"Strong Towns is taking an in-depth look at the land tax and how it can incentivize a healthier, more resilient pattern of growth and reinvestment in cities."

Why these spaces stay red.

This week Strong Towns has started a series of articles pointing to the disadvantages of property taxation in an urban context, as compared to advantages from using a land tax instead (or a hybridized approach). These issues directly address our eternal blog questions: Why isn't this building owner taking care of his property -- and why isn't THAT building owner putting something on his eyesore vacant lot?

This is utterly fascinating.

This week, Strong Towns is taking an in-depth look at the land tax and how it can incentivize a healthier, more resilient pattern of growth and reinvestment in cities.

You Get What You Tax For | What’s With That Empty Lot? | The Pennsylvania Experiment | Why Isn’t This Being Implemented?

This series is sponsored by the generous support of the Robert Schalkenbach Foundation (RSF).

As an introduction, this. I'll be re-reading all of these links -- and the series continues next week.

What's With That Empty Lot in the Heart of the City? by Daniel Herriges (Strong Towns)

 ... Taxing Building Improvements is a Gift to Speculators

A parking lot in a bustling downtown is the classic example of a property where nearly all of the value is in the land itself, not the asphalt on top of it. In a rising market, you can hold onto the land and watch its value go steadily up (thanks to all the things your neighbors are doing to make the place more productive and successful). You can collect enough in parking fees to cover the taxes, and cash out when you're ready to cash out. Your property tax bill will be relatively low, because it's based on the sum of land value and improvements. The land may be in a central, prized location, but the "improvements" on the property (that's tax-assessor speak for any sort of structure built on the land) are worth next to zero.

The result of this logic when you extend it to dozens or hundreds of properties is that land goes under-utilized, even in extremely valuable locations like downtown Austin—the fastest-growing large city in America. This kind of land speculation creates additional scarcity downtown, and pushes more new development to the outskirts of the city, where it incurs more infrastructure costs, more miles of driving on the part of individuals, and more gobbling up of farmland for suburban expansion ...

 ... Taxing Land, Not Improvements, Leads to More Productive Uses

 This doesn't have to mean raising taxes overall. Rather, cities can redistribute the burden of property taxes by either taxing only the land, or taxing the land at a much higher percentage rate than the improvements. The latter is called a split-rate property tax.

This way, those who wish to build or renovate something on their property will face no tax penalty for doing so. And those who wish to hold onto a vacant lot or use it for something low-value like parking—in effect freeloading off of the location value created by the productive uses to which their neighbors have put nearby land—will face a much higher tax burden.

Property tax bills: Keep your eyes on the ball, and forget the mound of peanut shell games.

Chris Morris is on medical leave, there hasn't yet been a replacement for Elizabeth Beilman -- and hell, Tom May can be 15 or 20 places at once, but not 30, so it looks like it's Erin Walden on the education beat as the superintendent of schools explains it's not an increase at all -- and she's to be commended for keeping things straight as the numbers (and fur) fly.

Reached at his down-low command bunker, bond issue advocate Jeff Gahan said he continues to support the Taco Walk, and any tree than disagrees will find itself rendered into campaign finance broadsheets, sleeping with the little fishies.

NAFC superintendent talks tax increases, by Erin Walden (Tom May Content Coagulator)

NEW ALBANY — The truthfulness behind the 2016 referendum marketing statement “not a penny more” was called into question after taxpayers in Floyd County noticed increases on their property tax bill.

During the Monday night school board meeting, New Albany Floyd County Consolidated School Corp. superintendent Brad Snyder explained the increase was one of perception.

According to a presentation by Snyder, the debt rate in 2016 — the year the district pursued the referendum — was .5408 cents. In 2017, the debt rate dipped to .3833 cents and for 2018, the first year of the bond repayment for the referendum, it increased to .4941 cents.

“The campaign was held in 2016 with a very specific pledge to when the debts were repaid. There was a dip [in 2017]. That was the unseen, undiscussed,” Snyder said.

However, residents are only shown on tax bills what they paid last year, Snyder said, so the tax rate and total due for 2016 was not shown to give context to the 2018 figures.

Monday night's agenda was rearranged and the presentation came before public comments rather than after, and each public comment addressed the situation.

