A Citizen's Guide to Indiana

Masson's Blog

Whoopsie – Perry County & USDOT communication break down

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Rumor has it that Perry County has hit a procedural snag in its quest to remain on the same time as its neighbors in the Southwestern part of the state. The snag being that the US Department of Transportation does not seem to think it has received a request from Perry County to change time zones.

The saga goes something like this. Gov. Daniels campaigns on one statewide time zone that observes Daylight Saving Time, he stated that his inclination was for the Central Time Zone. Realizing that they can’t get DST passed if they are up front about the time zone issue, DST proponents just ignore it and leave the mess to be settled on a patchwork, county-by-county basis. A lot of counties go through the process, requesting Central Time:

Only a select few have their request granted, leaving a map that looks like this:

However, a number of those granted their request to be moved to Central Time, reconsider:

(Counties petitioning to change back to Eastern Time in yellow.) Pulaski County (in the northwest) has since had its request granted and is back on Eastern Time, effective March 11, 2007.

The Southwestern Counties (Knox, Daviess, Martin, Pike, and Dubois Counties) are now the subject of a proposed rule to return them to Eastern Time. Public comment is open at USDOT docket OST-2007-28746 until August 15, 2007.

Back to Perry County. The Perry County Commissioners did not sign on to the Southwestern County petition. Instead, they dithered for awhile and then recently adopted a resolution to the effect that, if the Southwestern Counties went back to Eastern Time, they wanted to do so as well. Rumor has it that the Perry County News is reporting (in its paper version and not yet on its online version) that the USDOT does not have any documentation in front of them that it considers to be a petition on behalf of Perry County. Rather, they received some paperwork from Perry County that they considered to be evidence in support of change by the Southwestern Counties. Apparently the Perry County attorney never touched base with the folks at the USDOT to tell them what Perry County’s intent was.

The saga continues.

More on Marion County Reassessment

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Mary Beth Schneider, writing for the Indianapolis Star, has an article on the Marion County Reassessment that highlights some more issues with the Governor’s order, apparently by fiat, that properties in Marion County be reassessed.

1. Who is going to pay for the reassessment? It’s the governor’s order, apparently. (He’ll get DLGF to implement an order in 10 days or more — the required public hearing on the issue being a mere formality.) The Marion County reassessment fund is depleted. So, we have State ordered local government spending — kind of how we got in this mess in the first place.

2. Mortgage companies may or may not honor the Governor’s unilateral order. The Star article quotes one homeowner who was told, without a new tax bill, she would have to send her mortgage company an escrow amount based on the most recent 2007 property tax bill.

3. Some taxpayers had bills that decreased. Are they now obligated to make higher payments?

4. The inventory tax that was eliminated this year was on the tax bills last year. Are businesses obligated to pay the bigger bill that included the inventory tax?

5. Will local governments have to default on their obligations? Because of the freeze, “cities, counties, townships, schools, libraries and other Marion County government units will be getting $132 million less than they were expecting.” Gov. Daniels did not freeze the obligations of local government, he merely froze the means with which local government can meet its obligations.

6. With the same assessment rules in place, will the reassessment result in different values? This one is probably easier to answer — if business properties are significantly undervalued, as the reports seem to indicate, those assessment values should rise (while residential assessments probably won’t change that much). The net result will be a higher total assessed value for the county, resulting in a lower tax rate. Businesses will pay more while residential property owners will probably pay less. I wonder what the Chamber of Commerce thinks of this move.

Name the Presidents

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(H/t In The Agora) Here is a little timed name the Presidents quiz. I got them all in 3 minutes, 23 seconds. (I’d like to thank my Richmond High School AP U.S. History Teacher, Ed Johns, whose teaching style fairly burned many details of American history into my brain. He’d probably think my time was a bit slow given that I would be competing against all the rich kids at the prep schools out East when I took the AP test — nice “us” versus “them” motivational technique.) I also have a bit of a leg up in that my grandparents happened to live across the street from the old house of Rutherford B. Hayes, the most forgotten President.

