To the Editor:
On October 1, $15,291,699 was sent to Lake County to fund its share of the county-option-circuit-breaker program proposed by the Governor last July. Under this program property tax replacement credit money is loaned by the State to participating counties for the purpose of providing a targeted property tax refund to homeowners whose total property tax bills exceeded 2% of assessed value. While I believe there should be some limit placed upon just how high a homeowner’s property taxes can go, there are other things to be concerned about with this plan.
At the time the money was sent, Indiana government ended the first quarter of the fiscal year with a General Fund and Property Tax Replacement Fund Surplus balance of negative $640.4 million. The $15 million that went to Lake County came out of the Property Tax Replacement Fund. As the person charged with the responsibility to superintend the fiscal concerns of Indiana government, I have misgivings about money being shipped out to a few select counties on what looks to be a very political errand.
Maybe some people think, “What’s another $15 million when you’re already $640 million in the hole.” Others might point out that Lake County has pledged to repay the state the $15 million with interest over five years. Would you loan Lake County government money right now? Neither would I. And if they pay it back, it’s going to come from some form of tax revenue, which means there will be less money at that time for Lake County to spend on its constituents’ needs. Who’s going to pick up that tab? If the money ever gets repaid it’s a tax shift, not truly property tax relief.
Many Hoosiers deserve property tax relief. But this program picks and chooses a very small number of Hoosier homeowners and specifically targets the tax shift to them. No law established this program. It was simply what the Governor wanted to do. He designed the program, and he decided which of the many Hoosiers who deserve some property tax relief would share in his generosity.
After repeated requests, the Governor’s office provided me with its opinion that the program is lawful, stating that I may rely upon the opinion in administering the funding of the program. I have relied upon that letter, but I still have reservations about the legality of the circuit breaker. I also consider this a poor precedent for the future of Indiana taxpayers and state government finance.
No law grants the Governor, or his Property Tax Replacement Fund Board, which is the body that adopted this program, the right to make loans to counties out of property tax replacement funds to finance property tax relief for only selected homestead taxpayers. The Board may make certain statewide distributions early, but it cannot authorize loans to counties simply by calling them “advances.” The Board also has the power to increase the homestead credit for all homestead taxpayers. It does not have the right to increase the homestead credit for only a select few.
When we start believing that the implicit power of a Board to carry out its duties grants it the power to do whatever it wants, then we have created a government where the ends justify the means. Whether or not the circuit breaker is a good idea as designed in the Governor’s program, he should have sought legal authorization from the legislature.
But going to the legislature would have again raised the threshold question: Can a State government that is broke really afford this at the present time, even for a small segment of our population? We all know there is a budget deficit in Indiana. We also know that for the last several years, State government has spent every day operating in the red.
Our state government is struggling. Our counties are struggling. Hoosiers are struggling under the burden of a state where they earn on average only 88 cents on the dollar compared to our neighbors in other states across the country. Hoosiers deserve tax relief. But Hoosiers also deserve better than they are getting from this administration.
Sincerely,
Connie Nass
Auditor of State
