EDITORIAL: Plenty to tackle in 2008 session of Indiana Legislature

The IBJ

  The legislative session that just ended might be best characterized by the old saying "good enough for government work."

   Government usually doesn't work effectively without compromise, and compromise often results in half measures that are good enough, but not great. That's what happened this year. For "glass-half-full" types, there were successes to celebrate. But legislators also left plenty of unfinished business for next year's short session.
   Rather than reaching agreement on true property tax reform, legislators opted again for a quick fix, approving rebates of $550 million for those who pay tax on a primary residence. The last-minute rebate package won't do anything to suppress property taxes long term or alleviate local governments' over-reliance on them-a goal of elected officials on both sides of the political aisle.
   One of the keys to property tax reform is extending to municipal governments the power to raise revenue in different ways. Other than granting permission for a slight income tax increase, legislators didn't give locals much freedom. Perhaps in the next session state lawmakers will see fit to trust local government-and local voters-to make the decisions that are best for their communities.
   Giving local government the option of raising sales taxes was never seriously considered this session, but that might be just what local officials need to kick the property tax habit.
   Longtime Indianapolis City-County Councilor Philip Borst was among those calling for a regional sales tax. By Borst's estimates, a 1-percent sales tax increase in the nine-county metro area would raise $250 million, 30 percent of which would come from tourists. Coupled with property tax relief, the tax would help fund public safety, mass transit and other needs while saving taxpayers money. Next time legislators convene, they should approve Borst's plan or something similar.
   They should also grant Mayor Bart Peterson's request to authorize the city to save money by eliminating layers of local government. The mayor's request died in the session's final hours, but there were signs the partisanship that thwarted the bill in previous years is beginning to wane.
   Partisanship didn't stop Gov. Daniels' plan to raise the cigarette tax to fund health insurance for the uninsured. Legislators raised the tax to 99.5 cents a pack. If legislators could muster the courage to exceed that magical $1 barrier, smokers would have even more incentive to quit and there would be more money to fund smoking-cessation programs.
   In the meantime, we'll settle for a host of economic development tools approved this session. Among them are $70 million for the Indiana 21st Century Research and Technology Fund, a new $20 million research and development fund for life sciences companies, and a tax exemption for income derived from patented technology.
   Indiana joins only a handful of states that offer the tax exemption. That's the kind of policy that can give Indiana an edge in the economic development race.
   Lawmakers should move the state forward with even bolder measures in 2008.