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My apologies to those of you who aren't from Indiana ... although I suppose taxes are a worldwide issue.


I was shocked recently to discover many people still haven’t heard of the property tax circuit-breaker. (Shocked – circuit-breaker. Get it? That might be the last lame joke of this column.)

It’s a bill passed by the Indiana State Legislature, which is poised to have a profound effect on the state of Indiana. (The law. Not the Legislature.) People involved in local government have discussed it in detail; I’ll try to pass on those details in a way that will make sense, and won’t involve too much math.

But I doubt it.

This feel-good piece of legislation seems like a very good thing, until it’s examined more closely. The idea is that, if your property tax gets too high, the law automatically kicks in and you won’t have to pay as much. This is a great idea, especially if you’re a person who owns a lot of property but has a thin profit margin, such as a farmer. After that, things start breaking down.

First, let’s go into more detail. Settle down, it won’t be too painful:

The law limits a tax bill to 2% of a property’s assessed valuation. If your property tax on a $100,000 home is estimated at $3,000, the law would kick in and your bill would automatically be cut to $2,000. Whether you own a shack in the projects or a mansion on the hill, your property tax is capped at 2%.

Supporters calculate this will result not in a tax decrease, but a flattening of tax bills, because of property tax reassessment. Okay: as part of the bill, in 2006 homeowners will get a one time, 5% tax break, which will be offset by higher homestead credits and cost the state about $100 million.

In 2007, the homestead credit will increase from $35,000 to $45,000, which is supposed to shift the tax burden onto businesses for that year only. The idea of this is to keep homeowners from seeing one big jump in bills caused by the market-based reassessment, something which, you might remember, was forced on the state by the courts, after the legislature procrastinated like a turtle on Valium.

The law also included a portion specifically for Lake County, where apparently the residents are extra special. (Actually, tax rates there are unusually high, even compared to the rest of the state.)

Whew. Thank goodness the state of Indiana employs lots of accountants. That way they don’t have to come up with something simple.

In 2010 the circuit-breaker becomes required for all property, effectively lowering the tax base across the state. By the way, it was a bipartisan legislation, meant as a temporary solution (as usual) and championed by Governor Daniels. Like it or hate it, people on both sides of the aisle are for it, unless they’re against it, depending on the time of day and/or wind direction.

I saw this as a good thing, assuming it’s the same for everyone, and assuming the legislatures came up with a fair way to make up moneys lost to local government. But it isn’t, and they didn’t.

According to several lawmakers, their legislative leaders (there’ll be a pause for the derisive laughter), assured the body that there would be no ill effects from the circuit-breaker legislation. (Okay, more derisive laughter.) Within weeks of its passing, horrified cries emerged from where this will really have an impact: cities, townships, towns, and counties. Local government. Crap rolls downhill, to paraphrase a rather famous saying.

I suppose I don’t have to add that this new law was slipped quietly into a massive bill just before the legislature voted on it. Say it with me: “Gee, we didn’t realize …”

Because the bill’s aftereffects make lenders nervous, it’s now harder to get loans even for governments that don’t raise taxes. That means governments must pay higher interest rates or more insurance on financing, if they can get the financing at all. If they can’t get loans, even to fund infrastructure improvements that are often required by the state, they have to raise taxes. Which the state won’t let them do.

In this agony of financial uncertainty, interest rates are rising on projects new and old because of downgraded bond ratings. In Southwest Allen County, a $5 million project to ease elementary school overcrowding will now cost another $100,000 because of those ripples, and cost that school district over a million and a half bucks over the next four years.

That system’s voters approved a referendum to improve their schools, but what they said won’t matter; the improvements will disappear under the tax cap.

The cost of a project in Muncie will go up $400,000.

Fort Wayne Community Schools estimates it will lose $11.8 million when the law comes fully into effect in 2010.

The Allen County library system stands to lose about a million and a half.

The Allen County Auditor estimates that if the circuit-breaker had been in effect in 2005, the county government alone would have brought in $3.5 million less. You really can’t make that up by using paper clips instead of staples.

Multiply that across Indiana, and it becomes clear that in the long run this will cost taxpayers more, not save them. But who actually gets the tax break?

Well, here’s a fun fact: The statewide property tax average is already below 2%. The law doesn’t help homeowners who are low to middle class and have homes of lesser value, because of exemptions that keep them from reaching the limit (that would be me and you). The owners of high valued homes would be the ones to benefit, because they don’t get the exemptions. (That would be … well, generally that would be wealthy people.)

Huh. Go figure. Until the moment I first wrote that sentence, it didn’t occur to me that this was a tax cut for the rich. Crafty devils.

But can local government entities simply do without the money? If not, is there a better way to get it than property taxes?

