Lesley Stedman Weidenbener has an article on the Shepard-Kernan recommendations for restructuring local government. She notes that it’s not clear whose responsibility it is to promote and shepherd legislation to implement the recommendations. That’s a hard job to sell, I would think. Quite apart from whether the recommendations are good policy (in my view, some are, some aren’t), support for the recommendations will be general and abstract. Opposition to the recommendations will be personal and fierce. That’s hard to fight against, especially during an election year.

If anyone has a duty to spearhead this thing, it’s the Governor (assuming, of course, that he agrees with the recommendations). Given that it’s an election year and how invisible he was on the property tax debate last session, I’m not sure if we can expect that kind of leadership from him. I don’t know if his absence from the property tax debate in 2007 was because he was too scarred from the Daylight Saving Time and Toll Road battles from previous sessions or what. I guess my sense is that he is following in the footsteps of his mentor, George W. Bush. Molly Ivins pointed out, before Bush became President, that Bush would take hard lines and push controversial measures the first year of a term. As the term progressed and elections approached, he would become more moderate in his positions and actions. I think Daniels would like to follow a similar path, but had the property tax issue thrust upon him due, in large part, to Marion County’s awful handling of the matter. Other counties can be ignored, but Marion County has way more influence on State government than any other locality.

More immediate tax restructuring proposals will take precedence, I imagine. Local government restructuring, billed as providing longer term property tax reductions, will probably have a hard time getting room in this short session during a big election year. (I’ll be interested to see numbers on how much money these proposals are supposed to save.) Just a guess. I’ve been wrong before.

Update The Indianapolis Star has a story on the proposal. Incidentally, a pet peeve of mine is use of the term “reform” by reporters writing supposedly objective news articles. “Reform” is a value laden word implying improvement. Maybe the proposals would result in improvements, maybe they wouldn’t. But I don’t think this is something that reporters can know.

I have had a chance to read over the report of the Indiana Commission on Local Government Reform (pdf). Following is a summary and, in parentheses, a few of my initial observations.

• Indiana government is too complicated and should be simplified.
• Too many local government decisions are delegated to appointed boards and commissions (p. 8) BUT too many local government officials are elected into their positions, making it difficult for them to work as a team. (p. 8)
• A single individual as county executive would be more efficient than the three county commissioner model. (p. 8) (but possibly less transparent and responsive)
• A model based on the realities of travel and communication by horse and hand-delivery is outdated. (reporting to Indianapolis also?)
• Local government should be more transparent with respect to decisions and spending. (For example, if the legislature mandates a duty, it should probably have to pay for that duty).
• City v. county isn’t sufficient to define the complex geographic realities these days. Recommends thinking of regions as urban, suburban, exurban, and rural. (p. 10).
• More equitable distribution of services and funding them. “Some pay for services they don’t receive; others receive services for which they do not pay. Indiana can do better at matching services received and dollars paid.” (p. 11) (Possible translation: If you can’t pay for government services, you probably shouldn’t get them. See also, Anatole France, “The law in all its majesty forbids rich and poor alike from sleeping under bridges and stealing bread.” — See? Equitable!)
• Reduce the number of local government officials.
• Only elected officials can approve debt or taxes. (p. 11).
• Elected officials should be administrators, officials such as sheriff, assessor, and coroner should be appointed rather than elected and should have professional qualification requirements.  (p. 11) (I’ve got to say,  appointment rather than election of the guy responsible for the Department of people with the guns makes me a little nervous.)
• (So, we should reduce the bureaucracy and reduce the number of elected officials in favor of appointed professionals except that we should have increased bureaucracy and numbers of elected officials (without any particular expertise) when it comes to funding the actions decided upon by others.)
• “It is imperative that the state develop a system of technical assistance and monitoring to ensure sustained implementation of local government reform, and that the state provide incentives and rewards for local governments that continually collaborate, innovate and improve efficiency and effectiveness.” (p. 12) (In other words, your newly efficient, stream-lined, responsive local government will have to report to an Indianapolis bureaucracy.)
• State services should be supported by state funding “wherever possible”. (When
  would it be impossible for the State to provide funding for its demands
  where it would not be impossible for local government to fund the State
  demands?)

