Evansville Courier & Press
At one point last week, it appeared that all of Indiana was exploding with frustration and fear over property tax increases. Headlines rippled with calls for special legislative sessions, emergency help and calls for an overhaul of the state's tax system.
But when the smoke had cleared, it appeared most of the anger and protest was coming from Marion County (Indianapolis) and a few others where increases were painfully high.
In the meantime, in Vanderburgh County, where tax bills were delivered this spring, it appeared that most homeowners had moved on. At a meeting Thursday for six homeowners to discuss appeals of their assessments, only one showed up. In all, appeals were filed on only 11 percent of county parcels.
This was a surprise, given that angry protests had rocked public meetings with County Assessor Jonathan Weaver in April, after homeowners received their new assessment figures. But at the time, former Assessor Tammy Elkins suggested that had the county waited until after tax bills had been figured - and residents saw the actual impact of the assessment changes - the protests might not have been so emotional.
Apparently she was right.
But up in Indianapolis, property owners just recently received their new bills with an average 34 percent increase, topping the statewide average of 24 percent.
Protests there led Indianapolis Mayor Bart Peterson to call for a special legislative session to provide some relief to hard-hit homeowners. And that led Gov. Mitch Daniels to say he might call one if lawmakers could agree on some solution before going into session. He later said he had some ideas that would require a special session, but at this writing he had not shared them with the public. But Peterson changed directions, saying he had come up with a plan to borrow $75 million from future tax revenues to provide short-term relief.
Baring some extraordinarily compelling reason for a special session, state leaders should shelve that idea. Lawmakers couldn't reach agreement on meaningful tax relief during the long session earlier this year, and they wouldn't do it in a summer meeting. It would be a lot of political preening at taxpayers' expense.
That's not to suggest that the state and the counties should not do what they can - installment payments, for example - to help those hit with crippling tax bills, but within the limitations of existing law.
With apologies to those individual Hoosier taxpayers trying to survive this year's bills, the more meaningful issue is what, if anything, the state can do in the long term to help on a more permanent basis.
Some groups and individuals have for years called for an end to property taxes. While we hold no brief at this time for that position, this seems to be a suitable time for the state to seriously address that issue.
David Coker, president of the Vanderburgh County Taxpayers Association, has called for the state to create a bipartisan commission of business leaders, academics, labor and elected officials to examine property tax reforms. He told us, as well, that middle- and low-income property owners should have a place at that table, and he's right.
Indeed, his proposal to study a long-term solution makes much more sense than the Band-Aid approach of a special session.
Government often does not act until there is a crisis, and for some property owners and their elected representatives, this is a crisis.
That idea has merit.
It might be useful to understand how Indiana got to this place. As difficult as the current property assessment system is proving for some people, the old one was worse. It was a complicated, subjective system that resulted in some properties being underassessed and others being overassessed.
What is going on now with huge increase might be related in some cases to properties being underassessed under the old system. Under that system, where you fell depended in part on which township you lived in.
The need for change was dictated by an Indiana Supreme Court ruling in 1998, which said the old system was unconstitutional because it is open to broad interpretation by assessors.
That led to Indiana instituting a market system like that used in numerous other states, with assessments based in great part on recent sales of like properties. It went also to "trending," which sees assessments adjusted each year, based on sales. The point of trending is to bring increases along in smaller portions, rather than all at once during reassessments. The last one was in 2002. The next will be in 2009.
Regardless, Indiana had something of a perfect storm to hit taxpayers. Along with the new assessing system, and some of that catching up on underassessed properties, the state phased out the business inventory tax, thus shifting more of the burden for taxes from business to residential taxpayers.
It is important to remember that this change had strong support as a tool for improving the economic climate in Indiana. The state economy was sagging at the time, and the change was seen as a way to make the state more attractive to new commerce.
On the plus side, a 2 percent cap on the percentage of a home's value that homeowners would pay in property taxes is coming for taxes payable in 2008.
And Gov. Daniels has said that his ideas for long-term reform could involve modernizing local government. If that means eliminating some of the unnecessary levels of local government, good. Let's move forward.
If Indiana does move forward on reforming taxes, each Hoosier taxpayer must ask himself or herself these questions:
Would you favor the elimination of property taxes in favor of higher sales taxes and income taxes? In her column today, Neal quotes a lawmaker as saying it would take a 2 percent increase in the income tax and a 4 percent increase in the sales tax to make up for the loss of property tax revenue.
What government programs would you be in favor of seeing eliminated, as a means of reducing taxes?
The answers to those questions could dictate whether Indiana sees any changes in its tax structure.