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Property Tax Crisis: Schools Facing Budget Gaps Forced To Borrow

Education_2 The property tax crisis continues to affect different entities in different ways. And you just have to love the dim-witted landlord at the end of this story who seems to think basic school costs are "foolish spending." Stupid pens and pencils. Stupid computers. Stupid learning.

Perhaps schools wouldn't be facing such a crunch if the Guv hadn't flat-lined state spending on them in the 2005 Republican budget he signed. But he's not really around right now to answer any questions about that, is he?

"The state's property tax mess has caused school districts to borrow millions of dollars, which will come back to haunt already angry taxpayers in next year's property tax bills.

"The loans were needed to cover gaps left by lower-than-expected property tax payments and delays in receiving crucial dollars needed to keep schools running, school officials say.

"Some school districts are worried about covering basic school costs, while others are putting off purchases of new equipment and furniture.

"'I talked to a (school) superintendent last week who had Friday's payroll covered, but he wasn't sure about the next one,' said John Ellis, executive director of the Indiana Association of Public School Superintendents. Recent borrowing through the Indiana Bond Bank, an agency created by the Indiana General Assembly that helps municipal agencies with financial issues, tells the story. In June 2006, schools lined up to borrow $40.8 million. This June, schools borrowed $236.4 million.

"'They are getting clobbered, because they are borrowing to make up the difference and then they are paying interest on that,' Ellis said.

"In recognition of the problem, Gov. Mitch Daniels asked the bond bank to provide short-term loans to help local districts deal with revenue shortfalls.

"'There is no doubt that borrowing money is not the way any of us would like it to be,' said state Sen. Teresa S. Lubbers, R-Indianapolis. 'None of us could have predicted, including the schools when they were putting together their budgets, this would have happened.'"

Actually, Sen. Lubbers, plenty of people did predict the shortfall and the other implications of reassessment. But no one listened.

Now we've got a real problem on our hands, and it involves what ought to be -- if we want to move our economy forward in the long run -- a top priority: education.

Comments

Gosh - It looks like the MAYOR in his new AD is taking credit for forcing the govenor to roll back the tax assesment.

http://www.bartpetersonformayor.com/video/ad/tax/

Why did this:
'None of us could have predicted, including the schools when they were putting together their budgets, this would have happened.'
- State Sen. Teresa S. Lubbers, R-Indianapolis.

Remind me of this:
'I don't think anybody could have predicted that these people would take an airplane and slam it into the World Trade Center, take another one and slam it into the Pentagon, that they would try to use an airplane as a missile, a hijacked airplane as a missile.'
- US Secretary of State Condoleezza Rice

It amazes me that people believe the r's have a better grip on security and 'running things like a business' when they can't seem to predict even the most basic consequences of their actions (or lack thereof).

TDW - Actually, Sen. Lubbers, plenty of people did predict the shortfall and the other implications of reassessment. But no one listened.

And when did they start listening ? Before or after the first public protests ?

When the bills came out, Pike Voter.

I know the teabaggers love to take credit for creating a publicity firestorm. Rest assured, that ain't the case.

What exactly did the legislators think was going to happen when they did away with the inventory tax? Did the governor not realize what the outcry would be when homeowners' taxes went up due to his shifting the cost of programs to the local governments from the state? It would really help the situation if these people thought before they acted.

With reference to the Star article, doesn't everyone feel sorry for the taxpayer who is collecting rental income on 37 (!) properties but has to pay increased taxes?

rasmussen is a slumlord not a landlord

btw, last month in a Star story, Rasmussen allegedly had 74 rental properties...did he suddenly sell a bunch of them?

Forgive me, but the quote from the landlord doesn't even remotely allude to foolish spending on books, pens or education.
( They've got to control spending," he said. "They are caught because of foolish spending, as far as I'm concerned.") I would interpret that statement as foolish spending on stuff not related to books, pens etc.
Unfortunately, public schools are chock full of duplicitous layers of waste and unnecessary overhead that have NOTHING to do with education. Sure got some purdy stadiums though!

As for the snide remark about feeling sorry for the landlord, just another example of the have-nots total cluelessness. Despite most peoples impression, rental properties are not exactly a "cash cow", and a bump in the property taxes can make a serious dent in an already slim profit margin become non-existent.

Tim,

I'm fully aware of the effect a bump in property taxes can have on rental properties, but way to get a slam on the have-nots in there just for gags. It's always hilarious to make fun of people who get by with less, isn't it?

Part of being a landlord is being responsible about it. If you can't afford to own and rent out property (i.e. making sure you take care of the place and have cash reserves on hand for emergency situations), you shouldn't be a landlord in the first place.

