By: Brian Sikma
What happens when you put a group of interested and engaged citizens in a room with a panel of property tax experts? A lively discussion ensues with both sides walking away a little more informed than when the event started. That was the case on Saturday morning when the St. Joseph County GOP headquarters was turned into a sort of local think-tank with a large crowd of interested citizens asking tough questions and offering intriguing insights into one side of the property tax debate while a panel of experts offered up their perspective of the situation.
The diverse panel was made up of Mayor Jeff Rea of Mishawaka, economist Josh Barro of the Tax Foundation in Washington, D.C., state Senator Joe Zakas of Granger, and Juan Manigault representing the South Bend Integrity PAC. Chris Riley, the St. Joseph County GOP Chairman, served as the able moderator who provided thought provoking questions to start off the morning and kept the discussion on track as the panelists and audience interacted with each other.
Senator Zakas pointed out that property taxes went down by an average of 30% across the state after the passage of HB 1001 in 2008, the bill that included the so-called 1,2,3 plan. This plan caps residential property taxes at 1% of assessed value, rental property and agricultural property at 2% of assessed value, and commercial and business property at 3% of assessed value. Debate in the General Assembly this year is expected to include a discussion about placing the tax caps in the state Constitution as a way of protecting taxpayers and landowners against future increases.
All of the panelists agreed that the reforms included in HB 1001 were necessary in light of what Mayor Rea termed “administrative chaos” in the property tax system. However, views differed according to whether or not the existing caps should be put in the Constitution. Sen. Zakas appeared to support the idea, but Juan Manigault and Mayor Rea urged caution because the reforms have not had time to generate sufficient data to really consider enshrining them in the state’s highest law.
Josh Barro did not take a strong position either way. Instead he focused his time on presenting the various pros and cons of the 1,2,3 plan and the placement of those caps in the Constitution. He noted that with the caps now in place, Indiana’s property tax rate is now more in line with what other states are doing, but the diversity of the caps-essentially three tiers of taxes-was considered to be an unfortunate compromise required by political considerations. Barro did say that if it is found that the 1,2,3 plan is sound, then placing it the Constitution would not be unusual in light of what other states have done. However, moving towards that goal too quickly may be regretted if the reforms do not operate as well as intended.
Although it took a little while for the panelists to finally make the point clearly, the bottom line in the property tax debate is not about maximum levies, whether debt is counted towards the allowable levy, the switch from cost-based assessment to market-based assessment, or caps on the tax rate as a percentage of assessed value; instead it is about government spending. If local governments would cut their budget and chose to allocate resources more efficiently, tax rates could be lowered.
When the discussion turned to the size and scope of local government, Mayor Jeff Rea ably made the case for why citizens need to know what they expect from their government before they seek to lobby for substantial changes in the tax system. Although he has done an excellent job of growing the city of Mishawaka while controlling the growth of city government, he has had to manage cases of where the public demanded that a particular service or amenity be provided even though it resulted in substantial costs with only limited corresponding benefit to the community.
After nearly two hours of discussion the panel came to a close with interesting ideas being presented and exchanged on all sides. With events like this the St. Joseph County Republican Party is showing that even though Republicans may be out of power locally, they can certainly develop meaningful policy ideas and shape the direction of public debate. To Chris Riley, Lindsey Mustard, and the staff, officers and volunteers of the St. Joseph County Republican Party: Carry on, because your example is setting the bar for what must take place to renew our party at the local level all across America.