Tribune Twists the Knife?

Eric Scott Campbell, the intrepid reporter for The Tribune, couldn't resist twisting the knife in today's news report on city business. And he wasn't the first to make a comment to me about the remarkable coincidence of Wednesday evening's schedule of events.

It seems that the city council discovered that tonight was the only night they could possibly hold their rescheduled meeting. Is it just a coincidence that the mayoral forum being hosted by Develop New Albany will be taking place just across the street at the same time? Could council president Larry Kochert have taken into consideration that most of the same people who attend and monitor council meetings would be interested, if not obligated, to attend the candidates forum?

But that's not the only news impacting local government this a.m. Gov. Mitch Daniels revealed his master plan for "property tax 'relief'" on Tuesday, and it's a doozy.

Now, I'm usually pretty perceptive. With a little study, I usually "get" it. So the Daniels plan seems to be an overreaction of the greatest magnitude.

There is so much to say. While it is a statewide issue, it will have tremendous ramifications for local government and the provision of services. But what's the truth underlying this move?

As I understand it (and please correct me if I'm wrong), local government revenues cannot rise more than 4% per year - check that - property tax revenues (general fund) cannot rise more than 4.4% per year. Yet, The Tribune wrote today that the average property tax bill rose by 24% this year, attributing that number to the Associated Press.

NOTE TO TRIBUNE EDITORS: Are you sure you didn't get that number from an anti-tax advocacy group that is making New Albany its Southern Indiana home? Isn't 24% a cooked-up number? How is it possible for the average property tax bill to go up by that much while total revenues are under a Proposition 13-like cap? I've tried to do the math. Theoretically, if 50% of the people saw their tax bills rise 100%, while the remaining populace saw their taxes go up zero percent, you could get that "average." But tax collections (local government revenues) would then have to rise by 24%. So which is it? Did taxes go up 24% or 4.4%? I think I know the answer, but I'd love to hear The Tribune's answer.

So here's Mitch's plan.

Cap owner-occupied residential property taxes at 1% of value (no exemptions? no credits?). Residential properties not occupied by the owner would have a tax cap of 2% of value. Business and commercial properties' taxes would be capped at 3%.

As a matter of basic equity, I'm down with the idea of a 1% cap on property taxes for homes where the owners live. I'd actually be OK with a cap of 2%, provided that a commensurate level of service were provided, but a constitutional amendment would prevent any local government from using property taxes to create a superior city or county.

For the next two categories, I'm attracted to the idea of treating rental properties as the businesses they are. We have no public interest in promoting or subsidizing investment in rental properties over job-creating businesses. We certainly don't have that interest in New Albany. Why would rental properties be subsidized? What greater value do such businesses bring to a community that justifies giving them a tax abatement? Is the fact that Daniels' political supporters are more likely to OWN rental properties a factor in the governor's proposal?

But that's not the end of the Daniels plan. By 2009, he proposes to raise the already regressive sales tax by another penny on the dollar, to 7%. I'm not inalterably opposed to tax increases, but the idea of imposing them on sales is, in the final analysis, a way to take a larger share of tax revenues from those least able to pay them.

In the interests of protecting the assets of those who have accumulated wealth, the governor proposes to increase taxes on the poor. For that reason alone I oppose his plan.

Now, I understand that the consumer who elects to spend her money on a flat-panel HDTV will be paying 7% sales tax. But so will the single mom buying milk to feed her children. And the "benefits" are far outweighed by the costs. We shouldn't be imposing the costs on those least able to pay, and the Daniels plan does that, all in the name of a false emergency.

Now that wealth-holders are seeing their wealth accurately taxed, they are marshaling their political forces to panic officeholders into passing emergency measures. In reality, property taxes can't have risen. There is literally no place for those revenues to go.

Indiana is a state with many borders. Here in Southern Indiana, consumers have a ready alternative to paying 7% sales tax - shop in Kentucky. I guess it would only be fair, since we are milking the Bluegrass state's gambling dollars with our casinos, but if ever there was a measure designed to drive retailers out of the state, especially merchants on the border of Kentucky, this is it.

One would expect Sipes, Stemler, Cochran, et al, to be leading the charge against this ill-conceived plan. Yet, to read the literature put out by Sipes and Cochran, they are being stampeded into the "property tax relief" herd. Joining with the city's own Steve Price and mayoral candidate Doug England, our representatives are panicking, pandering, or punishing the poor. And trying to drive business away.

And that's the view of Shadow5.

P.S. Didn't the legislature just give local governments the "freedom" to impose local sales taxes or local income taxes to make up for declining revenues? Doesn't this new "relief" effectively cripple the cities and counties who might have considered a local option sales tax?