Revenue is one side of equation

In the summer of 2007, the Indiana General Assembly handed local government some tools to prevent a future revenue crisis.

All 92 counties were offered the same options, but only a handful took advantage of them.

Jay County was one of those counties.

The state's goal was to steer local government away from reliance on property taxes. In the case of schools, the state's approach was to take over the task of providing revenues for the general fund.

In the case of the county and cities and towns, the state urged greater reliance on local income taxes.

It was a complicated issue, and the manner in which it was addressed by local public officials was a textbook case of good government.

Portland attorney John Coldren, a senior legislative consultant with Sommer Barnard in Indianapolis, arranged for one of his associates to explain the options and the process for a combined meeting of the county commissioners and the county council.

Other elected officials, department heads, and representatives of city government also sat in.

The state, the expert explained, was getting out of the property tax replacement business.

Local government was going to have to come up with those funds some other way, and changes in the local option income tax were the way to do it.

So, that summer, the county agreed to an increase in the local income tax to make up for the vanishing homestead tax credit revenues.

The action was taken in a matter of weeks, but with plenty of discussion and a one-hour public hearing.

Jay County Councilman Gerald Kirby summed the situation up pretty clearly when he grumbled that the legislature had set up local officials to be the bad guys when it came to raising taxes, but he was also right on the money when he added, "The consequences of inaction are far more dire than the consequences of action."

Fewer than a dozen counties followed suit. Instead, they chose to kick the can down the road, apparently hoping that the legislature would relent.

That was a serious miscalculation as well as an abdication of responsibility.

The shift of taxing burden away from property taxes to income taxes also had a precedent in Jay County.

Several years back, when county roads were in sorry shape and there was pressure to supplement motor vehicle and highway tax revenues with property taxes, the county instead adopted a wheel tax.

That user-based tax revenue system made good sense.

Like the local option income tax, it relieved the pressure on property taxes and spread the cost of supporting local government around more fairly.

But revenues are only part of the equation. Spending habits are just as important. - J.R.

Monday: Controlling the purse strings.[[In-content Ad]]