Team Hammond member Jim Sheehan went to the Indiana Department of Education to find the answers.
In a report dated December 31, 2007, the School City of Hammond's outstanding principal debt is $250,687,940.60. The school city's outstanding interest debt is $112,605,685.62. The grand total for both principal and interest debt is $363,293,626.22! These are the figures the School City of Hammond submitted to the Indiana Department of Education; they are not exaggerated or embellished.
And this does not include the $75 million for the new high school, the $30 million to renovate Gavit, or the $70 million bond interest (which they don't like to talk about).
Add the $175 million for the new high school and Gavit remodel, and the school city is looking at debt of $538,293,626.22. That is more than a half billion dollars of debt the Hammond taxpayers will have to pay for. And pay for a very long time!
How could School Superintendent Walter Watkins and the School Board of Trustees sink the school city in even more debt?
If you are against the proposed new high school, sign the remonstrance petitition and help defeat this outlandish project. There are 3 criteria to signing the petition: (1) you must be a Hammond homeowner, or (2) you must be a registered voter in Hammond, or (3) you may live elsewhere but own and pay taxes on property in Hammond. If you meet any of these criteria, you may sign the remonstrance.
Call Mary Ellen Slazyk at 933-7170 if you would like to sign the petition. The legal notice for the high school was published in the Times on Friday, May 30, 2008. We have 30 days from that date to get the required number of signatures for the remonstrance turned in. Please get your signature in as soon as possible.
And after June 30, 2008, any new high school building projects over $20 million will have to be voted on by a referendum. That's why the push for the new high school is in before this new provision of House Bill 1001 takes effect.
Friday, May 30, 2008
Team Hammond member Jim Sheehan went to the Indiana Department of Education to find the answers.
Mayor McDermott talks a good game about he's helping the taxpayers of Hammond by cutting the city budget and reducing the tax levy. If that were really true, the proposed 2007 tax rate for the civil city would not have increased by 39% over the 2006 tax rate. If he was really committed to reducing spending, the tax rate would be less not more.
If Mayor McDermott needs help with cutting the fat from Hammond's budget, here are some suggestions to help him out:
1) Eliminate the mayor's photographer at an annual salary of $50,000/year. Everyone has already seen enough pictures of the mayor to last a lifetime.
2) Eliminate the United Neighborhoods Inc. Department. This is a redundant department. The city already has a department called Neighborhoods Incorporated which performs the same functions. The mayor eliminated the Health Department because it was a redundant service so too, should this department be eliminated.
3) Eliminate the Mayor's television show. It is paid for with taxpayer money.
4) Eliminate the Legal Aid Clinic. Another redundant service that needs to be eliminated.
5) The city has 90 take-home cars. Eliminate all non-essential vehicles.
These suggestions are just for starters. We have many more ideas on how to cut the fat from the city's budget and help the taxpayers.
And by the way, did the Mayor really think the citizens of Hammond were so gullible as to believe that by shifting the Sanitation and Recycling Departments to the Sanitary District, he was actually saving us money by taking those two departments out of the city budget? Most people have seen their water bills increase by $120 a year. Will our property taxes go down by that much or more?
As published in the Times on May 3rd and the Post-Tribune on May 10th, the following is the proposed 2007 tax rate for Hammond. The tax rate is broken down by the different taxing units. The 2007 rate is also compared with the 2006 rate along with the percentage increase.
2006 Rate .0999
2007 Rate 1.0046
2006 Rate .0676
2007 Rate .2425
2006 Rate 1.9940
2007 Rate 2.7711
2006 Rate 2.1874
2007 Rate 3.5091
2006 Rate .2142
2007 Rate .2440
2006 Rate .2050
2007 Rate .3112
Taxing units always ask for more because once the tax rate is set for the year, they cannot come back and ask for more money. What should set up red flags for taxpayers, however, is these proposed rates for 2007 are all increases. Some of the increases, especially for the township and the school corporation, are pretty substantial. WHERE ARE THE SPENDING CUTS?
These rates for 2007 are only proposed. We hope the DLGF will be looking out for the taxpayers, and the final rates for 2007 will be substantially less. We would like to see the 2007 rates lower than the 2006 rates. Yeah, right! Wishful thinking!
