Apparently Gov. Daniels tried to sell his local government consolidation proposal to the Association of Indiana Counties. Not the friendliest crowd. First, it’s their oxen being gored by the proposals. But, perhaps more importantly, they have to be pissed at the Governor for continuously insisting that out of control local government spending is the cause of the recent property tax troubles.
Lest the propaganda get ahead of the truth, it bears repeating — the property tax situation is not the fault of local government. Only about 6% of the average 24% increase in property taxes is attributable to local government.
We got into this mess for a few reasons:
1. The Supreme Court threw out the old assessment rules which went easy on residential properties (particularly older residential properties) and shifted the burden to businesses. The Supreme Court’s order had the effect of shifting some of the burden from businesses to residential properties.
2. Elimination of the inventory tax. Again, a tax shift from business to residential property owners.
3. Trending. New trending rules were imposed that made residential properties play catch up in their assessment values. Again, an effective shift from businesses (that were already trending) to residential properties.
4. Shift from State to Local Government. The State had been effectively reducing property taxes on residential properties through tax credits. In 2005, it decided to balance the State budget by reducing those tax credits; balancing its budget on the backs of local government. Higher property taxes.
5. Increase in levies by local taxing units. This is the 6% part of the 24% average increase.