Dale Mann, who repeated his request for an independent audit of the district, said, “All these flyers – they were all lies. No increase, not a penny more. That’s all a lie. If you all support it, I’m gonna ask for your resignation ... "

Chain and big box subsidies cost us far more than we imagine, but who cares so long as Starbucks is there?

From the linked Strong Towns article.

I've always wondered if the presumed "neutrality" of chains and big boxes -- they're generic and identical from place to place, all buttons with no fingers -- fills some sort of psychological need in those for whom "localism" implies not a set of economic nuts and bolts, but the local community's parochialism (or worse).

There always have been adherents to internationalism as a corrective to narrower nationalism (or localism), as applicable to seemingly universal belief systems otherwise diametrically opposed: Communism's Internationale versus the worldwide Roman Catholic Church, for example.

As such: "I belong to the worldwide fraternity of Chipotle, where consistency and safety everywhere are the ultimate filters against the messiness of individualism and diversity -- which barely exist in my burg, anyway." 

Admittedly, it's probably more likely that identification with chains and big boxes owes to the narcissistic qualities of consumer culture; I want this or that, and for so long as the price is right, the costs to others be damned.

Or, maybe, that few of us bother to think at all.

Before the Strong Towns link, there's this transcript of a podcast from the Institute for Local Self-Reliance, with ILSR's Stacy Mitchell and Greg LeRoy, executive director of Good Jobs First.

It’s estimated, best ballpark number we have right now, that states and cities spend at least 70 billion, with a B, dollars a year in economic development incentives, and by far most of that is tax breaks, property tax abatements, sales tax exemptions, corporate income tax credits, R&D credits, film production credits. There’s a big menu. The average state has dozens of such programs on the books, which in turn are often locally administered.

Tax increment financing districts, enterprise zones, industrial revenue bonds, all those come under this category. The truth is, as you said, although some of the programs are justified in the name of helping small businesses or helping struggling neighborhoods, and in some cases that’s the way the programs were originally structured and written, over time they’ve become deregulated. Over time they’ve become give-mes that can go anywhere.

So we have TIF districts at the fringe of urban areas piling up apple orchards for Walmart Supercenters. We have subsidies for Amazon sortation centers that are just undermining Macy’s and K-Mart and Sears and all the other retail chains that are laying people off. We have an affluent suburb of Missouri, Des Peres, Missouri, outside of St. Louis, saying or mall is blighted because we don’t have a Nordstrom yet. We need to give a $31 million TIF deal this multinational REIT that owns this mall so that they won’t be blighted anymore and can subsidize bringing in a Nordstrom. It’s gotten really perverse. The anti-poverty argument has been turned upside down and on its head frankly over and over.

In short, government picks winners, and the chosen winners usually are the ones who had enough money to start with.

BIG BOX STORES ARE COSTING OUR CITIES FAR MORE THAN WE EVER IMAGINED, by Rachel Quednau (Strong Towns)

Drive a little ways out from the center of any town and you’re likely to find several big box stores—Target, Home Depot, Piggly Wiggly, you name it. They’re everywhere. If you took a helicopter or a drone above these parts of town, you’d likely see a vast amount of land taken up with just a handful of stores and their accompanying parking lots. The houses and small businesses around them would be dwarfed in comparison. Not only do they use up a ton of land, but as a result, big box stores also demand miles of public infrastructure like pipes and roads to serve them.

But here’s the crazy part: Those enormous stores are paying a negligible amount in taxes. For their size, they are contributing hardly anything while meanwhile demanding new electric lines and frontage roads and signalized intersections (among other things). In most cases, their taxes are not nearly enough to pay for the maintenance of these basic services, let alone the many other functions of our local governments that we expect taxes to pay for, like schools and fire protection.

Here’s a textbook example of this, created by our friends at Urban3, a firm that analyzes the relationship between building design and tax production. The illustration below shows the tax value of a big box store near Asheville, North Carolina, compared with a modest downtown building. Pay special attention to the taxes per acre.

The latest on HB 1131: Amended and up for a vote on Tuesday morning.

