Property tax caps 'devastating' to Indiana municipalities

2012-04-09T17:00:00Z Property tax caps 'devastating' to Indiana municipalitiesBy Lu Ann Franklin Times Correspondent
April 09, 2012 5:00 pm  • 

GARY | Property tax caps have become a double–edge sword that create a standardized tax structure but have been "devastating" to Indiana's municipalities, according to the head of the Indiana Association of Cities and Towns.

Matthew C. Greller spoke at the Gary Chamber of Commerce monthly meeting on Monday. The IACT executive director and CEO said Indiana municipalities have already lost out of $180 million they would have received before voters approved adding the property tax caps to the Indiana Constitution three years ago.

"It's easy to say to cities and towns to tighten your belt," said Greller of what he called the No. 1 challenge faced Indiana cities and towns. "We haven't thought through the long–term effects (of tax caps)."

"More than half of every dollar municipalities receive goes for public safety. For example, it's extremely expensive to outfit a firefighter. But without public safety, we have nothing," he said.

The problem is that there is little left over "to create other programs" including economic development efforts, Greller said. "There is complete erosion of parks and quality of life features."

Infrastructure is also falling behind with more than 50 percent of municipalities reducing street and road maintenance. In some rural counties, paved roads are being returned to gravel because it's too expensive to repave them, he said. "This is 19th Century or early 20th Century level services."

Greller said the Indiana General Assembly and the state government agencies also are negatively affecting local governments.

Of the 900 bills introduced during this legislative session, more than half "have some impact on local government," he said. "The Indiana legislature is taking a very onerous, micromanagement approach. That will have to stop."

State agencies have encroached on "home rule," limiting or taking over the powers of local governments, Greller said. In addition, state government has to certify municipal budgets, but never does so on time, he said.

The recent revelation that the state failed to distribute $206 million in local income taxes to counties spotlights the need to create an audit board that will make certain towns and cities get their money as soon as possible, Greller said.

IACT is also starting a new initiative that will take a grassroots partnership between all stakeholders in the community. Place–making or "creating a sense of place" will address the "brain drain" that takes young college–educated citizens elsewhere to live and work, he said.

"Over 60 percent of college graduates decide where they will live before they even have jobs," Greller said. "Quality of life issues drive people to choose where they live and work."

If Indiana doesn't create these environments, businesses will suffer, he said. "Among the effects will be the lack of a qualified workforce."

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