REAL culprit, the REAL reason they want to ignore property tax repeal is because that politicians have illegally used our homes as collateral against bond debt?
    .
    As you told us last summer. It is OUR government and it is OUR job to oversee it. That is what we are doing. Please use your press credentials to ask these questions of our legislators and taxing authorities.