House Bill 1131 is authored by Rep. Ed Clere, and co-authored by Rep. Anthony Cook and Rep. Steven Stemler, and the legislation deals primarily with appointments to local boards and commissions.

HB 1131 has been amended, and is up for a vote on Tuesday in the House Government and Regulatory Reform Committee. Following is an overview of the bill -- though note that the amendment does not change the housing authority provision.

Provides that if the executive or fiscal body of a municipality does not fill a vacancy in the municipal housing authority before the 61st day after the vacancy occurs, the remaining members of the housing authority shall fill the vacancy. Provides that the remaining members are authorized to fill the vacancy even if the number of remaining members is not sufficient for a quorum. Provides that an individual who is acting as a member of a housing authority 60 days after the expiration of the individual's term as a member of the housing authority may continue to act as a member for purposes of filling the vacancy.

Here is a recap.

1. Commission membership and appointments

Both municipal and county redevelopment commissions will consist of seven members. Under current law, municipal redevelopment commissions consist of five members, and county redevelopment commissions may have either five or seven members.

The executive will continue to appoint three members (no more than two of one party), and the council will continue to appoint two members (one of each party). The political balance is new.

There will be one school board appointee. If more than one school corporation serves the municipality or county, the school board with the most members who live in the municipality or county will make the appointment. The appointee must live in the municipality or county.

The seventh member will be appointed by the council, upon a recommendation from the local LEDO.

2. Projects outside a TIF district

If revenue from a TIF district is used to fund projects outside the TIF district, the redevelopment commission will have to certify that the project will benefit the TIF district and result in the creation of private sector jobs.

3. Annual report

The Department of Local Government Finance will produce an annual report showing the effect of TIF on circuit breaker losses for each taxing district in a county. It will illustrate the circuit breaker change that would occur without TIF, and with 10 percent, 20 percent and 30 percent reductions in TIF assessed valuation (AV).

4. County council review

If the report shows extreme TIF pressure on circuit breakers, the council may require release of up to 20 percent of TIF AV, subject to debt service reserves. Extreme pressure is defined as a case in which releasing 20 percent of TIF AV would produce more than half of the amount of circuit breaker relief resulting from releasing 10 percent of TIF AV.

---

PROPOSED AMENDMENT ... HB 1131 # 5

DIGEST

Redevelopment commissions. Makes the following changes regarding commission membership: (1) Requires a county or municipal redevelopment commission (commission) to consist of seven members. (Under current law, a municipal commission must be five members, a county commission must be five members or seven members). (2) Requires one member to be appointed to a commission upon the recommendation of the local economic development organization (LEDO) of the territory served by the commission, or upon the joint recommendation by all LEDOS serving the territory within the jurisdiction of the commission. (3) Establishes political party membership requirements for some appointments. (4) Requires municipal and county commission members to reside within the territory under the jurisdiction of the commission. Provides that a member serving on a commission on June 30, 2017, that does not satisfy the residency or party membership requirements continues to serve out the member's unexpired term. Requires the commission to comply with these requirements when appointing a successor member. Provides that allocated property tax proceeds may be expended for projects located outside a redevelopment district only if the commission adopts a declaratory resolution that finds that the expenditures: (1) will directly benefit the redevelopment district; and (2) will result in the creation of jobs in the private sector. Provides that the county council of a county in which a redevelopment authority is located may require redistribution to taxing units of up to 20% of the assessed value that is allocated to allocation areas if, when considering a reduction in the allocation in allocation areas from 10% to 20%, the amount of the reduction in losses due to the circuit breaker credits is exceeded by more than fifty percent (50%). Provides, however, that the county council may not make a redistribution to taxing units if: (1) the redistribution would effect debt service; or (2) there is no loss that meets the criteria for a distribution that is to a unit other than the municipality in which the allocation area is located, or a special service district that is wholly located within the boundaries of the municipality that established the allocation area. Requires the department of local government finance (DLGF) to annually prepare a report for each taxing unit that includes a calculation of the following: (1) The total property tax levy from the assessed value in the taxing unit and the amount of loss due to the circuit breaker credits. (2) The total property tax proceeds from the assessed value that exceeds the base assessed value in all allocation areas established within the taxing unit. (3) The effect, if any, on the amount of the tax levy or proceeds and the credit for excessive property taxes under IC 6-1.1-20.6 for the taxing unit and for the allocation areas if the allocation and distribution of tax proceeds in the allocation areas were: (A) eliminated; (B) reduced by 10%; (C) reduced by 20%; or (D) reduced by 30%. Requires the DLGF to: (1) post the report on the DLGF web site; and (2) file the report with the governor and the general assembly.

