UNCAPPED ... Adams County Auditor Bill Borne speaks at Wednesday night's public meeting called to explain Indiana's tax caps. (Photo by Eric Mann)
"It's not political," said Decatur Mayor John Schultz at Wednesday evening's meeting to explain property tax caps to the public. Underscoring that fact is Democratic mayor and a key Republican, County Auditor Bill Borne, joining forces to oppose putting into the Indiana Constitution a property tax caps system that Borne flatly calls "unconstitutional."
A tax caps referendum is on every ballot in the state that is being voted on now by absentee voting and that will be voted on by the majority on November 2. That referendum asks for "yes" or "no" votes on whether to make the tax caps a permanent part of the constitution.
Schultz and Borne, plus Decatur City Attorney Tim Baker, are vehemently against adding property tax caps to the constitution and they made that clear to 25 or 30 people on hand at the Riverside Center session. Their objections are centered on loss of local control and loss of tax revenue that they say the vast majority of local governments, school systems, libraries, etc. will suffer because placing tax caps in the constitution will make it impossible for any court to declare them unconstitutional.
Rex Hinsky of Decatur said, "This drastically affects the balance of power" between the judicial, legislative, and executive branches. He called the idea of tax caps in the constitution "ridiculous."
After the meeting, Borne said the latest polling he has seen about the tax caps referendum shows it is favored by about 60 percent of voters.
As the meeting opened, Borne declared, "A lot of facts are not being portrayed" and he indicated that those facts are not coming from state officials or from the news media.
He said the tax caps idea was spawned in 2007 after some large property tax increases occurred in just a few of the state's 92 counties: mostly in Marion County (where Indianapolis is situated) and Lake County (Gary).
Borne pointed out that the tax caps are already state law and and being followed in every county, but the referendum, if approved, would keep them in the constitution forever, so they "can't be overturned or adjusted."
In his video presentation, the auditor listed five reasons to oppose adding tax caps to the constitution:
(1) Loss of local control. This would make state government more powerful and city, town, county, and school board officials less able to serve the constituents they know best, he said.
(2) Amending the constitution was chosen as the way to "make an unconstitutional law constitutional." Baker strongly supported that reason.
(3) "It is too early to understand the effects" of property tax caps. Borne observed, "We're just starting to see some of the things that are going on."
(4) Tax caps are already established law, so why go the extra step of placing them in the constitution? Said Borne, the idea is "to try to get the constitution to match the law."
(5) Why should a specific tax "policy" (Borne put that word in quotation marks) be in the state constitution? He noted that two well-known fiscal analysts in the state, Purdue University professor Dr. Larry DeBoer and economic affairs columnist Morton Marcus at Indiana University, are opposed to the move to amend the constitution.
Said the county auditor, "You're going to get burned somewhere down the line."
He also stated, "Everybody wants someone else to pay the tax."
Borne listed two reasons being touted for putting tax caps in the constitution: "protecting taxpayers from out-of-control spending" and "protecting taxpayers from future legislative action."
He further said that approving this constitutional amendment would, in effect, remove from the constitution the words that the Indiana General Assembly "shall provide a uniform and equal rate of property assessment taxation."
Baker said that, with property tax caps, "local government is denied use of revenues" and he referred to the state's increase in the sales tax and to growth of user fees. Borne asked why there are no caps being proposed for sales taxes and income taxes.
Borne also remarked that it was supplemental homestead credits, not property tax caps, that were responsible for lower property tax payments across the state.
Finally, Schultz made the point that only one other state has such a tax caps plan and that is California. "Do we want to look like California?" he asked.
Borne elaborated on that view by saying that Florida, Michigan, and Massachusetts have plans similar to Indiana's and California's tax caps and those three state systems are not working too well.