Tenants deserve better.

Rasmussen seems like that special brand of quotable caricature who will always say just what you want him to say. In this case, his blah-blah-blah tirade about school spending is a good balance to everyone else -- read: the smart people -- in the story. Far be it for him to bother examining the issue, its roots or its long-term consequences.

If he can't afford to continue owning 37 rental properties, I'd suggest he put a few of them on the market. I have a hard time finding pity for him when there actually are homeowners out there struggling to pay their own bills.

(Unless, of course, Rasmussen is in the rental business to lose money, in which case I applaud him for selflessly throwing capitalism to the wind. Somehow, I suspect that's not the case.)

TDW...Sorry about the gratuitous snipe at po' folks. It was a knee-jerk reaction to 4:49's blatant jealousy of those thought to have means.

This I find humorous "Part of being a landlord is being responsible about it. If you can't afford to own and rent out property (i.e. making sure you take care of the place and have cash reserves on hand for emergency situations), you shouldn't be a landlord in the first place.

Tenants deserve better."

I guess most landlords should keep an extra $26k around for "emergency" tax increases, eh? Listen, I don't know this guy from Adam, but obviously you do or at least you know of him because the whole slant of your post paints him as the bad guy. Maybe he is, I don't know, but ANYBODY that gets hit with a tax increase of $26k has every right to bitch about how those tax dollars are going to spent.

Another ironic parallel with your argument is how you chastise the landlord for not setting aside funds for emergencies. Replace "landlord" with "school board" and "tenants" with "students"....

You're mad at the wrong people. You should be mad at the school corporation and the legislature, not the landlord that just got a $26k tax bill.

I'm not mad at him; I just don't think he sees the big picture. (I only know him from the comments of his I've read in prior media accounts.)

For what it's worth, he got hit with $26,000 on 37 properties. That's an average of about $700 per property, which comes down to about $350 a half.

Yes, it hit him harder because he owns more property, but that's hardly the stuff we've heard other homeowners complaining about.

Again, as a landlord, you should be prepared for extra costs each year. If you can't afford to be a landlord, don't be a landlord. As you rightly point out, it's not always a profit-rich investment scheme.

You forgot the Guv. We should be mad at him, too, if we're still in the "being mad" phase of things.

And while we're at it, let's quite sniping at school spending unless you truly know the causes for their strapped budgets. And I can assure you, it's not the stadiums and swimming pools.

By far, one of the largest and most costly expenditures in any school system is transportation. School bus purchase, maintenance, higher gas prices and more demand for hauling kids are all a great burden on school systems.

Secondly, UNFUNDED government mandates including more programs, increased instructional time, increased testing and more demand for special education have become an increasing burden on many, especially urban, townships.

There's a reason we have local governance of schools and we need to let our school boards and local administrations run their various institutions without the unfunded hinderance of the people in Washington DC.

TDW is a socialist progressive. It is likey she hates the very notion of private property. Likely hates the idea that a private person even be able to own lots of private homes/buildings and rent them out to others. However, TDW likely supports HUD and even the fact that HUD contracts with private property owners. You see HUD=Government, so it _must_ be all good in the eyes of a progressive. Maybe would should totally ban all private renting. All renting should be done with government owned property only. This way, no one gets treated poorly. Then, since the property is government, there would be no need to jack up rents due to property tax increases.

Personally, the entire incident is halarious. Sit back and watch the fireworks start. If this is how much it takes to run various counties in Indiana, foreclosures should skyrocket. I thought Indiana had actually been able to find a different path than Mich. when it came to the state of our economy. It just seems Mich. beat us to total and utter collapse. Honda will help, but when you have tens of thousands applying for maybe a total of 4,000 jobs in the future, to me that says something. I think Indiana is just stuck on stupid. Too much government with an economy that doesn't have thousands of high paying union factory jobs to support it. Of course no one wants to make cuts where cuts need to be. Every branch of government, from highway department to police and fire, have had this blueprint. Someone works hard, is a good person, they get "rewarded." Be it a desk job, a take home vehicle, whatever, they were "rewarded." This has lead to top heavy administration in public universities, public K-12, police departments, fire departments, public funded hospitals, mayor's offices, etc. etc..

The property tax issue is only affected by local spending. Just wait till the baby boomers start demanding more and more totally free health care, paid for by "someone else." Then we will really see the torches and pitchforks come out on a national level.

Man, it's so awesome to find someone (8:09) channeling my thoughts for me on a Monday morning.