County recommendations (p. 13) – (Looks a lot like turning a county system of government into a city system of government – Unigov for the whole state):

Township recommendations (p. 13). Get rid of all of the township responsibilities and give them to the individual county executive. This includes, township assessment, poor relief, volunteer fire services, and cemeteries.

School recommendations (p. 14). School districts should have a minimum of 2,000 students and school bonds should be approved by the local government with the largest portion of assessed value in the district. (As long as we’re consolidating, why not just make the individual county executive the Superintendent of schools and eliminate the school board? If this super-mayor can be the chief law enforcement officer, why not the chief educator as well?)

Cities and towns (p. 14). City-clerk to be appointed by the city council in second class cities; move municipal elections to even years; transfer municipal health department responsibilities to the county health department.

Libraries and special districts (p. 14). Reorganize library systems by county. Have budgets and bonds approved by the fiscal body of the municipal or county government with the largest portion of assessed value in the unit seeking approval. (Why not just have the county fiscal body do the budget, if we’re reorganizing by county? With this assessed value business, we’re moving away from ‘one person, one vote’ toward ‘one dollar, one vote.’)

Local governments generally (p. 14). Encourage coordination and consolidation. Allow creation of “service districts with differentiated levels of service and corresponding tax rates.” (Seems like this would encourage the return to a balkanized, incomprehensible muddle of taxes and services.) Encourage collective purchasing. Prohibit local government employees from holding elected office in the local unit.

State monitoring (p. 15). Require the “Indiana Advisory Commission on Intergovernmental Relations” to monitor progress, conduct additional research, and provide a report through 2011. Establish a statewide benchmarking system. Designate a state office to provide “technical assistance” to local government. (When I hear of “technical assistance” coming from the State, why am I reminded of the lyrics from a fun song I heard recently: “Merry Christmas from Chiron Beta Prime; Where we’re working in a mine; For our robot overlords; Did I say “overlords”? I meant “protectors””)

The rest of the report provides a narrative explanation for the recommendations. Perhaps I will have more thoughts later.

The Shepard-Kernan report on government reform will be released today. The Evansville Courier Press has an editorial on the subject. Governor Daniels commissioned former Governor Kernan and current Indiana Supreme Court Chief Justice Randall Shepard to take a look at local government and propose reforms.

Part of the problem with local government in Indiana is that there’s just too much of it, Daniels has said. Indiana has 2,730 local units of government that can levy property taxes — including counties, townships, cities, towns and school corporations — plus an estimated 10,746 elected officials, according to the Daniels administration.
. . .
It may have made sense to have very local government in the 1850s, when contacting or visiting the county seat or state capital was far more difficult than it is now, said James Madison, a history professor at Indiana University. But that government model created under the 1851 state constitution was outdated by the 1930s, Madison said.

The commission’s charge is here.

The Commission on Local Government Reform is charged with recommending ways to restructure local government to increase efficiency and reduce the financial burden on Indiana taxpayers.

By the end of 2007 it will deliver a set of proposals for changing the structure, organization, and number of units of local government (and local officials).

In conducting its work, the Commission will seek to answer the following questions about the future of local government in Indiana:

1. What local government offices might be eliminated to achieve efficiencies and cost savings for Hoosier taxpayers? In specific, should township/county property tax assessors be abolished in favor of a uniform process managed by the state?
2. What local units of government (including schools and libraries) might be successfully consolidated to reduce overhead and administrative expenses?
3. What services or functions of local government might be reduced, eliminated, or provided in new ways to achieve savings for Hoosier taxpayers?
4. What constitutional, statutory, administrative, or other changes are necessary to achieve significant reforms in the structure and organization of Indiana state government?

