Could See This Coming - Aim Has Been To Raise Taxes

You could see this coming for a couple of years.  Mayor Vaughn is the latest faux mayor of Indianapolis to walk the City's finances and talking points toward yet another tax increase, purportedly to finance public safety - again. 

IBJ's Kathleen McLaughlin has it inked down in today's issue. 

Clearly, they have used the belt-tightening brought on by the recession to focus on public safety because an scared public is more willing to accept a tax increase.  The Mayor's budget failed to allocate funds for a police recruit class this year (a firefighter recruit class eventually was established with federal grant money).  The Council Democrats, with Councillors Mahern and Brown taking the lead, found a way to fund those recruit classes, but those efforts were vetoed by the Mayor.

Preceding the recession was former Mayor Peterson's public safety tax (which ushered Ballard into office) and the State Legislature's takeover of some of our City's largest fiscal responsibilities, including the pre-1970 police pension that Mayor Goldsmith failed to fully fund.  The first years of the recession brought a bounty of cash infusion from the federal government; so much so that our total budget numbers increased.

We have had a year or two of actual declining budgets - with the gap being filled by the City finding legal ways to pilfer tax dollars sitting in the consolidated downtown TIF.  That maneuver, however, crimps the amount of cash in the slush fund that is used to give taxpayer money away to well connected developers.  With the economy improving, property tax and income tax revenues are once again on the rise.  The opportunity to 'fix' a temporary problem with a permanent tax increase has just a short window of time before revenues improve too much to sell 'impoverishment' to the public.  For folks like Vaughn and former Councillor turned Public Library leader, Jackie Nytes (who never passed up an opportunity to raise more revenue for our fair City), time is of the essence.

Our new City Controller, Jason Dudich, presented information about our tax revenues to the Homestead Credit Commission.  Check out page 3 of his PowerPoint.  By 2014, income tax revenue will be back to 2008 levels - without some of the spending needs that were taken over by the State.  And, as McLaughlin's article points out, the State is holding back some of the income tax revenue, as it always does, to provide a more constant, more predictable, stream of funds.

Lets face it - Vaughn and Nytes have to secure public backing for raising taxes AND secure a tax increase quickly.  Curiously, McLaughlin points to the Marion County Income Tax Council, which is controlled by the Council, as a body legally able to raise local income taxes from the current 0.35% to 0.5%.   She also reports that they can increase the COIT tax that flows to various taxing units including the City, the County, and three of our municipal corporations - namely the Library, IndyGo and Health & Hospitals - from 0.27 to 0.35.  This caught me by surprise, as I had incorrectly assumed that any tax increase necessarily was already maxed out and new permission was needed from the Legislature.

In a quick look at the Indiana Code 6-3.5-6 - the MCITC must meet by August 1 in every odd numbered year and may only pass one tax resolution in a year.  We'll have to find out what the status of their meetings in 2013 is and what measures have already been taken.

But, it now appears that this year's budget season will include an income tax hike crafted around the diminishing numbers of public safety personnel - even though recruit classes could have been funded but were vetoed by the Mayor, and even though tax revenues are once again on the rise due to the improving economy.