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?