Doghouse Riley provides an excellent summary of Gov. Daniels’ approach to education finance from 2004 – present. I’m linking it so that the rest of you folks can go enjoy if you’d like, and tagging it for posterity. If I had any gumption, I’d go and annotate the thing. But, on this Saturday morning, I’ll just say that it squares with my recollection of events.
The Price of Democracy
Gov. Daniels is talking about not holding a special election to fill the seat of pious adulterer, Mark Souder who has resigned with about 1/3 of his term left to serve. Gov. Daniels suggests that we’d spend about a million dollars and get only about 20 days worth of service.
I would just caution that this cost-savings approach to choosing one’s political system leads to some pretty bad places. The cheapest solution would be one with no election costs and a lifetime of service by the officeholder. But, of course, our ancestors opted out of just such a system long ago. In fact, in Iraq – I’ve been told, we have been spending a ton of our own money to bring replace their old system with a version of our less cost effective one.
Daniels often seems like one of those guys who knows the price of everything (the aforementioned Iraq adventure notoriously excepted) but is a little sketchy on the value. In Souder’s case, however, I might allow that no representation is better than what the 3rd District has been getting.
Not So Special
Via the Indiana Law Blog, the Associated Press has a story on Indiana’s efforts to pass the buck on raising special needs children by classifying them as not being special needs.
Indiana is trying to shift hundreds of foster children with medical, emotional or behavioral problems into cheaper care for children without special needs, a move that cuts payments to families who care for the state’s most challenged children.
The change would give foster families less money to pay for therapy, food and clothing and other costs. And some fear that fewer families could volunteer for the job in the future because they’d have to cover the bills themselves.
Foster parents who provide homes for special-needs children are paid up to $100 a day. Under the state’s new plan, many would receive $25 or less.
This is a pay-me-now or pay-me-later situation. If you don’t get these kids proper help now, you will be paying for their incarceration down the road.
Gov. Daniels on Bring Your Guns to Work Bill
In conjunction with signing the bill that requires private property owners to allow certain invitees (employees) to bring guns onto the owners’ property, Gov. Daniels issued a statement that reveals a fundamental misunderstanding of how the Bill of Rights works which, in retrospect, explains quite a bit. (Via Jim Shella):
Considering the clear language of the Second Amendment of the U.S. Constitution, and the even stronger language of Article 1 Section Thirty-Two of the Indiana Constitution, protecting these rights as provided in HEA 1065 is appropriate. I also am compelled to give great weight to the overwhelming consensus of both Houses of the General Assembly as they passed this bipartisan statute. The law does contain ambiguities that the General Assembly may wish to refine at some future date, to avoid unnecessary litigation, but the understandable concerns raised against the bill do not suffice to justify a trespass on a fundamental right so expressly protected by our founding documents.
This is not a Second Amendment situation. The Bill of Rights limits the power of the Government. It does not limit the power of private individuals. Therefore, passing a law that limits the rights of a private individual to restrict gun possession by another individual on the first person’s land is not a Second Amendment issue. It’s a question of competing property rights – land rights of the land owner versus personal property rights of the gun owner. The General Assembly is expressing a preference for one property right over the other.
The state Constitution has stronger language, but I still don’t think it compels any particular action to prefer one property owner over another:
Section 32. The people shall have a right to bear arms, for the defense of themselves and the State.
With respect to this provision, the Indiana Supreme Court has previously held, “Indiana gun owners are guaranteed the right to bear arms, but this right does not entitle owners to impose on their fellow citizens all the external human and economic costs associated with their ownership.” Estate of Heck ex rel Heck v. Stoffer, 786 N.E.2d 265, 271 (Ind. 2003).
Gov. Daniels misunderstanding of how the law works would be disturbing if I thought it was genuine. But, I’m fairly sure he’s just pandering.
