Wednesday, January 28, 2009


Despite the forecast of snow, there was a good turnout at the Team Hammond Taxpayers' Group meeting on Tuesday night at the Woodmar United Methodist Church.

Guest speaker for the evening was Christine Cid, 2008 President of the Lake County Council.

Ms. Cid gave a powerpoint presentation on the 2009 county budget. She explained how the budget was cut by $15 million and how and where the cuts were made. A total of 119 positions were eliminated in the budget reductions. Ms. Cid also pointed out which departments, namely the sheriff, did not make any cuts and actually asked for an increase in spending. Criminal justice (courts and law enforcement) makes up 75% of the county's budget and yet, the sheriff made no cuts to his budget. She questioned the need for the sheriff's new helicopter and adding staff when other departments were voluntarily cutting staff and making budget reductions.

Future county cost-cutting measures include consolidation of purchasing and privatization of the jail. Ms. Cid said she will continue to push for budget reductions to make county government more efficient and cost effective.

The food and beverage tax was also touched on. Ms. Cid questioned whether the bus systems had looked to other sources of funding before asking the council to enact this tax. She said she would need more information on the food and beverage tax and the bus systems before she could make a final decision.

Another tax Ms. Cid was questioned on was the county option income tax. She said she had originally voted for it because 100% of the tax was to be directed to property tax relief. Cid also said the county commissioners (Scheub & DuPey) will continue to veto the income tax so it is pretty much a moot point.

Hammond Fourth District Councilwoman Kim Poland also spoke at the meeting. She talked about the ordinance she sponsored regarding take-home cars in Hammond. There are currently 71 take-home cars being used by various city employees. Poland's ordinance is currently in committee and needs to be tweaked before coming back to the council for approval. She will continue to fight for passage of this ordinance.

Mary Ellen Slazyk gave an update on the last school board meeting. She said the school city is looking at purchasing two apartment buildings on 119th Street across from George Rogers Clark Middle/High School for more staff parking. One of the buildings is owned by Donald Osborne, who is currently the President of the Hammond Multi-School Building Corporation, the holding company the school city uses to finance all their school building projects. The other apartment building is owned by a realty company whose address just happens to be the same as Mr. Osborne's business. Mary Ellen agreed Clark has always had parking problems, but questioned whether the sale of these properties would be a conflict of interest. She also said there needs to be more citizen attendance at school board meetings. The next school board meeting will be at 7 p.m. on Thursday, February 12 at the school administration center at 41 Williams Street.

Hammond Councilman-At-Large Bob Markovich spoke next about the wind turbine project for Forsythe Park and Wolf Lake. He said the city received grant money from the state for the project and the total cost of the project would be $195,000. The city would receive about $5,000 a year in electricity credits from NIPSCO. At that rate, it would take the city about 39 years to pay off the project before any potential profit could be realized. Markovich commended the city for looking at alternative energy sources. Audience members questioned the size of the turbines, placement of the turbines in a migratory flyway and if noise would be an issue.

Larry Rapchak then spoke about the staggering impact illegal immigration is having on our education and health care systems as well as property taxes. He spoke about the E-Verify legislation that would greatly benefit Hoosier taxpayers. E-Verify allows employers to electronically verify employment eligibility of newly hired workers. House Speaker Bauer stopped the legislation last year but this legislation needs to be passed this year because it protects Hoosier jobs. Larry said it is also important to fill out legislative surveys either by mail or online because our local state reps and senators need to know this is an important issue with their constituents. He passed out information on E-Verify along with contact information on our NWI state legislators.

A resolution was then passed by Team Hammond members in support of the E-Verify legislation.

Jim Premeske finished off the meeting with upcoming Team Hammond events. Members will continue to attend county council workstudy sessions and meetings and Hammond city council meetings. The public hearing for the wind turbine project will also be held on Wednesday, January 28 at 7:00 p.m. in the city council chambers.

The next Team Hammond meeting is scheduled for Tuesday, February 24, 2009 at the Galaxy Hall in Hessville. The topic of next month's meeting will be public safety and updated crime statistics.

Blunt Proof of the Feasibility to Permanently Abolish Property Tax

Media Contacts:
Melyssa Donaghy 317-938-8913
Max Katz 765-409-6669

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.

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.