Next week: Popping the circuit breaker, or -- alternative forms of energy.


( 20 comments — Leave a comment )
Jul. 14th, 2006 04:54 am (UTC)
That is the problem about taxes. No wants to pay them, yet everyone wants money for all those deserving organizations that are funded through taxes.

Have you ever noticed that taxes hardly ever appear in fiction. Too horrible a thing for make-believe worlds. ;)
Jul. 14th, 2006 05:36 am (UTC)
Well, going to the bathroom rarely appears in fiction either, and for the same reason. :-)

You hit it right on the nose with taxes -- everyone wants something, no one wants to pay for it.
Jul. 14th, 2006 06:24 am (UTC)
that sounds about right.

whoever came up with that rider idea is one crackerjack motherfucker. all sorts of damaging shit gets passed and no one is the wiser.
Jul. 15th, 2006 05:08 am (UTC)
Oh, the guy who invented the rider is a genius -- all sort of harm gets done by it, but if you want the good parts of a bill passed you have to vote for it. In this case it was even worse, because by all accounts the bill was so huge that most legislatures took their leader's word for it on the details. And since we have a part-time legislature, it's almost impossible for our elected officials to check that stuff out personally. It's the perfect system for the Powers That Be.
Jul. 15th, 2006 06:32 am (UTC)
oh yes, that's also bullshit when they don't actually read the legislation they pass. i don't care if it 800000 pages. you're being paid a great sum of money to read it. so you better fucking read it asshole!
Jul. 15th, 2006 08:52 pm (UTC)
Indiana state legislatures get, including perks, a total of about $30,000/yr. (They're technically a part time legislative body.) And you're right -- they chose the job. I read every single document that comes before me as a town council member, and believe me -- it's a lot!
Jul. 16th, 2006 02:39 am (UTC)
not including the tremendous health care package...
Jul. 16th, 2006 08:56 am (UTC)
Now, there's a sore subject with all us normal people!
Jul. 14th, 2006 06:32 am (UTC)
My thoughts on this are basically its a bunch of hooey. Yeah, I said hooey. Anyway it always comes down to a tax break for the wealthy and not really benefitting teh poor or middle class. For most of my life I was in teh poor tax bracket, but never did I have any kind of government funding. We didn't want it. None of the welfare crap. We just struggled to keep our heads afloat on our own. In the last few years we moved into the lower middle class, but now it seems even though we are considered lower middle class and haven't added to our bills we have less money. LOL Makes a lot of sense doesn't it?

Anyway our government did a tax break for property owners a few years ago and all it's managed to do is raise our sales tax in the state and still we haven't got the money to even get rid of huge pot holes in teh highways.

How about we force the government to do away with pork belly spending. You know on insane things like refurbishing a statue in one of the legistlators home state for 3 million that was just refurbished 5 yrs before. Or we could go with not allowing government to vote on their own pay. Really, if regular ppl got to vote on their salary there would be no money left and everyone would be out of jobs. How many companies would be able to support making everyone rich without raising the price on everything to an extremely insane amount?

I have a lot of issues with the way this country is run financially. LOL I know what a budget is and how to pinch a penny. Give me control for a few years and I'll wipe out all the idiot spending and watch us flourish.

By the way HAPPY BIRTHDAY! I'm gonna go post you one on my LJ now. Sorry that I had no clue it was your b-day until about 20min ago. I want to give you a drabble. Will you take a really late one say 6 weeks from now or so? Tell me what you want. Do you want a freindship one between certain ppl or a specific pairing?

Jul. 15th, 2006 05:16 am (UTC)
thanks for the birthday wishes!
Sure, I'll take a drabble any time! Type or character doesn't even matter that much. I just got one from myfeetshowit in which she actually used my own original characters, the watcher Richard and the slayer Kara, which was really cool. (Took a bit of time-consuming research on her part, I assume ...) I lean toward the secondary characters, especially Tara and Dawn, but I'm open to everyone.

It sounds like you and I are on the same page where the government is concerned. Watch the movie "Dave" if you ever want to get a look at how simply government financing could be, if the Powers That Be would only *keep* it simple.
Jul. 14th, 2006 09:12 am (UTC)
and they can pass laws like this because people like me tend to go off into a coma when they talk about it on the news. i think it's a conspiracy!

*looks suspiciously around*
Jul. 15th, 2006 05:32 am (UTC)
I researched this issue in great detail (yes, my life is *that* dull), and had to go buy an extra bottle of ibuprofen and suck down three or four cans of Mountain Dew just to make it through. They make this stuff deliberately dense and boring, of course, to keep the regular people from being able to figure things out.
Jul. 15th, 2006 08:18 pm (UTC)
Ya know...
Without the governments pork barrel spending, myself and around 2000 soldiers wouldnt be doing what we did. Wed all be regular cannon fodder.
While Im massivly against the GOVT on a wide array of issues, I try not biting the hand that fed me.