State of the State tonight
Gov. Daniels will give his State of the State address tonight. I’m a little bit indifferent. He’s been in office for 5 years. I don’t expect any real initiatives out of him at this point. I get the feeling that the General Assembly is sort of steering the ship at this point. Probably I just haven’t been paying attention, but my snap recollection of Gov. Daniels for the past couple of years is: 1) loads of flashy ads; 2) general campaigning against an anemic opponent; 3) nothing during the last legislative session; 4) until he raised his head at the last minute to torpedo the budget deal and force a special session (instead of just working with the budget process from the get go); 5) some friendly back & forth with the Maryland governor; and 6) here we are.
Indiana’s Shifting Tax Policy
Meranda Watling, writing for the Lafayette Journal & Courier, has an outstanding summary of the tax situation for local government over the past decade. And, even better, one of her sources was Everybody’s Favorite Economist, Larry Deboer.
To summarize even more briefly, the property tax situation became destabilized back in 1998 when, due to the Town of St. John litigation started back in 1993, the Indiana Supreme Court ordered an overhaul of the way Indiana handled its property taxes. (See Dagney Faulk’s “How We Got Here from There.”) The way Indiana handled its assessments was pretty artificial. There were formulas that ended up undervaluing certain properties. For example, expensive old homes had relatively low assessments. (Hence, I believe, the anger among the Indianapolis Meridian crowd.)
Switching to a market based assessment resulted in an upheaval. Those with undervalued assessments suddenly saw a sharp increase in their property tax burden. The General Assembly scrambled with a variety of approaches, including a significant property tax replacement credit for homeowners and property tax caps. Where we stand now, homeowners have a similar tax burden, landlords are paying more, and businesses are paying somewhat less. And, we are shifting from reliance on a fairly predictable property tax to a more volatile sales tax. The shift was assisted by a 16% increase in the sales tax which accompanied the property tax caps.
I think this quote summarizes the feeling of many local officials:
“I’d like to see the whole system stabilized,” said Kim Fox, Tippecanoe School Corp. chief financial officer. “There’s such a push not to increase taxes. But at least make it so we know what we’re getting and it can come in on time.”
Not only have local officials been subjected to uncertainty about what revenues would be available, but also uncertainty as to when they would be available. The desire of some, mostly state level, officials to blame the problem on overspending by local government is unfortunate. There has been a tectonic shift in how we finance government and, since fecal matter runs down hill, the most local levels of government seem to be left cleaning up the mess.
Hopefully the next decade will be marked by a more predictable tax system. I wish I could remember the quote, but there was a Supreme Court Justice who wrote something along the lines of “it is some times more important that the law be clear than that it be entirely correct.” In the tax field, I think that’s often the case. Even where constant wrangling over tax policy leads to slightly better policy, those gains can be more than offset by the lack of predictability.
Hot Streak!
Remember when Indiana was on an economic hot streak, an “island of prosperity,” if you will? Well, those days are gone with election season, apparently. Now we are getting wave after wave of revenue shortfalls for state government.
Gov. Daniels has called for a plan to reduce K-12 education funding by $300 million without laying off teachers or increasing class sizes.
The governor said the decision was forced by continued shortfalls in state tax collections and a new revenue forecast, delivered just before his announcement Tuesday, that projects Indiana will take in $1.8 billion less in revenue during the next year than expected only six months ago.
Without spending cuts to match it, that lost revenue will eliminate the state’s surplus, projected to be $1 billion at the end of the two-year $27.6 billion budget passed in June.
Obviously, I like to pick on Gov. Daniels’ campaign rhetoric, but Indiana is hardly the only state struggling. And, for those of you who are equally happy to pick on President Obama, the economic collapse started rolling on President Bush’s watch and, I think, in response to his policies. One thing you can be sure of, though, the Club for Growth and Heritage Foundation will use these hard times to call for gut financial regulations, repeal the minimum wage, and cut taxes, especially estate taxes — but that’s because these folks are as constant as the north star *any* financial situation is an excuse to call for these things. Remember how Bush’s tax cuts were the cure for our budget surplus *and* our budget deficit? Remember how “Shimmer” was both a floor wax and a dessert topping? But I digress.
