A Citizen's Guide to Indiana

Masson's Blog

Hoosier household income down 10%

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Ron Shawgo, writing for the Fort Wayne Journal Gazette, has an article entitled Household income off 10% in state.

Unable to keep up with inflation, Indiana’s median household income has slipped an estimated 10 percent since 2000, with only three other states posting worse declines.
. . .
Indiana’s median household income was an estimated $45,394 last year, lower than the $50,298 earned in 1999, when adjusted for inflation. Only Michigan, Ohio and North Carolina had greater percentage declines. Only eight states showed incomes that outpaced inflation.

How is this happening when American productivity is up (or so I’ve been told?) Is it just that fewer people are pocketing more of the value produced? Or is something else going on? I’m no economist, so this is a real question.

Update
ManFromMiddletown has a diary entry over at Blue Indiana noting some pretty startling information. Indiana apparently has 3 of the 10 poorest communities: Bloomington, Gary, and Muncie. I wonder if student populations figure into the calculations somehow. (I don’t really feel the same concern for a college student living in a hole, eating Ramen as I do a high school dropout trying to raise children living in the same squalor.)

Update #2 Plate o’ shrimp — as I was writing update #1, I noticed that ManFromMiddletown had graced this fair blog with a comment. He points out a report from the Economic Mobility Project (pdf) (put together by folks working for the Brookings Institution and the Pew Charitable Trusts). Page 6 of the report, reveals that for the first 30 years following World War II, productivity increases and median household income growth went up pretty much in lockstep. Since the late 70s, and most dramatically since 2000, productivity has continued gone up much faster than median household income. “[T]he benefits of productivity growth have not been broadly shared in recent years.”

The report itself focuses mainly on intergenerational mobility — the extent to which children move up or down the income spectrum relative to their parents’ generation. (Seems like the “nothing is wrong” crowd will often try to show mobility by pointing out that an individual can expect to increase his or her earnings as he or she gets older.) The report notes the importance of intergenerational mobility to the American Dream. By and large, Americans like to view our society as one where diligence and skill get rewarded. Large differentials in economic outcome are acceptable because, after all, your fate is in your own hands. If you get rich, it’s because you deserve it. If you stay (or get) poor, it’s your own fault. The report suggests three hypothetical types of society – 1) The meritocratic society where you rise or fall according to how hard you work and how talented you are; 2) The “fortune cookie” society where it’s all luck; and 3) The class-stratified society – you’re born into it.

Obviously, we’ve always had a little of all of these going on. But, for the past generation or so, it looks like we’re starting to favor #2 and #3 more than in the past. And, in fact, the study finds that Denmark, Norway, Finland, Canada, Sweden, Germany, and France have more relative mobility than does the United States. In other words, your parents’ status is a better predictor of what your status will be when you grow up than it is in those other countries. In our peer group, only the United Kingdom has similar levels of mobility. Viva la revolucion!

Lots of other sobering information in the report. Thanks ManFromMiddletown.

State versus local control of budgets and taxes

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The Palladium-Item has an editorial entitled State should give options to local level. In it, the editors of my old home town newspaper opine:

Gov. Mitch Daniels and Republican and Democratic leaders in the Indiana Statehouse can’t agree on much, but on this much they see eye-to-eye: County governments ought to enact the property tax alternatives that legislators in the last session provided them.

. . .

An income tax option will, as state officials note, help shift a good portion of the higher costs away from property taxes to a local option income tax.

But state officials, with a shared interest in mollifying taxpayer anger, ought to express that interest by giving local officials incentives to choose an alternative to the property tax.

With all due respect: no. If state lawmakers wanted counties to shift from the property tax to an income tax or other sort of tax, they had the power to do it; and, if that’s what they had in mind, they should have gone ahead and enacted the tax change when they decided to balance the state budget on the backs of local government.

Instead, what they did was balance the state budget by capping the property tax relief credit – Hooray! Balanced State Budget!

Then, state legislators provided options allowing counties to shift from property taxes to county income taxes – Hooray! Home Rule! Local Control!

But then they left it up to county officials to pull the trigger on the new taxes – Boo! Tax-raisin’, money spendin’ local officials. Hiss!