Note that the commission started with the assumption that local government needed to be consolidated, reduced, and eliminated. The charge did not call for the commission to look at any benefits local government might provide. It did not call for a look at how, for example, state government power might be distributed to local units to make them more useful.

The editorial suggests that, back when Indiana’s government was formed, local government was more necessary because it was harder to travel to and communicate with Indianapolis. The editorial points out that this suggestion was made as far back as the 1930s. But, a funny thing has happened since the 1930s. Information technology has changed such that a top-down, pyramid command structure is no longer necessarily the most efficient management model. Often times, distributed decision making is more flexible, efficient, and responsive.

Legislators should take a look at the commission’s recommendations. But they should recognize the possibility that the recommendations were already built into the initial assumptions. Perhaps they could take this opportunity to empower local government so that it does not have to waste valuable time and resources going through Indianapolis before decisions can be made.

Update The Indianapolis Star has article on the subject here. One rumored proposal mentioned in that article is to go from three county commissioner to one. That would be in line with Daniels’ apparent preference for the pharaonic model of government — one supreme leader receiving information from the masses and then issuing mandates. Multiple decision makers living down in the trenches with those they govern isn’t really in the finest Daniels tradition.

Update II The Kernan-Shepard Report is available here (pdf).

Via a press release:

Former Governor Joe Kernan and Indiana Supreme Court Chief Justice Randall Shepard, co-chairs of the Indiana Commission on Local Government Reform, will hold five news conferences around the state to present the Commission’s report, Streamlining Local Government: We’ve got to stop governing like this.

Apparently, they’re intending to hold the report and begin the news conferences on December 11, 2007 because that will be the anniversary of Indiana becoming a state. I’m o.k. with the symbolism, but my suggestion would be for them to release the report now so that people could educate themselves on its contents and be prepared to ask meaningful questions when the press conferences are held.

(H/t Blue Indiana) The Daniels Administration’s “blame the locals” approach to the recent property tax increases is getting a little old.

At Wednesday’s hearing, Cheryl Musgrave, who heads the state Department of Local Government Finance, said having one professional assessor appointed in each county, rather than 1,008 township assessors and 92 elected county assessors, would be a big step toward providing the consistency and fairness taxpayers want.

Asked by Sen. Mike Delph, R-Indianapolis, if Daniels’ proposed changes would have prevented any of the property tax mess the state experienced this year, Musgrave said: “Yes. It would have made the biggest difference of all.”

Of the 24% average increase in property taxes, only 6% is attributable to local government spending. The remaining 18% was caused by a shift in the tax burden from state to local (the state balanced its budget on the backs of local government) and from business to residential property.

As stAllio! put it:

the governor’s office began mocking local governments because their spending went up. that’s like me pushing you down into the snow and then laughing at your lack of balance.

Update Here is a somewhat related article I read this morning. Senators considering the part of the Governor’s proposal to assume Department of Children’s services expenses are reluctant to do so without having some controls available.

“This is an entitlement program,” said Cathy Graham, with the Indiana Association of Residential Child Care Agencies. “If children are abused or neglected and need to come into care, the state has an obligation to provide that care.”

State-paid county judges make final determinations on what happens to those children and what services they need, such as foster care or counseling.

If State officials are concerned that the current model would give them, as the bill payers, too few controls over how much money is spent, just think of the position local officials are in currently. The State at least has some legislative options for guiding the judges who have to make these tough decisions for abused or neglected children. County officials have much less power.

At the end of the day, neglected kids are really, really expensive. It’s a cost we have to pay both because of moral obligations and because it’s penny-wise but pound-foolish to totally abandon these kids. But the results are mixed and hard to point to and so taxes used to pay for such things will always be a source of resentment.

South Shore Progressive has a good post on the discussion of The Daniels Plan for tax restructuring from the perspective of northern Indiana. He passes along that Rep. Chet Dobis wants to revisit how casino money is shared among the state and local governments. Rep. Charlie Brown wants to revisit the tax breaks given to big business in Lake County in 2003 which many blame for higher property taxes in that area. Rep. Reardon from Munster wants income taxes thrown into the mix. “When you exclude income tax from the discussion, I think you’re missing something.”