Marion County Reassessment

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The Governor has announced his intent to have the property values in Marion County reassessed. I haven’t found where the Governor himself has this power, but do see where the Department of Local Government Finance has such authority (thanks to a commenter over at Advance Indiana.) According to a DLGF press release:

Daniels decided to order the Marion County reassessment after receiving a recommendation from Department of Local Government Finance (DLGF) Commissioner Cheryl Musgrave. The DLGF and the state’s government efficiency group have been poring through parcel data for the county in recent days. Musgrave outlined findings that prompted her recommendation in a memo to the governor. For example, assessed value for nearly three-fourths (16,000 of 22,100) of commercial and industrial parcels in Marion County did not change at all over a six-year period.

The state will take charge of the commercial and industrial reassessment in Marion County using professional assessment assistance and instruct county officials to do the residential work. Marion County property taxpayers will receive bills with a new 2007 amount promptly after the reassessment is completed and tax rates certified, a process that is expected to take six to eight months.

To begin the formal process of initiating a Marion County reassessment, the DLGF has issued a resolution that calls for a public hearing in 10 days. Following the public hearing, DLGF will issue an order to reassess.

According to another DLGF press release, Cheryl Musgrave took office as Commissioner on July 16 and has held office for all of 2 days. And, it’s a little disturbing to me that the hearing is to be a mere formality. The process for DLGF to take charge of a reassessment is set forth in
IC 6-1.1-4-9:

Reassessment resolution of department of local government finance; hearing; reassessment order
Sec. 9. In order to maintain a just and equitable valuation of real property, the department of local government finance may adopt a resolution declaring its belief that it is necessary to reassess all or a portion of the real property located within this state. If the department of local government finance adopts a reassessment resolution and if either a township or a larger area is involved, the department shall hold a hearing concerning the necessity for the reassessment at the courthouse of the county in which the property is located. The department of local government finance shall give notice of the time and place of the hearing in the manner provided in section 10 of this chapter. After the hearing, or if the area involved is less than a township, after the adoption of the resolution of the department of local government finance, the department may order any reassessment it deems necessary. The order shall specify the time within which the reassessment must be completed and the date the reassessment will become effective.

Notice that the Department is supposed to conduct a hearing first and make its order second. The Governor has apparently made the decision for the DLGF. This is backward from the way IC 4-22-5-1 says things are supposed to run:

Sec. 1. Where under the provisions of any statute, the department of local government finance . . . is required to conduct a hearing, the commissioner [may appoint hearing officers, if done in writing]. In the discharge of their duties, the hearing officers shall have all the powers to investigate and to require evidence granted to the department[.] The department . . .may conduct any number of hearings contemporaneously through different hearing officers. At the conclusion of a hearing, the hearing officer shall make a written report thereof. After receipt of the report the department . . . may take further evidence or hold further hearings. The decisions of the department . . . shall be based upon the report, additional evidence, and records as the department . . . deems pertinent.

Odd that the Governor didn’t agonize over whether he had the authority to order reassessment without a prior hearing of the DLGF the way he agonized over whether he had the authority to take action on fuel taxes.

The reassessment of Marion County may not be a bad thing, but the process is important. This is a democratic government we’re running, warts and all. Laws mean things — even if the Governor chooses to ignore them, such as when he suspended the bar closing time because Daylight Saving Time made it inconvenient or when he intervened in opposition to St. Joseph County’s request to move to Central Time despite the law requiring him to support such a request.

Crazy, if true

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Bil Browning at bilerico has caught wind of an amazing rumor.

From what I’m hearing, the Republicans are still angry that SJR-7, the constitutional amendment to ban same-sex marriage and civil unions, failed on a tie vote in the House earlier this year. Before they’re willing to address property tax reform, they want the amendment back on the table and passed in the same special session. No amendment – no tax relief.

I tend to think a special session is a bad idea for other reasons. Rushed, pressured, and panicked is no way to approach comprehensive property tax reform. But if these wingnuts are refusing to address a real problem (property taxes) if they don’t get a chance to address a fake problem (gay marriage), that’s pretty incredible. I guess their single-mindedness is impressive even if their critical thinking skills are not. If the rumor is true, anyway.

More property taxes

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The Governor has ordered reassessment of Marion County’s real property. In the meantime, Gov. Daniels has enlisted former Governor Joe Kernan and Supreme Court Chief Justice Randall Shepard to head up a commission to “find long-term solutions to the property tax crisis, including the possible elimination of township-county assessors and other government streamlining ideas.” Gov. Daniels hopes to get the commission’s report by December. The Governor has also apparently instructed Marion County property tax payers to pay their 2006 level of tax as opposed to what they apparently owe in 2007.

