Local governments in Indiana say they are going to face extraordinary pressures because of property tax caps and an expected drop in income tax revenues, so they're asking legislators to be cautious about putting the caps into the state constitution:
Rep. Terry Goodin, D-Crothersville, said the confluence of pressures should force lawmakers to take some action to help local governments.
“Local government is going to have to survive,” Goodin said. “Local governments provide the services that people want and people demand.”
But even if the General Assembly approves the amendment putting the caps into the constitution, it won't take effect unless voters approve it in a November referendum. Indiana citizens will, in effect, be voting on what services "they want and demand," or at least the ones they're willing to pay for through property taxes. As a referendum approached, I presume local-government representatives would attempt to educate voters about what services they receive, what they cost and what might be in jeopardy if funds were diminished.
Or are Hoosiers too dumb to be trusted with their own fate?
Comments
Being skeptical of this amendment doesn't mean one thinks Hoosiers are dumb. I have a high opinion of my own intelligence and spend more than the average amount of time looking at Indiana laws. That notwithstanding, I'm pretty sure I don't understand the full implication of the proposed amendment.
You expect the average Hoosier to understand the full ramifications of putting this into the Indiana Constitution:
Section 1. (a) Subject to this section, the General Assembly shall provide, by law, for a uniform and equal rate of property assessment and taxation and shall prescribe regulations to secure a just valuation for taxation of all property, both real and personal.
(b) A provision of this section permitting the General Assembly to exempt property from taxation also permits the General Assembly to exercise its legislative power to enact property tax deductions and credits for the property. The General Assembly may impose reasonable filing requirements for an exemption, deduction, or credit.
(c) The General Assembly may exempt from property taxation any property in any of the following classes:
(1) Property being used for municipal, educational, literary, scientific, religious, or charitable purposes.
(2) Tangible personal property other than property being held as an investment.
(3) Intangible personal property.
(4) Tangible real property, including curtilage, used as a principal place of residence by an:
(A) owner of the property;
(B) individual who is buying the tangible real property under a contract; or
(C) individual who has a beneficial interest in the owner of the tangible real property.
(d) The General Assembly may exempt any motor vehicles, mobile homes (not otherwise exempt under this section), airplanes, boats, trailers, or similar property, provided that an excise tax in lieu of the property tax is substituted therefor.
(e) This subsection applies to property taxes first due and payable in 2012 and thereafter. The following definitions apply to subsection (f):
(1) "Other residential property" means tangible property (other than tangible property described in subsection (c)(4)) that is used for residential purposes.
(2) "Agricultural land" means land devoted to agricultural use.
(3) "Other real property" means real property that is not tangible property described in subsection (c)(4), is not other residential property, and is not agricultural land.
(f) This subsection applies to property taxes first due and payable in 2012 and thereafter. The General Assembly shall, by law, limit a taxpayer's property tax liability as follows:
(1) A taxpayer's property tax liability on tangible property described in subsection (c)(4) may not exceed one percent (1%) of the gross assessed value of the property that is the basis for the determination of property taxes. (2) A taxpayer's property tax liability on other residential property may not exceed two percent (2%) of the gross assessed value of the property that is the basis for the determination of property taxes.
(3) A taxpayer's property tax liability on agricultural land may not exceed two percent (2%) of the gross assessed value of the land that is the basis for the determination of property taxes.
(4) A taxpayer's property tax liability on other real property may not exceed three percent (3%) of the gross assessed value of the property that is the basis for the determination of property taxes.
(5) A taxpayer's property tax liability on personal property (other than personal property that is tangible property described in subsection (c)(4) or personal property that is other residential property) within a particular taxing district may not exceed three percent (3%) of the gross assessed value of the taxpayer's personal property that is the basis for the determination of property taxes within the taxing district.
(g) This subsection applies to property taxes first due and payable in 2012 and thereafter. Property taxes imposed after being approved by the voters in a referendum shall not be considered for purposes of calculating the limits to property tax liability under subsection (f).
(h) As used in this subsection, "eligible county" means only a county for which the General Assembly determines in 2008 that limits to property tax liability as described in subsection (f) are expected to reduce in 2010 the aggregate property tax revenue that would otherwise be collected by all units of local government and school corporations in the county by at least twenty percent (20%). The General Assembly may, by law, provide that property taxes imposed in an eligible county to pay debt service or make lease payments for bonds or leases issued or entered into before July 1, 2008, shall not be considered for purposes of calculating the limits to property tax liability under subsection (f). Such a law may not apply after December 31, 2019.
[...] to a tried and true tool in pretty much any debate over adopting a Constitutional Amendment: “Let the people decide!” Keeping a proposed amendment off the ballot, the argument usually goes, is tantamount to a [...]
Actually, my point was a little narrower than "Let the people decide!" my choice of headline notwithstanding. My main complaint is that it is a little misleading for officials to say they will be prevented from providing services people "want and demand" when, in fact, the amendment won't happen unless the people vote for it in a referendum.
And I agree that it is unfortunate for legislators to make the laws so dense and complicated that the average person can't understand them and their ramifications. We should keep insisting that they stop doing that. In the meantime, which is better, to educate people and let them have the final say, or just trust that our legislators will do the right thing? You think ANYONE will ever understand the 2,000-page-plus conglomeration we end up with known as "health care reform."
As a general rule, it is better to put only the broad strokes of our governing principles into the constitution and leave the nuts-and-bolts stuff to legislation. But the whole point of the property tax cap was to encourage fiscal restraint, and all officials do is look for ways around it. Maybe a constitutional amendment is the lesser of two evils in this case.
My concern is that people will hear "property tax cap" and think "that sounds good".
Then when services get cut, they will be the first to complain.
I am NOT necessarily opposed to putting tax caps in the constitution. However, I do think we need to wait a few more years. here is why:
1. Property taxes are a roller coaster right now. We are still working out this "trending" thing and it does cause fluctuation in the market that will affect how much is collected in taxes.
2. There is already a law that says they are capped. The act of putting it in the constitution is really a political trick- pass the buck to local government and force them to create a local income tax.
I think if we wait a few years we may come to a conclusion that a tax cap in the constitution is okay- but maybe we need to adjust the numbers (for example- we may find that almost all communities can keep providing services if the cap is 1.5% instead of 1%).
I think putting it in the Constitution is a bad idea because there are too many moving parts. I'd say the same (only louder) about trying to jam the health care reform bill into the Constitution as well.
The Constitutional amendment process gives a role to both the General Assembly and the people directly. Neither should abdicate that role. In other words, if legislators think it's not a good idea to have it in the Constitution, they shouldn't vote for it just to get it on the ballot.