That made me think of a recent post by Buzzcut at “Blue County in a Red State.” He notes the regressivity of a sales tax and suggests as an alternative a progressive statewide income tax (as opposed to flat county-by-county income taxes.)

It’s good to hear about the tax perspective from other areas of the state. Perhaps it’s my own fault for what I read and listen to, but all to often it seems I’m hearing about property taxes through a heavy Indianapolis filter. And, I think that kind of filter skews the analysis since it sounds like Indianapolis’s property tax problems are an order of magnitude greater than most of the rest of the state.

Lesley Stedman Weidenbener had an article on the House Ways & Means Committee hearing on The Daniels Plan to restructure Indiana’s tax system. Apparently, the “eliminate property tax” (and jack up other taxes) crowd was out in force. Realtors and owners of a lot of property were, unsurprisingly, very interested in the idea of getting rid of property taxes.

To accomplish a property tax elimination, Indiana would have to “the state would need to increase the state sales tax to 13.2 percent from 6 percent or raise the state income tax to 9 percent from 3.4 percent to pay for an elimination of the property tax” or some combination thereof.

But Jesse Ballew, who owns a substantial number of properties in Clark and Floyd counties, told lawmakers that the sales and income tax increases could be substantially lower if the state also restricted local governments to spending increases of no more than the rate of inflation.

“That’s no different than putting a cap on spending on your home. If you spend more than you make, eventually you’re going to have a problem,” he said.

Oh really? Local government spending is no different than home spending? Homes don’t traditionally, for example, have the State passing more criminal laws requiring them to incarcerate more people, State prosecutors and State courts ordering the incarceration, and federal courts mandating space and health care requirements for the inmates once they are incarcerated. Local government can’t just “do without” in quite the same way as home budgets. I’m sure your local county council member would be more than happy to “do without” a heart transplant surgery for an inmate or some other mandated expense.

Apples and oranges – and when you hear folks start comparing local government budgets to home budgets, dollars-to-donuts says your infrastructure is about to start crumbling.

The Associated Press has an article reporting that the House Ways & Means Committee will hold a hearing on The Daniels Plan for tax restructuring. The article calls it “property tax reform,” but I think that is a loaded phrase. First, that implies that the Daniels Plan is better than the current property tax plan. That’s not necessarily wrong, but it’s certainly debatable. More importantly, the phrasing focuses on the property tax implications to the exclusion of the income tax and sales tax implications. So, I’ll go with tax restructuring.

Daniels has proposed increasing the state sales tax to 7 cents on the dollar, from the current 6 cents, and limiting property tax bills to 1 percent of assessed valuation for homeowners, 2 percent for rental property and 3 percent for business.

Daniels also wants the state to pick up the costs of schools’ general funds, school transportation and child welfare and supports limiting local spending growth to the six-year average growth of personal income.

On principal, I am against amending the Constitution in this fashion. The Constitution is supposed to be a more or less timeless document. That’s not always possible, but I think you want to avoid writing today’s needs and assumptions into the document in cases where you can be pretty sure those needs and assumptions are going to change. Furthermore, my local treasurer and former auditor likes to describe the tax situation as being like a balloon. If you squeeze one end, the other end is going to expand. Here we have a proposed squeeze on property taxes at 1% for homeowners, 2% for landlords, and 3% for businesses. Is that always going to be the optimal tax-to-valuation ratio for funding government? There is no way of knowing. Is the balance to be struck in the upcoming session between property, sales, and income tax going to be the right balance for at least a generation? If we can’t be reasonably certain of these things, we shouldn’t be writing them into the Constitution.

What I’d like to see is some kind of break down of who wins and who loses. What can various income levels be expected to pay in increased sales taxes and how does that compare to the probable reduction in property taxes for a variety of home values?