Direct Democarcy Generates Sound Policy

November 9, 2009

For release noon Tuesday Nov. 10 and thereafter (670 words)

Indiana voters are getting a taste of direct democracy thanks to a 2008 referenda law, and so far so good. The law lets the electorate approve expensive capital projects and certain tax rates at the school and local government level. Early results show voters can and do discriminate between what they think is nice and what they think is necessary – and that’s exactly how public policy should be made.

In Indianapolis, voters overwhelmingly approved the bonding for a new inner-city public hospital complex to replace the old one, which was outdated and laced with asbestos. In Beech Grove, voters okayed a property tax rate increase (about $115 a year for the owner of a $100,000 home) that will allow the local school district to maintain current funding levels for transportation, buses and capital projects, despite state-imposed tax caps. Without the increase, the district said, it would have to cut bus transportation out of the budget completely and reduce its capital projects fund by a fourth.

On the other hand, voters in Perry Township rejected a $98 million project to upgrade and expand its school buildings and Franklin Township voters nixed a tax rate increase the school system said was needed to avoid staff and transportation cutbacks.
           
There’s been no study yet of these specific referenda, but anecdotal evidence points to the practical. Voters wanted to know that the spending was absolutely necessary and that those doing the spending had done all they could to reduce costs. A citizen who opposed the Franklin Township measure said it was a matter of economics. “A lot of people are hurting … If they have to cut, they have to cut.”
           
School leaders, in particular, argue that the voters’ analysis is simplistic. After all, voters are less informed of education issues than elected school boards and have less at stake, especially if they don’t have school-age children themselves. Another criticism is that these referenda – typically scheduled as special elections rather than during general elections  – are hardly exercises in democracy because so few people vote. In Indianapolis, only 11 percent of registered voters cast ballots on the Wishard Hospital issue Nov. 3.
           
Rather than being a drawback of referenda, low voter turnout may be a good thing if you want thoughtful policy enacted. That’s because people who vote are more knowledgeable of the issues than those who don’t, a self-evident conclusion that has been affirmed by numerous studies of electoral habits. Also, and this favors the school systems spending plans, the higher the turnout the more likely it is that referenda to spend taxpayer money will be defeated. “Turnout and bond referenda have been negatively related for an extremely long time,” researcher Mark Bondo said in a 2007 study.
           
The thoughtful way voters have approached the issues affirms that citizens can be trusted to make hard decisions. The referendum law replaced a cumbersome process that required opponents of spending projects to mount a petition drive and obtain more signatures than supporters. Since the new law took effect, about half of Indiana’s capital projects have been approved. In November 2008, five of six bond issues passed. Last May, four of four were defeated. Around the same time, Center Grove’s school board canceled plans for a $142 million construction referendum, deciding that the support wasn’t there in this economy.
           
Yet more are in the pipeline in coming days and weeks. As school systems confront the impact of property tax caps on operating budgets, expect to see a slew of requests for tax rate hikes to cover operating funds. (Some school districts are also threatening to file lawsuits challenging the equity of Indiana’s funding system).
           
Larry DeBoer, professor of agricultural economics at Purdue University, said it’s too early to analyze Indiana’s trends, but it appears voters became less willing to approve the referenda when the economy soured.
           
Direct democracy works. Deciding not to spend money when times are tough is a sign of wisdom, not stinginess. Perhaps more elected officials should take their cues from citizens.

Andreea Neal is a teacher at St. Richard’s School in Indianapolis and adjunct scholar with the Indiana Policy Review Foundation. Contact her at aneal@inpolicy.org.



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