Daniels suggested that schools had gotten a free ride for too long. Other state agencies had been cutting and cutting, and now it’s the schools’ turn since they make up such a large part of the budget.
He suggested schools consider joining the state’s health insurance program, procurement contracts for buying supplies — and foregoing teacher pay increases.
“I’d like the (state) Board of Ed to talk about that,” Daniels said. “The data I’ve seen says that in a year in which the average Hoosier income went down 2.5 percent, the average teacher salary will go up more than 4 percent.”
The Indiana State Teachers Association disputed those numbers, saying that in 2010, pay for most teachers goes up an average of 1.65 percent.
Democrats are skeptical of Daniels’ motives in preserving the rainy day fund in the face of the monsoons that have been here for quite some time. They think he just wants to keep some money in the bank to have a big number to tout when he runs for President. They suggest that it’s raining and perhaps we should go to the rainy day fund before cutting education; then, if education needs to be cut, we cut.
I don’t think Abdul is wrong when he suggests that this is a good time to look for waste and creative solutions in school budgets, but I think we ought to be skeptical if/when the proposed cuts are inevitably damaging to the teachers’ unions. Breaking the teachers’ unions seems to be the dessert topping/floor wax in any proposals concerning education.
The Indy Star article continues:
For 14 straight months, Indiana’s collection of sales, income, corporate and other taxes has fallen short of expectations. In this fiscal year alone, the state has collected $475 million less than it expected.
This highlights the danger in shifting from property taxes to other kinds of taxes. Property taxes are predictable which is important for government planning, given that the controls on government spending and budgeting lead necessarily to a loss of flexibility. As we’re seeing, these other kinds of taxes are much more volatile. Indiana lawmakers need to articulate their plan for dealing with this volatility as they rush to enshrine that mess of a property tax cap amendment in the Indiana Constitution out of political expediency.
State Motor Carrier Inspectors Gutted
The Indiana State Police’s Motor Carrier Division will be cutting half of its current work force, according to WRTV 6. The division is responsible for enforcing motor carrier laws and inspecting large trucks and school buses. According to the report, the division had 160 inspectors at one time.
There is making government lean and then there is just deciding not to enforce the laws any longer. I think we’ve probably crossed into the second category on this one.
We Don’t Need No Education
Gov. Daniels called for a $150 million decrease, or 6 percent cut, in higher education funding in light of state revenue for November falling $144 million short of projections.
Money is running short and tough decisions have to be made, I suppose. But, if we’re digging into education, that seems to be an admission that – on the state level, anyway – there isn’t a lot of wasteful government spending or non-essential government activity. Otherwise, I would think, Gov. Daniels would be cutting that stuff before pursuing cuts in education.
Daniels also announced the state would suspend its $15 bi-weekly matching contribution to state employees deferred compensation retirement accounts for 2010. That move is expected to save the state $9 million.
The governor also directed the state’s Department of Administration to reduce the number of vehicles in the state fleet, but he did not identify a specific number to eliminate or a projected savings.
Gov. Daniels eases regulations on propane gas carriers under emergency powers
Browsing the governor’s executive orders, as one tends to do on the Wednesday night before Thanksgiving, I noticed that there were a couple of orders issued recently that relaxed the motor carrier regulations regulating hours of truck operation for drivers transporting propane. The executive order cites a need for the use of propane to dry crops, an excess of which is needed due to early heavy rains that delayed planting of Indiana’s crops. However, the order does not limit the relaxation of motor carrier rules to those hauling propane to dry crops. The second order was an extension of the first.
Hard knowing if this is just a little extra benefit for the propane gas industry or a response to a legitimate need or a little of both. I’m not sure I care too much either way.
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