See how that works? You impose spending obligations on local communities — juvenile detention fees; child services, for example. You even fund those obligations for awhile. But, when times get tough for the State, you go ahead and balance the state budget and give a bit of the “screw you” to the locals. Then, to make up the gap, you force the local officials to do the tax raising.

It’s not that local officials are poor fragile things that can’t take a little heat when they make tough decisions. The problem is that the State has taken a great deal of control out of the hands of county officials with respect to spending and taxing. Their options are limited when they want to cut spending; and their options are limited when they want to raise taxes.

Want an example? On August 24, the Department of Local Government Finance just issued a letter to every county demanding that data sets from 2002 through 2008 be submitted to the DLGF by October 15, 2007. Governor Daniels’ prior appointee as Commissioner of the Dept. of Local Gov’t Finance was more lenient in terms of deadlines for submitting these sets of data to the State. Once the property tax shit hit the fan, Gov. Daniels appointed a new Commissioner, Cheryl Musgrave, who has been taking a much harder line. According to the letters, the DLGF will not approve any local unit of government’s 2008 budget or debt issues until all of the data is provided. Further, the DLGF will hold a unit’s property tax replacement credit hostage pending delivery of this data. I believe this abrupt change from the DLGF will force many counties to scramble even more than they have been from the already chaotic property tax situation. Assessors’ and Auditors’ offices around the State, already stretched thin by the demands placed on them will have to devote scarce resources to complying with the State’s data requests. In some respects, this may be adding insult to injury. Becky Williams, president of the Indiana Assessor’s Association says that the DLGF is directly responsible for counties being behind on some of the deadlines. She says, the agency hampered assessors by failing to provide new trending rules until last summer, setting assessors behind in their work and making it nearly impossible to do their job correctly and still meet deadlines.

To be sure, some counties are worse off than others. For example, the letter to Marion County indicates that Marion County has failed to provide Auditor data from Pay 2004 – Pay 2006; sales disclosure data from 2004-2005; real property data from 2004; and personal property data from 2004 – 2006. The letter to Warren County indicates that it still owes the State data from 2006 sales disclosures and real property as well as 2004 – 2005 personal property. It looks like all of the counties got demands of one sort or another.

If the State is determined to micromanage county finances, holding budgets and property tax relief credits hostage to the State’s demands, state lawmakers should at least be gracious enough to raise taxes themselves when it’s necessary.

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Since I’m on the topic of property taxes, I’ll mention this excellent article by Niki Kelly in the Fort Wayne Journal Gazette entitled “Panel floats ideas for taming property tax.” Senator Kenley’s interim study committee, the Commission on State Tax and Financing Policy, is studying the issue. Apparently it would take a 9% income tax or 13.2% sales tax to cover the property tax gap.

Apparently conservative demagogue, Eric Miller, got a cool reception from the panel when he proposed “passing a constitutional amendment eliminating property taxes in 2008 and 2009 with a public vote on the issue in 2010. Then in 2011, he said, legislators could come up with a mechanism to replace the billions of dollars that would disappear in 2012.”

Sen. Kenley astutely questioned the propriety of passing a Constitutional Amendment first and finding a funding mechanism second.

“Let me get this straight. We don’t know what the plan is until after the constitutional amendment is passed? Wouldn’t we want to pass that upfront so people would know where they are going?”

Rep. Espich pointed out that Miller’s suggestion to increase sales taxes to 8% and increase income taxes to 4.4% would generate only $4.4 billion of the $6.1 billion dollar funding gap that would be created if property taxes were eliminated.

False representations on USDOT docket

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The Indianapolis Star has an article by the Associated Press entitled Time-zone letters may be forged. According to the story, two letters submitted to the USDOT docket purporting to be from the town of Ireland, Indiana and parishioners of St. Raphael Catholic Church in Dubois have typewritten names but no signatures. Some of the people listed claim they were not even contacted before the letters were submitted.

Eek! Flour!

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Hash House Harriers is a drinking club with a running problem. In this organization, “hares” are sent out to mark a trail for fellow route runners – the trail will have some dead ends, false leads, and shortcuts and almost always ends in some sort of beer consumption.