A couple of observations: First, as Advance Indiana points out, this would seem to create a potential conflict for Justice Shepard if some of his recommended legal changes get adopted, then challenged, then reviewed by the Indiana Supreme Court. Second, does anyone know where the Governor gets the authority to order reassessment for Marion County and to freeze Marion County tax payers’ bills at the 2006 level for the time being? I assume he wouldn’t do anything this monumental without having solid authority, but it seemed like a relevant question. Also, is Marion County in risk of defaulting on anything important as its tax revenues are being dried up – first by the elimination of the inventory tax, second by the reduction of payments by the State in the form of the property tax replacement credit and homestead credit, and third by the Governor’s tax freeze on Marion County property tax levels?

In a post entitled, Sir, The Taxpayers Are Revolting, Doghouse Riley gives us a brief history of our current property tax situation:

There’s a fairly straightforward explanation for what’s happened to Indiana’s property taxes: the state Supreme Court found the assessment system unconstitutional; successive state legislatures found it more prudent, from a re-election standpoint, to punt the issue; a single-party gained control, including an incompetent, self-aggrandizing Governor who used the budget process to make himself look good; and most directly, the ill-considered abolition of the business inventory tax with no specification as to its replacement. Yet there’s a continual drumbeat of “don’t point fingers, just solve the problem,” notably from the Indianapolis Star, as well as other Daniels die-hards who realize their man has fucked up Big Time. Daniels, who has been lauded–by no one so much as himself–for his “fearless” leadership, simply refused to have anything to do with the issue, hoping, perhaps, that astronomical local tax increases would gnaw a chunk from the man once considered his most likely ’08 challenger, Indianapolis mayor Bart Peterson. Now he sits on a state budget surplus, not to mention what he’s raked in selling off taxpayer assets, and does his best Hamlet–assuming Hamlet was played by a 58-year-old with a comb-over (which he sometimes was) and assuming he tried to get his picture in the paper every day (which he didn’t).

[tags]property taxes[/tags]

Lugar, et al dubbed “WINOs”: Waverers In Name Only

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Looks like Greg Sargent has himself a meme going, having dubbed Senator Lugar and like minded Senators WINOs which is short for Waverers in Name Only. This, of course, plays on the acronym RINO, an epithet I first saw over at Free Republic for those Republicans who were not pure of heart: Republicans in Name Only. In the case at hand, the WINO caucus includes Senators Susan Collins, Jack Warner, John Sununu, Norm Coleman, Dick Lugar, Pete Domenici and George Voinovich. These are Republicans who more or less acknowledge that the Bush administration’s plan for Iraq has failed but who will not cast a vote or take concrete action to alter the Bush administration’s course.

I’m not going to claim that the Democratic plan is the perfect one. But, in politics, the perfect is the enemy of the good. In any event, to me the main solution is for the Congress to do what it can to wrest control of this debacle from the President. We know that Bush is an incompetent, yet stubborn, failure who will not change course through any amount of persuasion. He has to be compelled. Normally, I’d say that waging war by committee is a recipe for disaster, but it seems worth a shot given how bad President Bush is at the job. Maybe Congress can do better.

What’s Wrong With This Picture?

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Let me make sure I understand this. For many, many years, the State recognized that it imposed numerous burdens on local governments without giving those governments sufficient taxing flexibility. This recognition came in the form of the property tax relief credit and the homestead credit — these State subsidies reduced property taxes. Then, in 2005 and 2007, these credits were reduced by the General Assembly, effectively balancing the State budget on the backs of the counties. Reduction of these credits is a significant part of the huge property tax increases. So now we find out the State is projecting a billion dollar surplus.

This is not a case of those dumb counties outspending their means only to have their hand out when the fiscally responsible State has a surplus. Nope, these jacked up property taxes are directly related to the State surplus. If the State had not reduced the property tax replacement and homestead credit, the surplus would be less and so would the necessary property tax increases.

I could run a surplus too if I had the power to stop paying for the the things I demand.

At least that’s the way I see it. I’m not a tax expert. I welcome evidence that my analysis is flawed.

