Why not Trust the Voters on Tax Cap?

November 17, 2008

For release Nov. 19 and thereafter (700 words)

If you were one of the citizens who took to the streets last year, demanding relief from out-of-control property taxes, pay close attention to the upcoming session of the Indiana General Assembly. Future tax cuts are in danger.
Local governments, schools, some legislators and others are trying to put the kibosh on a constitutional property tax cap proposal supported by Gov. Daniels and Senate Republicans. House Speaker B. Patrick Bauer, D-South Bend, says he’d like to wait until 2010 before moving forward. Bauer says he wants to gauge how 2009 statutory tax cuts will affect funding in public safety and other services before committing to a constitutional amendment. One major Indiana newspaper has agreed with him, telling taxpayers in a recent editorial: “Be patient.”
Be patient? That’s tough advice when the economy is in freefall, 401-Ks are dropping in value daily, people are losing jobs and retirees are being forced to sell their homes.
Be patient? That’s hard to do if you live in a county — like Marion — that has yet to send out fall tax bills so residents don’t even know how much to set aside, with the Christmas holiday right around the corner.
Be patient? Tell that to owners of older homes in urban neighborhoods where property taxes aren’t going down because they were historically “underassessed,” through no fault of their own, and for whom recent assessments have been used to level the playing field.
In the debate over the constitutional tax cap, there are two sides: those who think it is sound public policy to cap property taxes at 1 percent of a home’s assessed value and those who do not.
If you believe on principle that the owner of a home assessed at $100,000 should pay no more than $1,000 in property taxes, there is no need to wait a year and see the effects of 2009 legislative changes. Should the tax cap result in deeper-than-expected drops in government revenues, then the solution isn’t to repeal the cap; it’s to cut government spending or rely more heavily on local option incomes taxes, which the legislature has given government the authority to do.
If you believe it is not sound public policy to cap taxes, just say so. You oppose amending the constitution because you don’t want to limit government’s ability to raise taxes should it need the revenue.
Calls to defer the amendment process are especially frustrating because the proposal passed the legislature so easily last year. The vote on Senate Joint Resolution 1 was 40-7 in the Senate and 79-20 in the House. Surely the desire for tax relief doesn’t hinge on whether or not it is an election year.
Regardless of which position lawmakers take, why not trust the voters to decide? A constitutional amendment must be passed by two consecutive, separately elected General Assemblies and approved by a majority of voters. Delaying action until the 2010 session, as Bauer has suggested, could unnecessarily derail the process and keep the issue from reaching voters in the 2010 election.
Among many other lessons, the Nov. 4 elections taught us that Indiana voters have a keen ability to sift through candidates and issues on the ballot, set priorities and make an informed choice. What else can explain how Democrat Barack Obama could carry Indiana while Republican Gov. Mitch Daniels is re-elected so overwhelmingly? What else could explain why voters in the Indianapolis Public Schools District, many of them burdened by high property tax rates, would nonetheless approve a school remodeling project that will cause their taxes to rise a bit more?
Many Hoosiers have seen significant drops in property taxes this year due to the legislative changes passed last session. It would be easy to get apathetic and conclude that property taxes are no longer a critical issue and that the amendment may not be needed. That’s what opponents of the amendment are hoping.
But we’ve been through this before: Property taxes may go down for a while but it never lasts because of government’s insatiable appetite to spend more. If it does nothing else for taxpayers, the 2009 legislature should do its part to get the cap amendment on the ballot for 2010.

Andrea 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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