taking down words

One-Year Fix: How The Guv's Tax Plan Is Actually Going To Work Out

The Fort Wayne Journal Gazette, which actually spends quite a bit of time and thought on its editorial page, runs a lengthy and informative column by Karen Francisco this morning explaining why the Guv's tax relief plan isn't even close to long-term reform, no matter how many times he says it is:

Much of the complexity of the new law lies in the property tax caps the governor insisted were necessary to make tax relief permanent. A companion resolution, Senate Joint Resolution 1, triggers the process of amending the state constitution because its current language – requiring a "uniform and equal rate of property assessment and taxation" – doesn't work with a tax plan that taxes homes, apartments and businesses at different rates.

The proposed amendment must now be approved by a separately elected General Assembly in 2009 and then ratified by a majority of Indiana voters. By 2010, residential property taxes would be limited to 1 percent of their assessed value, so that the tax bill on a home assessed at $100,000 would never exceed $1,000. For apartments and other residential property, the cap is 2 percent. Commercial property would be capped at 3 percent.

The caps have been inaccurately described as circuit-breakers, but true tax circuit-breakers include a mechanism for making up revenue lost to the caps. In Indiana, local units of government and schools will simply lose the money they would have collected from property owners who hit the 1 percent mark. Business owners, with three times the tax exposure, are much less likely to benefit from the caps.

It's the classification of taxpayers that is bothersome. Moses said the higher tax caps for businesses could affect the state’s competitiveness.

"It has serious economic consequences," he said. "When we tax business property at a higher rate than others, our neighbors are going to use that against us. … This could be a very detrimental bill for jobs."

Taxpayers, Take Note: It Was The Guv Who Set This Ball In Motion

Local officials already are having to respond to the Guv's burden-shifting property tax plan. The Fort Wayne Journal Gazette reports that Mayor Tom Henry is mulling ways to make up a massive budget shortfall caused by the "relief" plan:

Saying the state’s property tax plan has forced his hand, Mayor Tom Henry plans to discuss raising local income taxes with members of the City Council.

On Monday, Henry said the recent General Assembly-approved bill to cut property taxes by 30 percent across the state will force the city to look at raising income taxes to prevent layoffs and service cuts. The bill still must be signed by Gov. Mitch Daniels, which is expected this week.

While a 1 percent sales tax increase finances part of the property tax cut, the proposed legislation also includes tax caps on property that limit the amount of money local governments can collect.

The state estimates Fort Wayne will not be able to raise $2.1 million in 2009 and $9.5 million in 2010 because of the caps.

Henry said that anticipated shortfall, combined with the council's $3.7 million property tax freeze for this year, hampers the city's ability to provide all the services residents expect. Because the law also allows communities to raise income taxes to curb the sting of the caps, Henry said the city has to examine that option.

Diversifying the tax base may be a good thing because it reduces the burden on property taxpayers, but Henry said he understands some people will end up paying more with the tax shift. He said the changes offer the city little choice.

"They (the state legislature) are essentially forcing our hand to diversify our tax base," he said.

Work In Progress: Make Sure You Use Pencil To Write In Those Caps

Another newspaper, this time the South Bend Tribune, notes that the Guv's tax plan included no long-term solutions and urges lawmakers to defeat the plan's constitutional caps next year:

The bill approved by the legislature barely touches on the serious need for local government streamlining in Indiana. HB 1001 provides for consolidation of assessor functions but it exempts townships with 15,000 or more property units. Much remains to be done in the area of local government reform.

The tax squeeze built into HB 1001 may well be, in the minds of some lawmakers, intended as an incentive to local governments to cut their spending by consolidating services. The fact is, any significant consolidation would have to be initiated by the legislature, not local officials. Much of county government structure is written in state law.

It is evident that much work remains to be done -- possibly on refining the tax reform just accomplished and certainly in tackling the issue of local government structural reform.

In conjunction with HB 1001, the General Assembly took the first step of a multi-stage process to imbed in the Indiana Constitution property tax caps of 1 percent on homes, 2 percent on rental properties and farms, and 3 percent on businesses.

It should be evident that no work in progress -- as this session's work very apparently is -- ought to be written into the Constitution. The General Assembly must be free to respond to unintended consequences in coming sessions and to address taxation issues as they develop in the future.

We hope that the resolution to amend the Constitution will be defeated in 2009 and that the legislature will instead focus on continuing the work it has begun.

The Issue That Won't Die: Study Shows DST Costs $8.6 Million In Power

Not only has the switch to daylight saving time not netted Indiana a glut of new jobs, but it's actually costing us more money on the whole:

The switch to daylight saving time is costing residential electricity users in Indiana $8.6 million a year, according to a new study.

"The point of this study is just to shed light on the old myth that daylight saving time saves energy," said Matthew J. Kotchen, a University of California-Santa Barbara economics professor who conducted the study.

Kotchen said the energy-saving argument has been made since Benjamin Franklin raised the issue more than 200 years ago.

WedgeWhack! Protest: B-Boz, Repubs Walk Out Over Immigration

With all the tax-related action and furor at the Statehouse, guess what issue B-Boz and his buddies walked out over yesterday?

House Republicans staged a Statehouse walkout Thursday night to protest an effort by Democrats to prevent changes to an illegal-immigration bill.

The GOP boycott began shortly after 8 p.m. when Republicans refused to return to the House chamber after meeting behind closed doors on the issue for more than two hours.