Wednesday, May 28, 2008
Last week Governor Daniels ordered $9.8 million in property tax rebates be paid to residents of Lake County who had been denied the money because of the county's existing 2% circuit breaker. Because they had already received a property tax cut, the money was scheduled to be sent to the cities of Whiting, East Chicago, Hammond, and Gary.
The order clarified differing interpretations of the rebate law from 2007. Daniels opted to send the money to homeowners instead of local government. Good call considering the cities that would have benefited. Griping the loudest was Jim Bennett, the financial adviser for the City of East Chicago. He had this to say:
"Well, (Daniels is) running (for re-election), isn't he?" said Jim Bennett, the financial consultant for East Chicago, who said the second round of rebate checks will cost the cash-strapped city $1.3 million it can ill-afford to lose.
"Our tax collections were horrible, and this just further puts us in the hole," Bennett said.
Nice, the old "he's running for reelection" argument. East Chicago invented that tactic. Don't forget, this is a city that used to trade new sidewalks and driveways for yard signs before everyone went to prison.
True, they're going to get absolutely whacked by property tax relief since their rate is more than three times the state average. They have a budget of almost $70 million for a population of just over 30,000. With that kind of annual spending East Chicago should be a gem, but it's not. It's a city full of working class Joe's who have had the privilege of working tough jobs their entire lives to help pay their political leaders the highest tax rates in the state.
Starving that city of the money that feeds the political machine should be praised. In fact, they should give all of their money to their citizens, it would be a nice payback for the half-century they spent wasting it on political patronage.
From Frugal Hoosiers
May 28, 2008
Posted by Team Hammond at Wednesday, May 28, 2008
Blunt Proof of the Feasibility to Permanently Abolish Property Tax
Melyssa Donaghy 317-938-8913
Max Katz 765-409-6669
BLUNT PROOF OF THE FEASIBILITY TO PERMANENTLY ABOLISH PROPERTY TAX.
Hoosiers For Fair Taxation, Senator Delph, Representative Noe, Representative Elrod and many other legislators along with Stop Indiana, attorney John Price, Eric Miller's Advance America, and the Statewide Taxpayer Alliance know that property tax abolishment, without substantial increases in sales tax and income tax, is realistic and possible. The economist Dr. Bill Styring's 2/2/2 Plan demonstrates that the state of Indiana can completely replace property tax without changing the state's current spending habits.
Dr. Styring's plan does not account for positive changes in Indiana's economy that will undoubtedly follow the elimination of property tax such as heavy real estate investment and increased consumer spending due to increased statewide disposable income. The real estate investment in Indiana alone would cause such an economic boom that it could likely end our abandoned property and foreclosure crisis. Property tax elimination would also likely cause a surge in Indiana's population as more people locate to Indiana to take advantage of real estate purchase opportunities without the burden of property tax. With the population surge would come more sales and income taxes.
The General Assembly does not have to adopt a specific plan until the year 2011. In the meantime, we recommend that the General Assembly approves the 27steps outlined in the report prepared by the Sheperd Kernan commission. While the Governor's commission cannot forecast the savings to the state once the plan is implemented, there is no doubt that the savings would be substantial--perhaps equivalent to the the entire property tax burden currently placed on Indiana's homeowners because our legislators have not had the political will to liberate Indiana's governing structure and her taxpayers from the 19th century.
Our citizen networks will work to replace all legislators who do not support property tax repeal in the November 2008 election.
The 2/2/2 Plan, to replace property taxes in Indiana based upon the latest revenue forecast (07/08 fiscal, estimate):
1) Current IN sales tax (state level rate of 6%): $5.601 billion2% increase would yield an additional $1.867 billion
2) Current corporate profits tax: ~$2 billion
2% increase would yield an additional $.286 billion ($286M)
3) A 2% statewide average of the COIT would yield $2.705 billion to cover local civil units of gov.
By adding these three together ($1.867 billion + $.286 billion + $2.705 billion), a total of $4.858 billion is realized; enough revenue to replace property taxes.
PROPERTY TAX HISTORY PREPARED BY DR. BILL STYRING
Indiana has a 70-plus year history of attempts to lower property taxes by raising other, non-property taxes. In every case these have failed miserably. The new taxes, or higher rates on old taxes, remain in place. And, in short order, property taxes rise back to their old levels, poised to roar even higher.
