I think Steve Dalton might be having an identity crisis. For 10 years now, he and Commissioner Bob Harper have not seen eye to eye politically. But the day has come when 'you know what' has frozen over. Thanks to the tax cap bill at the state house, Commissioner Harper and Mr. Dalton have found at least one thing to agree on; a constitutional amendment that will permanently cap property tax rates. So, I agreed to take Steve up on his offer and provide a different perspective on the debate.
Call me what you will, but I really like the Porter County Public Library and am a strong proponent of neighborhood schools. So when I found out the library is anticipating a $600,000.00 budgetary shortfall this year and Valparaiso Community Schools is also anticipating roughly a million dollar shortfall each year for the next three years, the 1-2-3 tax cap amendment doesn't give me the same warm-fuzzy feeling it seems to give others.
These are the facts in the debate as I see it:
- The move from a property tax to a sales tax basis causes instability in funding sources. The sales tax basis is an unstable source of funding completely dependent upon the tempestuous purchasing nature of the Indiana consumer.
- There isn't an assessed value "cap" measure included in the bill, so assessed value can be whatever the DLGF decides "Market Value" means this year. And they are charged to re-define Market Value every single year.
And the proof is in the pudding:
- On Dec. 4th the Times online reported the State's November tax revenue came in $144 million below forecast, and that this is the 14th month in a row the sales tax generated system has come up short. This fiscal year alone the state budget is down $475 million, state employees are being asked to take "voluntary" month long vacations with no pay, many state employees have been cut from their jobs already, and $150 million is getting cut from the operating budgets of the state-funded Public Universities.
- Dollar for dollar, my property taxes have gone up. There is only one reason this can happen when the rate goes down, and it is because the assessed value goes up. Work with me here and go take out your tax bill. Look at how much you are charged this year, and ask yourself if dollar for dollar it is lower than 3 years ago? Now, do you see the line where it says "Supplemental HSC"? That credit will not be on your bill next year or ever again: so just go ahead and add it back in to your total bill. That is a one-time credit that is falsely giving Hoosiers a sense that the tax cap is legitimate.
Now take a look at this quote from the City:
"There's very little money in the budget for equipment purchases, and after last year (when the tax cap legislation was approved by the state legislature), there's even less," Costas said. "This has been a way to make up for that amount."
That is a quote from a January 15, 2009 article in the Times newspaper, reporting on City Council agreeing to let the Redevelopment Commission put $300,000.00 annually from 2009-2012 towards the purchase of equipment.
Also, the City suggested raising fees by charging VU a "fire fee", passed a 2010 budget with an expected $1.8 million shortfall, and now is proposing a fee increase to City Utilities bills that will bring in roughly $6 million a year starting in 2011. More fees, less revenue, more fees.
So Valparaiso and the rest of Indiana had better just get used to this because you are going to see a lot more of it to make up for the sales tax shortages. Creative funding through fees!