"Gentrification has a much bigger effect and poses far bigger risks for renters."

New Albany is gentrifying, at least in comparative terms.

Taking into consideration the Gahan administration's emphasis on scattered pockets of heavily subsidized "luxury," the mayor's concurrent war on public housing -- which in reality is far less "welfare" than affordable housing for the working poor -- and his failure to fully mobilize rental property inspections, it's clear that the risk of displacement described by Florida will be borne (yet again) by those New Albanians least able to cope.

Gentrification Has Virtually No Effect on Homeowners; The risk of displacement falls largely on renters, by Richard Florida (CityLab)

Gentrification is the hottest of hot-button urban issues. Many activists and critics see it as essentially a process by which more affluent and educated white newcomers displace poorer, working-class black residents. But those who have studied the subject closely, like Columbia University urban planner Lance Freeman, believe that the issue of displacement is more myth than reality. In fact, Freeman’s detailed empirical research has found that the probability of a family being displaced by gentrification in New York City was a mere 1.3 percent.

Now a recent study by Isaac William Martin and Kevin Beck in Urban Affairs Review helps deepen our understanding of the issue of displacement. It’s the first study I’ve come across that separates out the effects of gentrification on renters versus homeowners. Previous research, including Freeman’s landmark research, grouped renters and owners together ...

(ALL THE SUPPORTING EVIDENCE IS HERE IN THIS GAP)

... The big takeaway is that gentrification has a much bigger effect and poses far bigger risks for renters, who tend to have lower incomes, are subject to rising rents, and can be evicted from their apartments. For many today, the solution to today’s urban housing affordability problem is to deregulate land use and build more housing. But this is likely to help more advantaged homeowners, who already benefit from the substantial subsidy that comes from their ability to deduct the interest paid on their mortgages. It’s time for housing policy to focus on lower-income renters who face the highest housing burdens—and the biggest risk of being displaced by gentrification.

Same referendum, same arguments. Same outcome?

Returning to a point we made last spring: Given the advent of early voting, the News and Tribune must move up the release of articles like this, as well as its General Election Voters Guide, so that they'll appear before ballots are cast.

On the other hand, the referendum is the perfect example of emotions outweighing logic. I suppose it doesn't matter, does it?

SATURDAY SPOTLIGHT: New Albany-Floyd County Schools try another referendum, by Jerod Clapp (News and Tribune)

FLOYD COUNTY — Taking a second shot at securing funding for upgrades and rebuilt schools, the New Albany-Floyd County Consolidated School Corp. has an $87 million referendum on the ballot for Nov. 8.

In May of 2015, the measure failed in the primary, with the vote spread at 45 percent in support and 55 percent against it. Taking some lessons from the failure and regrouping, the district aims to win next month, but an opposition group still raises concerns about keeping taxes at the same level and whether the scope is too great on the projects.

In just more than two weeks, voters will decide whether to take an overall property tax decrease or to allow the district to issue the bonds to renovate or rebuild schools, but both sides argued their points.

Pat Harrison's Slumlord Uprising of 2008, 3/6: "Wrong tree, wrong dogs barking."

Eight years later, and it's déjà vu all over again as Pat Harrison prepares to defend our downtrodden slumlords against the Gestapo.

The following was originally published here on Repeat from February 19, 2008. Text by Jeff Gillenwater.

1/6
2/6
4/6
5/6
6/6

---

Wrong tree, wrong dogs barking




As the chart above from the Indiana Department of Local Government Finance shows, 74.2% of the total county property tax levy is paid by residential property owners. While the implied argument for economic development as a method of property tax relief is strong as the development of additional businesses would reduce the portion of taxes collected from residential property, one factor that's not so obvious is the built-in landlord subsidy.