In Connecticut, two hares sprinkled flour in a shopping center parking lot to mark the trail. Apparently, this is a felony.

New Haven ophthalmologist Daniel Salchow, 36, and his sister, Dorothee, 31, who is visiting from Hamburg, Germany, were both charged with first-degree breach of peace, a felony.

. . .

“You see powder connected by arrows and chalk, you never know,” she said. “It could be a terrorist, it could be something more serious. We’re thankful it wasn’t, but there were a lot of resources that went into figuring that out.”

They should probably also round up this guy:

Another example of the consequences of governing through crime. We’re turning ourselves into cowards, essentially. If we get ourselves worked up into a panic over every potential threat, we’re not going to be much of a country. Sure, the potential threats are out there, but you have to weigh them against their actual likelihood. At times, our perception of risk far outpaces the actual risk (and, at times, we underestimate our risk — say, getting in a car, eating frankenfoods, or (probably) doing nothing about global warming.)

Kicking him while he’s down

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Not that I’m complaining, but John Cole at Balloon Juice quotes a severe critique by Andrew Cohen of former Attorney General Alberto “Abu” Gonzales.

By any reasonable standard, the Gonzales Era at the Justice Department is void of almost all redemptive qualities. He brought shame and disgrace to the Department because of his lack of independent judgment on some of the most vital legal issues of our time. And he brought chaos and confusion to the department because of his lack of respectable leadership over a cabinet-level department among the most important in the nation.

He neither served the longstanding role as “the people’s attorney” nor fully met and tamed his duties and responsibilities to the Constitution. He was a man who got the job not because he was supremely qualified or notably well-respected among the leading legal lights of our time, but because he had faithfully and with blind obedience served President George W. Bush for years in Texas (where he botched clemency memos in death penalty cases) and then as White House counsel (where he botched the nation’s legal policy on torture).

For an administration known for its cronyism, and alas for an alarmingly incompetent group of cronies, Gonzales was the granddaddy of them all. He lacked the integrity, the intellect and the independence to perform his duties in a manner befitting the job for which he was chosen.

Cole also takes a look at an entry at Red State that suggests the solution for President Bush to take this opportunity to appoint an Attorney General who will clear out career staffers and install more yes-men and cronies.

More on the Southwestern Counties

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Roger Moon, writing for the Times-Mail of Lawrence County, has an article entitled Lawrence County residents silent on time zone issue. He is basically commenting on the USDOT docket for the Southwestern Counties’ petition to change time zones and notes the apparent absence of input to the docket from Lawrence County residents “despite the fact that many of the county’s residents are among the 67 percent of Naval Surface Warfare Center Crane employees who a DOT document reports commute from the Eastern to the Central time zone to work at the facility.” The comment period on the USDOT’s notice of proposed rule making has been extended to August 31, 2007.

In the docket materials, there is a real howler from the Governor for anyone who remembers the St. Joseph County situation. In that case, St. Joseph County petitioned to be placed on Central Time. The USDOT entered a preliminary determination that the petition should be granted. Neighboring Elkhart County expressed its displeasure and enlisted the services of the Governor who filed a letter opposing St. Joseph County’s petition despite a state law requiring the state to support any such petition. Now, we get the above linked letter from the Office of the Governor in support of Perry County’s petition to move from Central to Eastern if the request of the other 5 Southwestern Counties is granted. The letter includes this bit:

As you know, during the original round of decision-making on time zone selection in 2005, Perry County petitioned for an opposite result – to be included in the Central time zone. The law passed in 2005 that put Indiana on DST also specifically encouraged each individual county to assert its own view on the choice of time zone, and bound the state to support that view. As governor, my longstanding position has been that local preference should be respected as much as possible.

He adds a caveat about opposing local preference where that preference disrupts the “greater good of a larger region.” That’s to cover his ass because of his actions in St. Joseph County. He doesn’t point to the provision of the law that relieves the State of its duty to support a local petition when the caveat applies, because no such exception to the law exists.

