Howey updates solutions to property tax woes

This week, Brian Howey updates potential solutions to the property tax fiasco...

On the timing and the sense of Daniels' general plan...

INDIANAPOLIS - Two property tax proposals - by the Indiana Farm Bureau and Indiana Association of Realtors - were floated late last month. But the real drama will come later this month. That's when Gov. Mitch Daniels will weigh in, selecting one of several plans now before him. Several observers I've has talked with believe that the governor and a rather complex plan Sen. Luke Kenley is currently floating will likely meld together. Look for circuit-breakers, a shift to sales and/or income taxes, and moving assessing duties from townships to counties as almost certain hallmarks of any such plan. One source suggested that an income tax increase is giving the governor heartburn. He is said to desire a simplified system...

Lt. Gov. Becky Skillman told the Columbus Republic, "I expect the 2008 session to be consumed by the property tax debate. The governor will have a proposal on the table. It should be announced within the next 30 days or so. He talks regularly with the legislative leaders to try to reach some consensus on a long-term plan."...

The October unveiling is critical to give legislators time to react with their constituents to any plan prior to November's legislative Organization Day...

On the connection to local government and government spending in general...

At Valparaiso University, Gov. Daniels told students there he is thinking about seeking spending caps in the Indiana Constitution. A long-term approach would include the local government reorganization that is being researched by the Kernan-Shepard Commission. Gov. Daniels has said repeatedly that property tax and government reform are inextricably linked...

According to estimates by the Legislative Services Agency, net property taxes in Indiana grew between 2006 and 2007 by about $800 million - an increase of more than 14 percent. This is nearly six times the current inflation rate of 2.36 percent. In contrast, the previous two years saw a combined increase of $470 million...

Howey's conclusion...

Any legislator who thinks maintaining the status quo or applying another bandage will run the risk of ... unemployment. Having said that, any new system is likely to have a little castor oil for everyone. My advice: pay attention, keep an open mind, take in as much information as you can, resist making this a Republican vs. Democrat issue, and don't leap to conclusions.

I'm not usually optimistic about the ability of the general public to overcome bad policy through their elected governments. But this event has a key catalyst for significant change: an existing policy that substantially irritates a lot of people, especially when it's been going on for a long time. But there is reason to think that we'll end up with something less: the complexity of the topic, the continuing activity of narrow special interests (e.g., farmers), and the existence of broad special interests (renters vs. homeowners).