According to the 2000 census, there are 29,087 residential units in Floyd County at about 95% occupancy. Those units include single-family homes, trailers, apartments, and any other arrangement of separate living space. Only 68.6% (19,954) of them are owner-occupied, however. That leaves 7,557 of them as rental units. 26% of all housing units in the county are owned by someone other than their residents and are operated as rental businesses.

Why does this matter? Because the current property tax proposal being mulled over by our state legislature seeks to tax rental businesses at a different rate than other businesses. Owner-occupied residential property tax caps would be set at 1%, rentals at 2%, and other businesses at 3%.

It's difficult to exactly calculate how 7,557 rental units are divided up between various properties. One property could be comprised of 30 units while another could be a detached, single-family rental, i.e., one unit. For comparison's sake, let's assume a typical New Albany rental property of four units. 7,557 total rental units with four units per property is equal to 1,889 properties.

With that figure in hand, take into account the median county property value of $104,300. 1,889 properties multiplied by the median value equals $197,022,700 worth of taxable property.

That property, taxed at an as yet unjustified special rate of 2% would lead to $3,940,454 in revenue. If taxed at the same 3% rate as other businesses, however, the revenue would be $5,910,681. That's a difference of $1,970,227- a difference that would be made up by homeowners every year.

How would that affect individual households? Remember, as of the 2000 census, there were 19,954 owner-occupied homes in Floyd County. $1,970,227 divided among 19,954 homes equals $98.74 per homeowner each year. It may not seem like much on its surface, but those interested in fairness should take note. With the owner-occupied residential property tax rate set at 1% and the median home value at $104,300, the typical property tax bill will be $1,043. That means that if our "number of units per property" assumption is anywhere near correct, roughly 10% of every "average homeowner" property tax payment would be going to subsidize area landlords who refuse, via special interest lobbying efforts, to fairly pay the same tax rate as other businesses.

We've already been collectively subsidizing the rental property business for years by allowing owners to pay residential tax rates on their business property and have often been paid back with an alarming lack of property maintenance and the accompanying attraction of the criminal element into our communities. The newest take on property taxes further codifies that subsidy without requiring any additional responsibility from landlords in return for it.

At the very least, the Jim Bakers and Pat Harrisons of the area should be held publicly accountable for such a boondoggle, as should those public officials who would vote in favor of it.

NA's Person of the Year 2015 is very nearly all of you.

First we explained it:

ON THE AVENUES: Who (or what) is New Albany's "Person of the Year" for 2015?

A person, couple, group, idea, place, or machine that "for better or for worse ... has done the most to influence the events of the year."

Then we narrowed the list of nominees:

• Jeff Coffey and/or Dan Gahan ... not since the 1939 non-aggression pact have two chummy leaders combined to exert such consistent influence on a captive city.
• "Quality of life" projects ... Striking, isn't it? Nowadays it's "my doggie needs a spray park," and not, "I need a real job."
• New Albany property tax payers ... because they're ones actually paying (TIF-ing) for all of Dan Gahan's big-ticket "quality of life" projects.
• The New Albany Street Piano ... Music has charms to soothe a savage breast, but as Jeff Coffey's Bored of Works showed, tone deafness is like Kryptonite when art's on the agenda.
• Al Knable ... he came out of nowhere to record the highest vote total in the Republican at-large council race.

Finally, you voted ... and every nominee got at least one vote. Even the mayor inadvertently "presented" his preference in this remark to the newspaper's head steno:

"We want residents to have a great experience living here. We appreciate our taxpayers."

And why not? After all, his hand remains in their pockets, and so New Albany property tax payers are NAC's Person(s) of the Year for 2015 ... especially those property owners in TIF districts (in truth, virtually all of us), who are serving as involuntary venture capitalists for Jeff Coffey-cum-Dan Gahan's emerging Disney on the Flood Plain, but really, all rate payers are being honored here, as it is becoming increasingly evident that over-reliance on the TIF mechanism as a Magic Kingdom-style ATM has serious ramifications across the board.

Heller: Indiana’s Favor-Ridden TIF Districts, by Thomas Heller (INpolicy.org)

 ... Indiana appears unique in allowing the erosion of the TIF “Base” (one of two calculated parts of the total tax base within a district). The Base is supposed to continue producing revenues for school, libraries, cities and counties. The Base erosion occurs in a series of steps termed “neutralization,” the complexity of which acts to shield the Base erosion — and its adverse effects — from the view of legislators, journalists and the public.

