State Legislature Meddling in Indy Yet Again

Last night began the City-County Council committee work to review, amend, and adopt the 2016 budget.

There was one particular item that got a bit of discussion that was quite interesting.

You will recall that the last few budget sessions have been punctuated with an ongoing fight over whether or not to eliminate the local homestead credit on property tax bills of homeowners.  The Democrat controlled Council has refused to eliminate it all at once and even refused to phase it out.

Well, it seems the Ballard Administration has once again turned to the State Legislature to change the rules so that Ballard can get his way.

Currently, income tax revenue (COIT) is used to fund the local homestead credit.  According to Council Counsel Fred Biesecker, with HEA 1485, COIT can no longer be used in this manner after January 1, 2017.  If the Council wants to continue the local homestead credit (LHC) in 2017, it will be forced to RAISE a NEW TAX.

The LHC costs $10 M, but only $2 M actually makes any difference in homeowners' property taxes, since so many of us are being protected by the tax caps.  But, the remaining $8 M doesn't just evaporate, it lessens the tax cap/circuit breaker impact on the many school districts in Marion County, IndyGo, Health & Hospitals, and the Library system.

By upending the current funding source, the Republican controlled State Legislature is reaching into what will likely be a Democrat controlled Mayor's office and forcing it to RAISE TAXES to maintain the status quo.  Of course, if a Republican were to somehow win the election, the Legislature left itself a year to 'correct' course so that no such dilemma would have to be faced by a Republican.

The upshot is not just having to raise a new tax - it also includes having to wade through the weeds and convince the public that it is somehow wise to raise taxes by $10 M so that members of the public can benefit by $2 M.

This is clever and cursed at the same time.

Whenever a local problem is brought to the State Legislature by a Republican, the solution is to do whatever makes the Republican's political life easier.

Whenever a local problem is brought to the State Legislature by a Democrat, the solution is to give them the authority to raise taxes.

And now we see that when a Republican is likely to be succeeded by a Democrat, the solution is to delay the authority to raise taxes until the Democrat is seated and crafting his first budget.