USDOT issues NPRM for Southwestern Indiana

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The USDOT has issued a Notice of Proposed Rulemaking for Southwestern Indiana today. It is USDOT docket OST-2007-28746. (The PDF of the document is here.)

The notice proposes to relocate the time zone boundary in Indiana to move Knox, Daviess, Martin, Pike, and Dubois Counties from the Central Time Zone into the Eastern Time Zone. Comments are open for the next 30 days — July 16, 2007 to August 15, 2007 or thereabouts.

DOT requests comment on whether this change would serve the convenience of commerce, the statutory standard for a time zone change and whether the time zone boundary should be changed for other contiguous counties in southwestern Indiana. Persons supporting or opposing the change should not assume that the change will be made merely because DOT is making the proposal. The final rule will be based on all of the information received during the entire rulemaking proceeding and whether the statutory standard has been met.

Those who wish to comment should go to the main docket page at:
http://dms.dot.gov/search/document.cfm?documentid=476552&docketid=28746. Next, go to the bottom of the page where there is a link for “Comment/Submissions”. Unless you wish to register, simply click “continue”. For docket ID type “OST-2007-28746”. The rest of the “document information” is optional, but the “Operating Administration” is “OST”. The docket type is “regulatory.” The docket existence is “does exist”. The docket title is “Standard Time Zone Boundary in Southwest Indiana”. And, the remainder is your information. Next, click “continue” and it will take you to a page for submitting your comment.

I haven’t read more than a couple of pages of the NPRM, but I did note the USDOT’s explanation of the Southwestern Counties’ explanation of their dramatic switch in positions:

The Joint Petition requests a change that is contrary to the Petitioning Counties’ positions in their original individual petitions. The Joint Petition claims the original petitions “were incomplete and conclusory, and the information they contained was limited and largely based on opinion and not backed by substantial and verifiable evidence.” The Joint Petition states that, since the January 2006 ruling, there has been “a groundswell of support for returning to the Eastern Time Zone, which has been a product of residents and businesses having been inconvenienced in ways that they could not have fully anticipated until the switch occurred.” Accordingly, the Joint Petition claims “to contain more extensive and thorough research on this issue.”

The NPRM notes 300 or so comments submitted to the (old) docket on the subject of the Southwestern Counties but that they were not considered in making a determination on whether the notice of proposed rule making would issue — rather the USDOT apparently will consider them and any other comments submitted in the next 30 days in determining whether to go ahead and adopt the proposed rule.

I’ll leave it to you guys to dissect the NPRM here or, probably even better, on the USDOT docket.

Property Tax Protests

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Reading the Indianapolis Star today and yesterday, I got the impression of mass tax protests, sweeping the State. The Star told me that special sessions were routine. Some are using the opportunity to promote the idea of replacing property taxes with sales taxes. I get the idea that problems are substantially worse in Marion County than elsewhere and that some of the folks pushing hard on the sales tax are not just responding to this property tax crisis, but have been pushing the sales tax over other sorts of taxes for quite some time.

I’m just a small town lawyer, so what the heck do I know? But, I get a little edgy at the idea of panicked Marion County lawmakers joining forces with opportunistic sales tax promoters jumping into an impromptu special session to slap together wide-ranging property tax legislation. Makes me feel like checking my wallet every so often to make sure it’s still there.

Step one: Analyze the problem state wide to see how bad the problem is in, for example, counties that took advantage of the opportunity to adopt a county option income tax to offset the inventory taxes that were eliminated.

Step two: Take a breath, think it through.

Step three: Make changes in a regular session. This ensures the process is less arbitrary and reduces the pressure to do something just for the sake of doing something. Probably lawmakers should do something, but if they get into a special session and find that all of their alternatives are worse than the current situation, I’d hate to see them go ahead with one of those alternatives simply because they need to do anything.

Many will say “local government needs to spend less.” That’s a good idea. But, ask those who propose this as a solution to the current problem to identify which government services ought to be reduced or eliminated. Some will say that their property taxes impose too great a burden. And this may well be true. But ask them to identify those whose taxes should increase so that theirs might be reduced. Because these are your two options: 1) Cut or reduce specified government services; we need to know which ones. 2) Reduce the tax burden on one class of citizen and impose an additional tax burden on another class of citizen; we need to know who should gain and who should suffer.

[tags]property taxes[/tags]