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Editoral: Bauer playing a dangerous game
Thursday, April 02, 2009
A year ago, just about every politician in Indiana felt pressure to join the property tax reform movement. The economy was still strong enough to mask the signs of an impending collapse, and homeowners were demanding relief. Gov. Mitch Daniels capitalized on public sentiment and pushed the state legislature for change, and it complied.
Indiana moved its taxation system away from one of the most stable revenue streams available, and its leaders banked on income and sales taxes being the acceptable alternative. But the politicians overlooked something in their haste to be re-elected. In a recession, income and sales decline - drastically, at times.
Local officials warned everyone of the consequences, but no one listened. The voters who owned homes definitely didn't want to hear that the tax break they were getting would cause more problems than it solved. They didn't want to look at the numbers that indicated that they might actually pay more taxes as a result of the reform. And no one wanted to heed local government's augur of tightened budgets, service declines, and job losses.
So, cities and counties across the state have slashed their budgets. Hiring freezes and lay-offs are the order of the day. Services are at risk. Some cities aren't opening their public pools this summer. Some counties have cut manpower in law enforcement. In Kokomo, there have been lay-offs at the fire department, and the future of the Kokomo Early Learning Center is in question.
Property tax reform isn't a matter of cutting fat or tightening belts at the local level. It's a matter of eliminating people and services once thought necessary. And when the reform is exacerbated by a recession, the cuts go deeper.
Now Pat Bauer, majority leader in the Indiana House of Representatives, is engaging in a game of politician chicken with statehouse Republicans. The conservatives in Indianapolis still are intent on pushing the reforms into a constitutional amendment. Bauer isn't enthusiastic about taking that step. Whatever motive he has for wanting to delay this next step is irrelevant. Either by intent or serendipity, he's in the right on the issue. Setting the reforms in stone limits the legislature's ability to further adapt or reform taxation as the economic character of the state continues to change.
But Bauer isn't making this argument as he spars with the Republicans. Instead, he is advocating the acceleration of the property tax caps. This year, that cap is set at 1.5 percent of a residential property's assessed value. He wants to move it to 1 percent. The problem is that local governments passed budgets based on the current cap. The state approved those budgets. Money is being spent at that rate. A change now would cause significant disruptions for cities and counties.
Somebody needs to blink. Bauer and the Republicans are engaging in a taxation Cold War. And the end result could be as damaging as the U. S.-Soviet arms race of a generation ago. Without a reliable alternative revenue stream, the dangerous game of property tax reform threatens to cripple local government. The worst part is that no one will call Bauer's bluff, if it is a bluff at all. His fellow Democrats, such as Rep. Ron Herrell, are the choir accompanying Bauer's aria. And the Republicans are an appreciative audience. The rest of us are just waiting for the fat lady to sing.
Feel the pain? Share the pain
General Motors' CEO Rick Wagoner stepped down over the weekend at the behest of the Obama administration, and the President has given the company 60 days to completely overhaul its operations. Obama went on national television to say that everyone associated with or employed by GM will have to feel the pain, from management and labor to creditors, suppliers and dealers.
If Obama wants GM and its employees to feel the pain, shouldn't he and all of federal government be willing to share in that pain? Jobs and salaries have been slashed at GM and will continue to decline, yet not one member of Congress has taken a pay cut. Every senator and representative enjoys the prospect of a taxpayer-funded retirement plan and the best health insurance available in the U.S. today. Not one federal employee is being asked to share the pain. And what sacrifice is Obama making?
If GM, and by extension the taxpayers, are expected to feel the pain, then federal government should as well. Congress should abandon its current benefits package and struggle like the rest of us with making a Social Security check and a withered 401(k) cover our retirement expenses. They should forego their retirement health insurance and work with Medicare like the rest of us.
Why not institute a 6 percent pay cut for all federal employees? There are plenty of private sector workers who have sacrificed as much, if not more. How about hiring freezes or even lay-offs? These are our realities. The difference is a cut at the federal level saves taxpayer dollars. A cut in the private sector eliminates tax dollars.
Before President Obama or any politician thinks to utter the words "feel the pain," they'd better step into line for their share.
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