I Have To Pay You Today For A Hamburger I May Never Get?
Tax anticipation bonds are fairly common for local governments looking for short-term cash to bridge the gap between tax collection periods, but given this story in this morning’s Indianapolis Star, I think it’s high time Greg Ballard stops talking about the awesomeness of his most recent budget.
Also, pay close attention to this part of the article:
Another, related concern for local governments is the effect of property tax caps that the state legislature passed this year.
Matthew Greller, executive director of the Indiana Association of Cities and Towns, said the new caps limit governments’ ability to generate new revenues and could affect credit ratings that help determine interest rates. Moody’s, one of the prominent ratings agencies, recently warned of that scenario.
Taylor said the caps more likely would affect small towns and school corporations before big cities such as Indianapolis, which has a AAA rating, rare for large cities.
There are quite a few Republican candidates out there right now talking about how it would be crazy not to amend these caps into the Indiana Constitution as soon as legally possible.
Because it’s always a brilliant plan to change our most sacred document before we know the kind of effect that change is going to have.
I don’t know how many times I have to say this, but here goes again: Mitch Daniels’ property tax “plan” was little more than a burden shift from state government to local governments. It was perfectly timed to make him look like a hero for his re-election bid, but the long-term effects are going to be devastating.
Daniels essentially has shrugged and said, “Meh, whatever. Local governments need to tighten their belts and guy up.”
We’re just now getting a preview of what that’s going to be like in the years to come.
I love change. I love moving quickly to solve problems. But we’re talking about something here that in these tough times could literally bankrupt local governments, which, in case you forgot, provide basic services like trash pickup, street repairs, snowplowing, sidewalks, stop signs and other stuff that we really can’t live without.
Of course, Ballard’s hands are tied. Not only does he not understand the budget he signed, but he’s now in a position where he can’t come out and blame Daniels for creating this mess in the first place.
The big losers? Us.
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Jen, the governor’s tax plan may be doing exactly what it was really intended to do, besides coming at a time that sets him up as our economic savior, there may be a more sinister plot afoot. Mitch has watched the General Assembly spin it’s wheels over the last several sessions with initiatives that would streamline local government through the consolidation of redundant services like public saftey agencies. I believe that hidden in his plan is the true motivation for the property tax caps, squeezing local governments into submission through a cut in funding mechanisms. Even the legislation that allowed county government to impose an increase in COIT was not shared with township government for funding their fire departments (which generally make up 60% to 80% of their operating budgets). Only the independent (excluded) municipal entities shared in this windfall. Furthermore, anyone that has looked closely at the caps knows that Mitch effectively replaced the loss in propoerty tax revenue by raising sales taxes. He knew that this was the only way to make up that lost revenue without having to share with local governments. The state’s revenue stream will not be affected but cities and towns will not benefit from the sales tax increase. If you review the cap impact on projected revenue loss on IACT’s website for cities and towns across the state, it is obvious that they will never make up the shortfalls in their budgets created by the caps. So what option are they left with, streamline services or compromise their existence. Mitch doesn’t have the patience to wait for public outcry over property tax issues to reach a pitch loud enough for the General Assembly to hear, so he took matters into his own hands by proposing HB 1001 and using the result to force local governments to comply with the reforms set forth by the Kernan-Sheperd report. HB 1001 does not exist in a vacuum and depends upon the reforming of local government to have a lasting impact in this state.
I started by calling Daniel’s agenda sinister. It is such because he is not being honest about the effects on local governments state wide. He is not being upfront about the residual impact because it would be largely unpopular with voters that live in cities and towns across the state. I have heard many times over the last year or so that people want to streamline local government but most want it to take place everywhere but their own city or town. No different then the approval ratings for Congress. The country thinks that Congress is doing a terrible job representing the needs of the people collectively but most think their Congress person is representing them well individually. This is the real challenge of government reform. We all think that government is out of touch as a whole but defend our individual representatives to a fault.
Sinister or not it may be a necessary evil to create a more efficient and equitable delivery of service at all levels of local, county and state government. Mitch knows it, Ballard knows it, Bosma, Elrod and Swatts know it but none are willing to take the political hit from telling cities and towns in their districts that these will ultimately be the real effects of the caps. We do, however, have a few elected officials and candidates that are willing to say yes to property tax caps but also demand that mechanisms be built in to protect local government before amending the caps into the constitution. They are Speaker Bauer, Barnes HD 89, Sullivan HD 97, Delaney HD 86, DeKemper HD 92 and Hickman HD 87. These folks are taking a responsible approach to fixing the tax issues we have while ensuring that reforms aren’t locked in before their deficencies are addressed. This approach isn’t always popular but will ensure that the reforms to our tax system and units of local government are not forced upon us without being evaluated properly.
I do not wish to imply that this is a party line issue but that is the way it appears to have manifested at the state level. Everyone agrees that property tax reforms are necessary but the Republican contingent wants the public to blindly accept their proposed reforms without asking how, why and what are the effects while their counterparts push for accountability to the public with full disclosure.
Sad but True.