Aside from that, the notion that the Governor has had a “long standing” position on anything other than the mere fact of Daylight Saving Time itself. From the inception of his campaign, he was for Daylight Saving Time. But, during his campaign, he was also on record as being in favor of state-wide Central Time. Then, as required by state law, he requested state-wide time zone hearings. Eventually, he just punted, allowing the state to drift by default into a primarily eastern daylight time zone. It wasn’t until the State was well and truly in the midst of the time zone debacle that he came up with the “local control for time zones” position.

As for the “greater good of a larger region” caveat, how in the world does he define that? I can’t say I disagree with him, necessarily, on this point — but I think that points out the flaw in the local control model. I think the relevant “larger region” is Indiana in its entirety. And, I think the “greater good” would be to have the entire state of Indiana on one time zone. Though I think Central Time makes a lot of sense with respect to Indiana’s geographic position, I understand that people have different preferences as to how they like to arrange their day with respect to the available daylight. That’s fine, and I don’t know that I can say one is inherently better than another. But, I think that for the Governor, a “greater good” analysis has to mean greater good for the citizens of Indiana. And, I think a single state time zone would do greater good for Indiana than split zones; even if a single zone might act to the detriment of individual localities — Lake County going to Eastern Time springs immediately to mind.

Landlords complain about preference for owner-occupied properties

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There is plenty to be concerned about with Indiana’s current property tax system — but here’s one that comes pretty far down on the list to me: The General Assembly’s tax preference for owner-occupied properties. Lesley Stedman Weidenbener, writing for the Louisville Courier Journal, has an article entitled Indiana landlords to make plea for tax relief.

In addition to the concerns pretty much everybody else has about property taxes, the landlords add a complaint for the preferences given for owner-occupied properties. The General Assembly provides a homestead credit for properties occupied by their owners, resulting in a lower tax obligation for such properties. This, the landlords say, is unfair. In particular, I like the analogy offered by Morton Marcus, director emeritus of the Kelly School of Business:

My concern is that property should all be taxed on the same basis,” Marcus said. “We don’t say when you buy a box of cereal: ‘Do you have false teeth? And if you do, we will charge you a different sales tax.’ “

I’d say it’s more like giving a tax break to people who are going to eat the cereal than those who are going to use the cereal as, say, an art supply. Both are perfectly legitimate uses of the product, but the General Assembly might reasonably provide a preference for the more basic necessity.

I recognize there is a debate to be had as to whether tax policy ought to be a tool for social engineering. For example, you might argue that the General Assembly contributed to the subprime mortgage debacle by encouraging everybody to own a home. That example’s a little tenuous, I suppose, but the debate is legitimate. However, if one accepts the legitimacy of using taxation to advance policy preferences, I think a preference for owning one’s own residence is generally sound. In my own neighborhood, the owner-occupied properties seem to be better maintained than the rentals. I’m generally happier when my neighbors are owners rather than renters because, generally, there is going to be more pride in ownership.

At the end of the day, the landlords’ pleas for “fairness” seem to be nothing more (and nothing less) than a complaint that they have to pay more on their capital investment than folks with like property who choose to live in their investment.

Here we go round again

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Scott at Hoosier Pundit posted a cartoon about Iran taking provocative action with respect to Iraq. The cartoon reminded me of a Daily Show bit I saw a couple of days ago reminding us that we built up Iraq because we were opposed to Iran; we assisted bin Laden because he was fighting against the Soviets in Afghanistan; we are providing military aid to the Saudis (“20% of the 9/11 suicide attackers were not Saudis”) because they are upset at the increase in Iranian/Shiite power resulting from our invasion of Iraq; and, just for good measure, we’re providing Israel with additional military aid because they’re nervous about all that Muslim military power.

There are plenty of other factors contributing to making that region of the world a pit, but I don’t think we’ve been doing ourselves any favors.

More pictures

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I uploaded a bunch of hiking pictures to my Flickr account for those who are interested. There are just three I want to post here:


Tom and I on the summit of La Plata Peak.

Hoosier Pass – 2007.


Hoosier Pass – 1995

Do my homework for me

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As you might expect, I’ve been out of touch for the past 3 weeks and haven’t paid much attention to the goings on in Indiana. Anything I need to know about to get my finger on the pulse of the Hoosier state?