In fact, a TIF district can work against a sound economic-development plan, eroding the Base and imposing tax increases beyond its boundaries. Worse, this erosion can hide a significant write-down of value on existing properties already within the district.

... and ...

White paper: TIF – It’s not Working the Way We Were Told It Would, Heller/INpolicy.org

 ... Was the public aware of these TIF secrets? Almost surely not, but a skeptic might ask whether the secrets indeed were known, albeit closely guarded, by the legal, eco-devo and architectural-engineering consultants who make up the cottage industry TIF has created in Indiana.

TIF distributes largess to consultants, contractors and apparatchiks, who redistribute the bounty to campaign finance coffers. Call it corporate welfare or crony capitalism, or just call it straight: It's a ticket Gahan will continue punching until it is pried forcibly from his hands. Our city council can do that.

Will it?

On TIF, Gahan and lessons from the Irish property bubble.

Coyle site TIF abuse: "Because subsidizing wealthy, out of town developers is the only thing our economic development director knows how to do with our tax money."

Clere: "(River Run) and other spending may leave New Albany taxpayers swimming in debt."

Fire station bidding questions, Part Three: A $1.5 million sale to enable a $2.75 million spending orgy.

Are we TIF enough? New study shows that TIFs are "popular but ineffective economic development tools."

Gahan's plan for keep Pillsbury: A $7 million TIF issue.

Postscript

On May 19, 2013, we expressed amazement: On lottery wins, shimmering new parklands and the persistence of a sow's ear.

In a world fairly reeking of tea party crashers and Norquistian finger-waggers, New Albany somehow has succeeded in ridding itself of self-identified citizens' anti-tax protesters. They simply have disappeared, and the new atmosphere is strange, to say the least. Gads. Am I feeling nostalgia for Citizens Faux Accountability?

Where have you gone, "Concern Taxpayer?"

"Changing the way we tax property to discourage speculation and encourage compact, infill development."

Another example of subversive thought lying somewhere outside the self-restricting box that local government prefers inhabiting. But wait: The Democrats are having a convention, and looking for innovative plat ... form ...

Never mind.

To Revitalize Downtowns, Tax Land Speculation: Five reasons to love land-value taxes, by Jerrell Whitehead and Clark Williams-Derry (Sightline Daily)

... So how is it that, even in the core of the Pacific Northwest’s largest metropolis, on some of the most valuable real estate within city limits, you can find so much land essentially still sitting idle?

One of the biggest reasons is also one of the most obscure: the structure of the property tax.

Under today’s tax rules, leaving a lot empty, or letting a building slowly rot, gives the property owner a light tax bill, thus allowing landowners to hold onto under-developed properties year after year after year. In essence, these land speculators become free-riders: their properties rise in value, sometimes dramatically, because of the hard-fought efforts by neighbors and city government to create vibrant and attractive downtowns. Yet many land speculators detract from the value of their neighborhood by leaving productive land derelict or by allowing buildings to disintegrate.

So what’s the solution to all this underutilized land? Perhaps the simplest one is an idea that’s been around since the late 1800s: changing the way we tax property to discourage speculation and encourage compact, infill development.

City to take Home Depot & Meijer to the woodshed, and with luck, their big boxed butts will be paddled mercilessly.

Of course, Business First gets all corporate-fluff tumescent on us and immediately shifts into full financial circle jerk mode, with "appeal" in the text being rendered as "fight" in the masthead, as though some great principle apart from persistent corporate greed were being discussed.

Yawn.

First we hand them the keys to the city treasury via handouts, abatements and other economic subsidies, then they try to wiggle out from their obligations.

Big-box retailers Home Depot and Meijer have appealed their assessed property tax values in New Albany.

1Si public policy junta to favor higher property taxes for dissidents, Democrats and socialists.

We begin another Monday morning with enduring populist theatrics from St. Daniels and his Disciples, worthy of note only because it's an example of "good" populism, as opposed to the "bad" populism that occurs when the GOP spin machine did not originate the agit-prop and is not in a position to control it.

