Who’s to Blame
Our position: Perhaps it’s time for residents to hire a high-powered lobbyist to represent their interests.
 |
|
|
|
Listen carefully this weekend and you’ll hear more than fireworks going off across the state.
You’ll hear the sounds of angry homeowners reacting to their new property tax bills.
It’s grim news, with increases expected to climb well into double digits in some parts of Marion County. In Marion County’s Washington Township residents, for example, will face extremely high increases because of updated assessments, a school tax increase and other levies.
Who’s to blame?
No one is eager to take responsibility.
Gov. Mitch Daniels points to local government agencies, including schools, cities, townships and library boards. They levy taxes, he says, and some could be much more frugal with taxpayer money. Daniels says that’s why local government reform is one of his three top issues in his reelection campaign.
Mayor Bart Peterson’s call for a special session at the Statehouse to address the “property tax crisis” seems unlikely to make a difference. He says public safety is the only city-county budget line that’s increased in recent years. Because of a state-imposed limit on property tax rates, Peterson proposed an increase in the county income tax to help pay for his war on crime. But he plans to allot less money than he could from the income tax hike to offset property taxes. If approved by the City-County Council, those bills will hit residents starting in October.
State legislators tried to address the property tax issue in their last session, but eventually gave up. They had focused on ways to ensure that property taxes would be assessed evenly across the state. In other words, their efforts focused on the taxing process rather than on lowering tax bills. Just before their session ended, legislators put together a rebate plan to help offset the huge property tax increases. However, those rebates will cover only a fraction of the increases for many homeowners.
Local school officials set tax rates according to their individual needs. They and scores of other taxing units in the county deal with their needs separately. Efforts to create a board to coordinate their requests have repeatedly failed. Therefore, the possibility of a “perfect storm” in which a flurry of tax hikes occurs is ever-present.
Local tax assessors are the functionaries in this process. They use standard approaches to set values on properties, which is one half of the two-part property tax equation. The other half consists of tax rates levied by a long list of local units of government.
Reality check
Because of the collective actions or inactions of those above, many homeowners will face some difficult choices. Some of those challenges will have to do with personal finances. Others will stem from perceived inequities, or imbalances of responsibility taken on by various groups.
Typically, assessors divide their geographic areas by use — residential, commercial, farming, manufacturing and so forth. Properties in all of those categories face adjustsments in their taxes this year, experts say. But the adjustments will hit some harder than others.
For example:
Some residents who live on fixed or low incomes could be forced to sell their homes because of huge property tax increases.
Homeowners will bear the brunt of the property tax increase to help make up for lost revenue from a discontinued business inventory tax.
New assessments alone didn’t account for higher tax bills. Had local units of government been able to lower rates in proportion to the increase in values, tax bills could have stayed close to level.
Instead, some of the burden was shifted from the business segment to the residential segment.
Big picture effect
Local and state politicians should not underestimate the effect of this significant tax event, which happened on their watch.
Some residents might accept the explanation that land values had been held down for several years, leading to this year’s large increase.
Others might be less accommodating. Following are some questions raised during Star Editorial Board meetings last week with Daniels and Peterson:
Why should homeowners be financially punished when their government is giving millions to build a new football stadium and convention center? Why should average income-earners be asked to subsidize a multimillion-dollar pro sports enterprise?
When will the General Assembly start putting the needs of individual citizens ahead of themselves and big-money interests? In their last session, legislators gave themselves a raise and took care of the gaming industry, but they left property tax reform undone.
How might this latest round of tax hikes affect out-migration from the city to surrounding counties? Indianapolis just dropped from the 12th to the 13th largest U.S. city. Meanwhile, suburbs like Carmel and Fishers are rapidly growing.
Why doesn’t the city assess its income tax on everyone who works in the city rather than only on those who live here?
What’s to be done?
Homeowners might consider pooling their resources to hire some high-powered lobbyists to represent their interests at the Statehouse and City-County Building.
Local and state officials bristle at the suggestion that lobbyists rule the roost, but consider what happened last session.
As noted above, legislators raised their pay and made a deal for more gaming but left property tax reform undone.
The state eliminated a tax on business inventories, but residential assessments were raised dramatically.
Tax increment financing continues to help fuel Downtown development, leaving more taxes to be spread over others in support of the businesses.
Legislators gave the City-County Council an OK to raise income taxes to pay for employee benefits better than what’s provided by most local businesses.
Because it’s an election year, there could be a populist shift in the offing, driven by throngs of angry homeowners.
Listen carefully, local and state politicians, and you just might get the message.