The feuding centered on Senate Bill 335, which would punish employers that knowingly hire illegal immigrants.

The House Public Policy Committee approved the bill Monday after amending the legislation, authored by Sen. Mike Delph, R-Carmel.

Some Republicans said Thursday they wanted to further amend and strengthen the bill by including provisions that would prohibit illegal immigrants from receiving state financial assistance for employment, college tuition and housing.

Red Meat: I Think You're Going To Hear Crickets, Sounds Of Silence

Looks like that old Pat Bauer Gets Buried Alive Because He Lies joke fell a little flat last week:

Partisan jabs aren't new at political events around the state, whether Lincoln Day dinners for the Republicans or Jefferson-Jackson dinners for the Democrats.

But in a session built so far on unprecedented bipartisan spirit, perhaps Rep. Matt Bell, R-Avilla, went a little far last week.

While introducing Gov. Mitch Daniels at a Whitley County Lincoln Day dinner, he told a disparaging joke about Democratic House Speaker Pat Bauer.

Bauer is used to being made fun of – his height, his hair – but Bell told a fictional story about him and some GOP colleagues who were driving along Interstate 69 when they came across an overturned bus on the side of the road labeled "House Democrats."

The joke continued with a local farmer telling the Republicans that it was a terrible tragedy with many fatalities.

"Were there no survivors?" asked the reps, to which the farmer replied that Bauer said he was alive "but you know how he lies" so he was buried anyway.

Bell later said he has the "highest regard and respect for the speaker" and noted that this was a party event.

But Rep. Win Moses, D-Fort Wayne, said "even throwing raw meat to partisans, that’s harsh."

Daniels said he vaguely remembers a joke being told but not the specifics.

"I'd have to hear it again. I guess I didn't notice much at the time," he said. "I may have been thinking about my own remarks."

Please Pass The Slate: Local Party Insiders Pick Their Horses Today

UPDATE: In the two contested Indiana House districts, Stephanie DeKemper won against Robin Olds in House District 92, and Mary Ann Sullivan won against Dane Mahern in House District 97. Garland Graves, Jim Osborn and Lou Rosenberg were slated for the open positions on the Marion County bench. Debbie Jenkins was slated over incumbent Marion County Surveyor Mary Catherine Barton.

For those of you in Marion County, it's local party slating day. TDW has live-blogged such events in the past, but Baby TDW complicates matters in that department.

So, feel free to make this thread your home for all things slating-related. Yours truly will try to bring you some updates later today.

For now, we're all dressed up with some place to go:

The Blame Game: Guv Gets Pissy, Keeps Hating On The Locals

The Guv must be getting some grief from members of his own caucus if he's already ratcheting up the rhetoric on his tax plan. (He's never been very good at building consensus, even within his own party.) The Fort Wayne Journal Gazette's Niki Kelly reports:

Gov. Mitch Daniels on Friday urged legislators to stay resolute in the face of a recent storm of criticism surrounding what he considers to be the core of his property tax relief plan.

He has proposed implementing circuit breakers that limit a homeowner's tax bill on a primary residence to 1 percent of its assessed value. Similar caps would be in place for apartments at 2 percent and other businesses at 3 percent.

But these limits aren't absolute. Tax bills could still rise each year as the value of the property grows, and legislators could place capital debt approved in a referendum outside the caps.

The circuit breaker program is estimated to save Hoosier property taxpayers who are above the 1 percent level about $635 million by 2010. But that is also money that schools and local governments will have to do without.

"This is the point on which the special interests are pressing," Daniels said. "What they are saying is government can't get by unless it has ever more of the taxpayers' dollars. In a way it's always been, I think, a central objective of this plan, but I think right now I just want to make sure it is amply defended."

Special interests? Since when are things like police protection and trash collection special interests?

WedgeWhacked To Death: SJR7 Exits Stage Right, Show Will Go On

Put this in your hate-pipe and smoke it, Eric Miller:

Supporters of a constitutional ban on same-sex marriages likely will have to wait at least another four years after a key House leader decided he won't consider legislation that passed the Senate.

Conservative activists and lawmakers expressed frustration Friday with the decision by Rep. Scott Pelath, D-Michigan City, not to hear Senate Joint Resolution 7, the legislation that included the constitutional ban.

Pelath's decision did not come as a surprise because earlier this session, he refused to hear a House version of the legislation in his Rules Committee. His decision not to hear the Senate version of the proposal, however, is significant because it likely wipes out a decision by the General Assembly in 2005 to pass the measure.

In order to amend the constitution, two consecutively elected legislatures must pass the measure, and voters must approve it in a general election.

We have more important things to deal with than making gay marriage super-duper-extra-double illegal, kids. Let it go.

Stand By Your Plan: Guv Tells Peter, Paul To Go Work Things Out

Does this mean the Guv is actually acknowledging that the economy isn't all sparkles and light? Next thing you know, he'll actually start reaching out to and sympathizing with average working Hoosiers.

A slowing economy nationwide should not get in the way of providing property tax relief in Indiana, Gov. Mitch Daniels said Friday.

"One of the best things we can do for Hoosiers in a time of economic slowdown is to leave more money in their pockets," Daniels said. "That's still my primary goal."

Uh, hate to burst your bubble, fella, but your plan takes $635 million out of the pockets of local governments, which get their money from the very people you think you're helping out.

Freedom isn't free. Neither are tax cuts.

P.S. Man, Dubya's tax refunds from a few years ago have really jump-started our economy, haven't they?