What's next, a Constitutional amendment banning bridge tolls? Sounds reasonal to me, so long as the objective is pandering to flat-earthers and cheapening the document, while ignoring problems in the real, non-partisan world.

Voters could add tax limits to Indiana constitution, by Lesley Stedman Weidenbener in the Courier-Journal.

This being America, it's too bad we aren't allowed to vote on it. Are the little people outraged yet?

I prefer option two, below, which our new school superintendent has chosen not to attempt.

A referendum would permit a person like me, who has no children of his own, to nonetheless vote with my wallet in favor of the principle of secular public education, because I believe that secular public education is one significant hallmark of a diverse and civilized society. I do not believe that a diverse and civil society is furthered by fragmentation into various tax-supported Madrasahs.

My guess is that in terms of property tax, it would cost me a dollar a day for the entire year to keep neighborhood schools open. A referendum would also permit us to identify quite clerely who supports a diverse and civil society, and who isn't sure. This would be instructive, allowing us a chance to debate openly the nature of selfishness as furthered by tax "rebellion."

Superintendent asking board to close four schools, by Chris Morris (Tribune).

Option two would have been to go to the public with a referendum to raise property taxes — which would have been on average of $225 a year on a $100,000 house ...

All at 2%, or all at 3%. Why the difference?

Has there ever been a coherent answer to the question: Exactly how is it that rental property ownership is not a business?

Also, imagine how much more fun the question would be if it also asked of Hoosiers, (after caps) how do you propose to support local government?

Shall we ask China for foreign aid, and a kickpack from the current voluntary Wal-Mart tax?

CLERE: I asked and you answered, by Ed Clere, State Rep. District 72

Here are the questions (in bold), followed by the results and my comments:

Do you support giving Hoosiers a chance to vote on a constitutional amendment capping residential property taxes at 1 percent of a home’s assessed value, 2 percent for agriculture and rental properties and 3 percent for business property?

Eighty-two percent of survey respondents want a chance to vote on tax caps, and they will get it. After a year of blocking a vote on the caps, House Speaker Pat Bauer, D-South Bend, finally relented. I was part of the bipartisan 75-23 majority that supported the caps. The Senate, which was on board all along, reaffirmed its support last week, and the question will be on the ballot in November. Now it’s up to Hoosiers voters to decide whether the caps will become part of the state constitution.

An answer would do.

In Representative Ed Clere’s Tribune column last Tuesday, he wrote that he hadn't heard from "anyone opposed to the (property tax) caps."

After commenting here at NAC, I resolved to contact Rep. Clere's office and make my opinion about property tax caps known. I didn’t save an exact copy of my words, as typed into the e-mail form at the official web site, but here's the gist of it:

Count me among those opposed, at least until it is explained to me why rental property ownership is not a business activity to be taxed at the same 3% rate as my own.

So far, so good. Unfortunately, it has digressed from there.

A “we read all mail” reply was duly e-generated, and then on Thursday, while enjoying a day spent out of town, I received a phone message from one of the Representative’s representatives, who acknowledged receiving my e-mail, noted that the Courier-Journal (is that the name of the newspaper "down there"?) was about to do a story on the same topic, and asked me if I’d be interested in providing the writer with the “I’m against it” perspective on property tax caps.

I didn’t call back to let him arrange matters for the story, which appeared today. Rather, I waited until the story appeared to return the flippant assistant’s phone call and to perhaps make something clear to him.

Basically, neither he nor his boss has yet undertaken to venture an answer to my question.

I'd really like to know. Why is the rental property ownership business deserving of a 1% discount?

Or, conversely, why is my business subject to a 1% surcharge?

Recall that nowhere in any of this did I indicate inexorable opposition to the idea of property tax caps, even if persistent Republican hypocrisy on the matter of actively starving local governments of cash, and then encouraging mayors to beg like trained seals for the relative farthings to be gleaned from an alcohol excise tax increase on my non-rental property beer business, makes me want to vomit long and loud.

I've asked a question. Can the elected official please make a stab at answering it?

Or am I asking too much?

Clere: An objection and a question.

I happily dissent ... and question whether equal time is merited.