--1933. General Assembly imposes two new taxes: an individual gross income tax and a corporate gross income tax. The morgue of the Indianapolis Star indicates that the political leadership at the time said this was for property tax relief (1933 was the pits of the Great Depression, and people were losing their homes. Home prices declined by over 40% in the 1929-1933 period). Property tax relief was nonexistent. The state used the money to bail out the state's own finances.
--1963. General Assembly imposes a new sales tax at a rate of 2% and changes the 1933 individual gross income tax (from 1933) to an adjusted gross income tax (the one we have now) at a rate of 2%. Again, the ostensible reason was for property tax relief and again little PTR was forthcoming.
--1967. Those 1963 tax changes were raising more money than projected. The GA decides to give back 8% of sales and income tax revenue to local government for property tax relief. Local units spent the money. No PTR.
--1973. Gov. Otis Bowen launches the most determined PTR offensive yet. The sales tax goes to 4% and a new corporate supplemental net income (profits) tax is imposed. Strict property tax levy controls are imposed. It works... for a time. By 1980, property taxes adjusted for inflation are some 30% lower than in 1973. When Bowen leaves office the levy controls are relaxed. By the end of the decade, property taxes (adjusted for inflation) are back to 1973 levels. The doubling of the sales tax rate from 2% to 4% remains in place, along with the new corporate SNIT.
--2002. More fiddling with the sales tax in the hope of property tax relief. The results of this are obvious, or we wouldn't be debating the current property tax mess. All of this suggests that unless the property tax is totally ripped up by constitutional amendment, the assessment and collection mechanism dismantled, it will grow back. The PTR-inspired hikes in other taxes remain. That is our history. It is a terrible deal for taxpayers.
2. A vote in the 2008 legislative session for a constitutional amendment to repeal property taxes does not amend the constitution. It merely starts the amendment process. Amendments must be passed by two consecutively elected General Assemblies, then submitted to a referendum. Thus any amendment passed by the '08 Assembly must be passed by either the 2009 or 2010 legislatures, then submitted to the voters at the 2010 general election. The General Assembly does not need to decide on a "replacement revenue" package until the 2011 session.
3. What might such a "replacement revenue" package look like? The particular answer will come from the 2011 General Assembly and cannot be determined now (if for no other reason than forecasting state level taxes and property taxes out that far would be a most unreliable exercise. No one need be locked into any particular plan just yet. However, as an illustration that a replacement plan is feasible and less scary than many fear (we don't need to be talking about a 12% or 13% sales tax ... in fact, we should not be), consider just this one possibility.
Local sales taxes are generally very bad policy, for a whole host of reasons too numerous to mention in this short sketch. Sales and corporate taxes are best levied at the state level. It happens that roughly a 2% increase in the sales tax and a 2% increase in the corporate profits tax roughly take care of school propertytaxes. The loss of local control by the state assuming school property taxes is minimal. About the onlylocal control left is on building projects.
For local civil units, a statewide average increase in the individual adjusted gross income tax of about 2% suffices to replace local civil government property taxes, higher than 2% in some units, less than 2% in others.
Thus, a "2-2-2" plan~2% sales and 2% corporate profits at the state level for schools and a 2% average on personal income taxes for civil units—is about what would be needed. This is merely a ballpark projection to 2011.
There may be better plans, it's really a policy question for the General Assembly: do you want to make the trade of something like this in exchange for no-property-taxes-forever-on-anything? Everyone understands "zero."
4. Are there "practical problems? Of course. The two identified are how to make the civil government transition from a property tax base to an income tax base, and how to handle debt backed by property taxes. Without elaborating, the former can be handled using locator software (Map quest-type programs). The debt problem might be handled by treating the current state paid PTRC's as in lieu of property taxes (which they are) and paying PT-backed debt service from each unit's own PTRC.
Conclusion: Total elimination of the property tax via constitutional amendment is the only way to give property tax relief that will stick. The other tax action necessary to achieve this goal—in 2011-are large but not so scary as "a 13% sales tax." They are feasible. The question is for the General Assembly. Are we going to once again go down that 70-odd year path of failed PTR policies or are we going to rip the property tax up by the roots?
Posted by Hoosiers For Fair Taxation on Friday, January 4, 2008.