An AP story I saw in the Princeton Daily Clarion reports “Speaker all but nixes chances for local tax options.” Last year, state legislators balanced their budget on the backs of the local governments. For a good many years, the State has limited local government’s ability to structure taxes in such a way as to pay for the services they are required to provide. In return, the State has compensated local government by providing a subsidy to relieve property tax burdens.
In the 2005 budget, the State cut the subsidy. This year, the legislature was looking for ways to increase local government taxing flexibility so the entire burden of the tax increase was not placed on property tax payers. The Senate recently passed a provision that would allow local governments to raise local option income taxes to offset property tax increases for operating costs or reduce property taxes outright.
House Speaker Brian Bosma said Friday that it
was unlikely new tax options for local governments could be worked out
in the final days of this legislative session but that he would make
local spending and revenue-raising reforms a priority next year.
. . .
Rep. Jeff Espich, R-Uniondale, said the plans
presented by IACT and the governor would allow local governments to
impose alternative taxes and use some of the money for new spending
beyond property tax relief.
He had said he was not interested in
that, and even though the Senate passed a plan, Bosma indicated little
interest in pursuing the issue any further this session.
â€œI have conveyed my thoughts both to our own
fiscal leaders and to the Senate fiscal leaders that it doesn’t make
sense to address local government taxation until we address local
government spending, and it will be very difficult to do that in the 10
days remaining,â€ Bosma said.
Any time the problem of property tax increases resulting from the 2005 budget comes up, House Republicans try to blame local government spending. That’s disingenuous and, frankly, a little offensive. And I don’t think it will work. There are an awful lot of Republicans in local government who probably don’t appreciate being thrown over the boat by their legislative brethren.
Local government expenditures have not increased particularly since 2005. The immediate cause of property tax increases will be almost entirely attributable to the property tax subsidy reduction passed by the legislature. But on a more general level, local expenditures increase because, as the saying goes, “shit runs downhill.” (Sorry Mom.) An example I mentioned yesterday was that of cutting funding for mental hospitals. The state cuts mental health funding so the county jails gets more inmates who are committing crimes because of their mental illnesses. Counties have to pick up the tab. Very often where you see a necessary expenditure cut by the state, you will see the expense pop up in a form the local government has to pay more for as the provider of last resort. So, it’s simply wrong for legislators to try to duck the consequences of their budgetary choices by implying that local government is somehow guilty of extravagant spending.
From what I have read, and if passed at some later date, the county can increase its local income tax to make up for shortfalls. I live in Daviess County which has the second highest county option tax in the state, 1.6 right now. What limits the amount a county can levy on its residents?
I thought the combined limit of the various county income taxes was 1.25%. But if Daviess is at 1.6, then maybe I’m wrong.
Scott Tibbs says
Some local units of government have been fiscally responsible, but others have not. Take, for example, my local school district. Their budget has increased dramtically over the last decade… with not much to show for all that extra money.
Mike Sylvester says
The Tax Levy in Perry Township for our Schools (Allen County-Fort Wayne) will increase 28% this year alone…
This is one of the reasons I am running for School Board in May!