Is limiting taxes bad? (09/19/06)

To the editor:

I'm confused. I thought property taxes were the most unpopular of all taxes and something had to be done to keep them in check. The General Assembly thought so, too, and took action. Last session, a law was passed to prevent taxpayers from having to pay more than 2 percent of the value of their property in property taxes.

If your home is worth $100,000 (and is properly assessed at that value; a different issue altogether) then your property tax could never exceed $2,000. That's $60,000 over the life of a 30-year mortgage, or 60 percent of the value of that $100,000 home.

Yes, that is a lot, but apparently it isn't enough to fund local governments and schools. Local officials across the state are saying this cap is too restrictive and will cause them to have to make dramatic cuts in their budgets.

OK, I'm not a city controller or school fiscal manager, but can I suggest that 2 percent (a percentage borrowed from our state Constitution):

•Should be enough;

•Spending may need to be curbed in some districts;

•The fears of doom and gloom are at least premature.

Although the law doesn't go into full effect until 2010, many local officials are attempting to determine its future impact by applying it to current rates that are based on current assessed valuations. This approach can only produce greatly exaggerated projections. Other changes in the law going into effect next year are going to significantly alter the property assessments and, consequently, tax rates.

Tax rates are calculated by dividing the total of all levies (local government budgets) by the total of the assessed value (AV) for all the property in a taxing district. So, as the AV goes up, the rates come down. And, the more rates come down the less likely that the tax owed will exceed the 2 percent cap. These other changes require all real estate assessments to be updated annually to stay current with their market value - a process commonly referred to as "trending." Generally speaking, most real estate appreciates each year. With these adjustments/trending, the majority of assessments will rise, causing the entire AV/tax base to grow and rates to drop.

Prior to trending, assessments were only updated at the time of a general reassessment (historically as many as 10 years apart), rather than annually. The current assessments/values are based on 1999 market values. The initial year of trending (next year) will bring assessments/values up to date and significantly raise the total AV.

(Please note that higher assessments don't mean higher taxes; if assessments go up, it just drops the tax rate.) Again, as the trending function causes the total AV numbers to go up and rates decrease, the less likely it is that the 2 percent threshold will come into play.

Until local officials factor in the effect of annual adjustments/trending, they can't begin to project the impact of the 2 percent cap.

Yes, the 2 percent law will impact some taxing districts - those with extraordinarily high rates! Let's give this reasonable taxpayer protection a chance before it is scrapped as a result of alarm generated by misleading projections using meaningless numbers to reach flawed conclusions.

Bill Waltz, director of taxation and public finance, Indiana Chamber of Commerce

Keep it open

To the editor:

The Indiana Supreme Court has been asked to overturn a ruling that permits public agencies and universities to avoid the Open Door Law by holding "serial" meetings.

Serial meetings allow public officials to meet privately in small groups that don't constitute a quorum to discuss public business - outside of public view and without public input or scrutiny.

The Indiana Coalition for Open Government believes that serial meetings violate the spirit of Indiana law, a sentiment also reiterated by the Indiana Court of Appeals in a recent ruling.

An Indiana Court of Appeals panel ruled in June that the Indiana University board of trustees did not violate the Open Door Law when it used serial meetings to discuss firing then basketball coach Bob Knight.

However, the panel also recognized that action itself ran contrary to the spirit of the law.

"The conduct of the IU trustees was in direct contravention to the public policy behind the Open Door Law," Judge Paul Mathias wrote in the 3-0 opinion. "While a more open process in matters of governance such as this might be preferable, the legislative branch of our state government has spoken. The law does not prohibit this conduct."

Sen. Bev Gard, R-Greenfield, will again sponsor a bill in the 2007 session to prohibit serial meetings. The Indiana Legislature has failed to pass her much-needed reform bill two years in a row.

The Senate passed the measure without opposition, but the House has continued to refuse to give the matter even a cursory hearing (which would allow for public testimony from citizens).

Watch for updates on the case on ICOG's Web site (www.indianacog.org) and contact your lawmakers telling them that serial meetings should be stopped. And ask members of the House to stop blocking the measure from having hearings that allow it be considered for a vote.

We believe strongly that public business should be conducted in public.

To read the full opinion online, visit: http://www.in.gov/judiciary/opinions/pdf/06020601pdm.pdf

Keith Robinson, chief of bureau, The Associated Press (Indianapolis) and interim presidemt, Indiana Coalition for Open Government[[In-content Ad]]