An economic columnist who appears weekly on the Times editorial page provided his thoughts on the recent push by communities in Sullivan County to influence the county council to increase the local income tax during an interview Monday.
“This has been going on since 1973,” said Morton Marcus, whose columns appear on Tuesdays in the Times, “this squeeze on local government.”
The city of Sullivan and each town in the county approved resolutions in recent months asking the county council to raise the local income tax from .3 percent — the second lowest in the state — to 1.5. Several of those communities’ council members attended the county council meeting on Feb. 27 lobbying for the increase, and the council voted unanimously to conduct a formal public hearing on the issue at 6 p.m. this coming Monday in the courthouse’s second-floor courtroom.
Generally, Marcus believes increasing local income taxes in relation to lost revenues due to the constitutional amendment of property tax caps in 2010 is a reasonable step.
“I think it’s necessary, or you are going to see continuing deterioration in services,” he said.
Other than increasing the LIT, Marcus noted the only other options he’s seen taken by communities in the state is to eliminate services or increase charges for those services.
“They can cut expenses,” he said. “That’s a lot of what this anti-tax movement is about.
“It means the health department cuts back on employees and restaurants don’t get inspected, or the library limits its hours or purchases fewer books,” Marcus continued. “There’s a lot of ways to cut expenses by lowering the quality of services.”
For some citizens, these cuts may be significant to their enjoyment of their communities, while others don’t find any use for the services in the first place, he noted.
“It’s like, ‘Why do you have all that high school sports news (in your paper)? I don’t read that. Why should I have to pay for that?’”
He said the other option to eliminating services is raising fees for those services, such as on building permits or in other areas.
“If you have a town pool and it costs 25 cents (to get in), then raise it to 50 cents,” Marcus explained. “The common thing is to put fees on anything you can.”
He said he has seen this with “some” communities since the property tax caps came into being.
“Basically, it’s the individual cities and towns that have been raising the fees, not the counties,” Marcus noted.
He could not provide local data on how the property tax caps affected Sullivan County, although believing property tax bills would be public records.
“It’s difficult to get the data unless you get directly into the computers (of the county auditor or treasurer),” he said.
Marcus agreed that the property tax caps generally helped larger corporate interests and property owners and a LIT increase would shift revenue generating for communities from those interests to lower-income individuals.
“I think that’s right,” he said. “Those that tend to benefit the most are (corporate and larger property owners).
“Absolutely, it’s the more expensive properties that are getting the benefit of the cap.”
Marcus noted interests, like Indiana Farm Bureau and the Indiana Association of Realtors, were among the major supporters of recent changes such as the constitutionalizing of property tax caps.
“We’ve done a lot to shift taxes from corporate to individuals, and then we say, ‘We are very proud of our tax system because it’s business friendly, but is it friendly to the people.”
He said that manipulation of property tax revenues has occurred for several years in Indiana, noting that property tax assessments were delayed for five or 10 years around the 1980s.
“Even though the value of properties were rising that wasn’t being included (in collecting taxes),” Marcus advised. He also pointed to freezes on tax levees limiting the amount of revenue counties or cities could collect in the past.
“That went on for years in this state, where property tax revenues were kept down,” Marcus stated. “(Property tax caps) are just another attempt to keep property taxes down and weaken the powers of local government.”
He compared the situation with the conservative rhetoric in the Statehouse of keeping schools locally controlled, but the reality being much different.
“They talk about keeping the schools in local hands, but they’ve made the schools totally dependent on the state,” Marcus said.
As to the present push for a LIT increase in Sullivan County, the columnist noted the particular interests of each county councilman will likely influence their decisions.
“It’s how many live in the city of Sullivan or an unincorporated area,” Marcus said. “It’s where they live and what their business interests are ... We have an interesting situation where a fireman on the city council can’t vote on their salary, but a shop owner can vote on his taxes.”