"What, you think they really paid 50,000 for a hammer? 30,000 for a toilet seat?"
Jul. 15th, 2006 09:13 pm (UTC)
Re: Ya know...
Spending to protect, train and equip the military is *not* pork barrel spening. Not that the suppliers don't sometimes pad their bills, but if a choice has to be made between overspending and buying what's needed to fight, it's better to overspend.

Pork barrel is stuff like that many million dollar bridge to nowhere, or the study the government paid for to determine sugar dissolves faster in tea if stirred with a back and forth motion, rather than a circular one. "Little" stuff like that adds up fast, and weakens our nation by increasing a bloated government that's so big it can't police its own spending. Outlawing bill riders and allowing a line-item veto on everything would be a good start toward cutting it down to the intended size.

After all, while it's true the government feeds the hand of you the nation's protector and me the emergency services worker, it's too easy to start thinking that means we owe them something besides an honest day's work. The people aren't here for the government; the government's here for the people. If we start thinking we don't have the right to protest when they do something damn foolish, then we're no better off than if we'd remained an unrepresented colony.

(I've always thought funding Area 51 was the perfect explanation for the $50,000 hammer.)
Jul. 15th, 2006 09:35 pm (UTC)
Re: Ya know...
Fair enough. However alot of the Mil-spec things actually come from pork barrel spending. For example. The budget committee for the military doesnt fund Civil Defence Corps work. Its actually funded via pork barrel spending. More specifically the popcorn bill. If you read throught the 20 K pages, you will find around 2B in funds diverted towards securing and protecting variou farms in 'danger' from hostile non indigenous life. (Cute politican way of saying mexican.)

Thats how they get their cash. But shh, dont go saying that one loudly. Funding for various military projects actually gets stuck into these bizzare bills. Sometimes its stupid shit like funding so research into new ways of blowing things up goodard, sometimes its actually for propiganda machines like what runs in Afghanistan, and Iraq. While I agree with the idea that we dont owe the govt anything, I can happily say I wouldnt mind destroying whats there. Ive seen the seedy underbelly. Frankly it goes against everything I was trained to believe.

Frankly Im of the firm belief that we live in a dictatorship. The news lies to the masses, the masses buy into it, and we have a talking head who will drive us into a third world war, and nobody seems to give a bloody shit about it.
And I still call myself a patriot. Oah?

Personally, Id hire a small division of accountants to go over every damn line item in every budget, just to see where every iota of a cent goes. Then put REALISTIC pricetags on things.

As a footnote, alot of the extra spending is due to the contractors hired to do the projects that the govt wants done. For example.
Theres a nifty spanking Mil base for the USMC along the texas border. The contractors bid it in at 20Mil. Ok, great. By the end, the price jumped to 60 mil. Tripled! Why? Simple. Every time the contractors had to change anything, from placement of power cables, data cables etc etc, they dumped a set ammount on top of things. Mind you, this is tax payer money.
Now the base is finished, Thank gods, but it stands empty.
Because the units that were supposed to be housed there, were sent to Iraq. Funny how that works.
Jul. 16th, 2006 09:09 am (UTC)
Re: Ya know...
Yeah, I'm aware that a lot of good stuff gets stuck on the big bills, just like a lot of bad stuff does. And if you took each thing by itself, some good stuff would get rejected, which is yet another example of the difference between what should be and what is.

It would be great to see that Marine base occupied again, soon. :-)
Jul. 16th, 2006 02:46 pm (UTC)
Spoons and guns!
highly unlikely.
That particular base has a very special reason for being. *Cough cough*
What is sad is, I was so set on being one of those that occupied it, till things went south in my life. lol. The site was perfect.

I still think hiring an army of accountants is a good idea.
Then shooting each and every politican who makes some dumbass addition to a good bill that benefits themselves.

Greedy fuckers should die quickly.
Jul. 16th, 2006 07:23 pm (UTC)
dumbass politicians
I'm not a cruel person; I'm up for them dying quickly. :-)
Jul. 16th, 2006 08:00 pm (UTC)
A good politician is a dead one
Note to self, invest in some M4a2s, and a good case of beer, and ammo, we should be set. Rock on kids. Whos in?
Jul. 16th, 2006 08:53 pm (UTC)
Re: A good politician is a dead one
Technically I'm a politician myself, since I did get elected to the town council, so let's make sure we stay at state level or above!

I don't drink, so I'll bring the ammo.
( 20 comments — Leave a comment )

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