I own rental property, genius. But I believe owning rental property comes laden with certain responsibilities. Like paying taxes on it. And fixing things that go wrong.

If I couldn't afford to do those things, I would have sold it when I got married.

P.S. It's "hilarious." Maybe if we put more money into our school systems, you'd know that.

"TDW is a socialist progressive. It is likey she hates the very notion of private property. Likely hates the idea that a private person even be able to own lots of private homes/buildings and rent them out to others."

I think you'd be hard-pressed to prove any of that. I'm as big of a capitalist pig as they come, and I agree with her - if you can't afford to own 37 of something, it's time to sell to someone who can. That's the very embodiment of capitalism.

"But I believe owning rental property comes laden with certain responsibilities."

"...comes laden..." grates on my grammar sensibilities (what few I possess). ;)

Better might be..."But I believe owning rental property comes with certain inherent responsibilities."

Grammar aside, I agree with MomTDW that "unfunded" liabilites offloaded from DC are an unnecessary burden on local school funding. This is especially pernicious as the unfunded directives come with a political agenda that has nothing to do with education.

"Socialist progressive". Pfft. As if it were a terrible thing, if it even applied in TDW's case.

I am ashamed everything progressive in Indiana is labeled as socialist by the Neanderthals. I am a fiscal and social conservative who believes that our constitutions (federal and state) must be obeyed. I am certain TDW and I agree on that point. It would be terrific if some of the limestone lizards would try to look at all aspects of an issue and work together on resolutions instead of politicizing them.

Good grief, I thought I'd never hear anyone else hold "landlords" feet to the proverbial fire!
(what a medevil term, "land lord", "lord of the land", etc. - I prefer to refer to individuals that own and rent property to others, as "land managers". Once, while living in the inner city where rentals are most abundant, several of us were considering a fledging organization called, N.O. S.L.U.M.which was an acronym for "Neighbors Organized to Stop Land Use Mismanagement". We got tired of the whine from many slumlords who would beg forgiveness for their crappy properties, many rife with drug deals and falling gutters, by pleading that they had soooo many properties that they could not be expected to visit them all as frequently as we suggested that they did. I reminded many of them that "managing property" is a business and it very much affects a neighborhood much as a bar, grocery store or auto shop does. Therefore, they are responsible for the upkeep as well as the impact that their properties have on the neighborhood. This city cuts way too much slack for developers w/o demanding responsibility for the projects that are their cash cows.

Just venting prior to beginning to set out on this sunny day.

"P.S. It's "hilarious." Maybe if we put more money into our school systems, you'd know that."

Some of us come from families that had to send us to public schools more focused on looks and sports and stuff than actual "education." When sports is held up as more important than education, kids are not given the push toward learning. Yea, the teachers care, but they can only do so much. As far as swimming pools and stadiums not being the issue, that is laughable. $10,000,000 would go a long way toward health care, gas costs, etc.. Instead, we have too many school districts building pools for a small group. I don't know of a school district that has yet to stand behind their promise of "community use." They _might_ open the indoor track and weight rooms a couple of nights a week. I think this sort of stuff is better done by parks departments than schools. At least with the parks department, community usage would be alot better.

"I own rental property, genius. But I believe owning rental property comes laden with certain responsibilities. Like paying taxes on it. And fixing things that go wrong."

Not all of us are trust fund kids. Private schools, the ability to own rental property, etc.. So what you are telling us is that if your property taxes went from $1,000 a year, to $5,000 the following year, to $10,000 the next year, you would not care one bit? Say you decide to sell, at a discount, when it hit $10,000. Well, thanks to the government, no one will buy even at your discounted price. So now you owe $10,000 a year that you can't afford because you invested and planned for $1,000. When we are seeing jumps in % by 100 points plus, something is wrong. I can plan for upkeep. Last time I checked, the estimates to fix my chimney did not go up from year to year. Hell, even those folks with ARMs that went up were not hit as bad as some folks with property taxes.

Face it, government costs money. It will eventually cost millions their homes. All thanks to the two party status quo. Don't worry everyone, our elected idiot, I mean "leaders", are holding hearings.

I'm hardly what you'd call a "trust fund kid." But thanks for stereotyping.

My parents worked hard and gave up a lot to put me through private school, and I thank them for that.

Of course I care that my taxes have gone up, but you missed my point: I have a lot of trouble feeling sorry for Rasmussen when other people who aren't out to make a buck in the rental market are suffering a lot more.

He could sell a few of his properties and -- most likely -- still have a roof over his head.

As for hearings, yeah, it's plain awful when government stops, looks and listens, isn't it?

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