CLERE: You make the call, by Ed Clere (News and Tribune).

STATEHOUSE — In last week’s column, I noted that there were 22 days left for a vote on constitutional property tax caps. Now, a week later, we’re down to 15.

I didn’t hear from anyone opposed to the caps, which are contained in Senate Joint Resolution 1. The resolution was adopted by the House and Senate last year, and the Senate already has adopted it again this year.

Count me among those opposed, at least until someone (anyone?) provides a coherent explanation as to why rental property ownership is not a business activity to be taxed at the same 3% rate as my own.

After reading the column, it also strikes me that the Tribune is providing column space each week for what might become a partisan forum. Some might say that it already is. Once the Democrats have a candidate in place for the next election, does he or she get equal time? Is equal time merited now?

Kindly note that I consider Ed a friend, but I believe the preceding to be valid considerations worthy of answers.

Just remember, they’re “products,” not “properties.”

File under "symbolic gestures."

Floyd County resident shows resentment to tax rates by paying bill in coins, by Daniel Suddeath (News and Tribune).

Alford’s payment totaled $21,333.09. He paid in a similar fashion last year, except instead of coins, he used dollar bills to account for a $9,553.46 installment on a $19,106.92 tab.

Alford said he doesn’t want to do the same next year, but he won’t hesitate if rental property taxes continue to remain high in his estimation.

“To me, it’s ridiculous,” he said. “We don’t get any deductions on rental properties.”

The property tax increases for rental properties don’t just impact the landowner, Alford said. The bill will have to eventually be passed down to tenants if Alford is to stay in business.

Alford said he’s put in over 800 hours of work into his rentals this year, and will likely only claim a profit of around $10,000. Only one of the 14 rentals has a mortgage on it, according to Alford.

He calculated that nearly 29 percent of every rental dollar he receives goes directly to property taxes.

By my calculation, these numbers suggest an average monthly rental price of $400 for Alford’s 14 rental units, assuming the houses have not been subdivided. In turn, this suggests a gross of around $67,000 each year before property taxes and expenses.

We don’t know the cost of repairs and refurbishments, but “800 hours of work” comes out to 15 hours of labor per week, spread among 14 properties. Assuming the yards are small, that’s about enough time to mow the grass. And, remember, only one of the properties has a mortgage.

Interesting. Do the numbers add up?

Dare WE loiter on LOIT? (Part 2).

Previously, and including a lengthy discussion: Dare WE loiter on LOIT? (Part 1).

To continue the discussion concerning the Local Option Income Tax (LOIT), I’d like to address the if’s, how’s & why’s of the benefits for the citizens of New Albany/Floyd County.

Having just completed the 2009 budget process for the city, which left us all spitting cotton and wondering whether or not there’ll be any point in calling 911 next year, the Safety Tax portion of the option seems to be a no-brainer.

But then one has to have ‘em in order to use ‘em.

For three years or longer both police & fire departments have been attempting to hold the line with less live bodies than recommended by any study I’ve seen to date. Yet the selfsame councilmen who readily pass along complaints from their constituents about the lack of protection & service are just as quick to target those departments as the prime culprits of wasted tax dollars.

“Park the cars!” “Take away their cell-phones!” “Cut out overtime!” “Put off maintenance!” All of these and more are the constant battle cry of those who at the same time demand and expect an immediate response to a need, be it real or perceived.

The local newspapers have run several articles during the last several days depicting views from various individuals on both sides of this issue.

FOP President and New Albany Police Detective Paul Haub presented what I thought was a good argument for passing the LOIT based on the ever increasing crime rate in our city.

Floyd County Republican Party Chairman Dave Matthews followed with an admonition that local government needs to trim even more from their budgets.

NAFC Chief, Matt Juliot expressed his concern about providing the quality of service that we’ve all come to expect from our fire department with no funds in his 2008 budget for overtime.

Then, to further confuse the argument, an article in Sunday’s Courier-Journal reports that the Indiana legislators are split on whether to make Their Man Mitch’s property tax cuts permanent, or take a “wait & see” position.

So, from the feedback I’ve gotten so far, the choice locally seems to be rolling the dice and taking our chances.

I’ll grant that’s the politically safe thing to do and I suppose that’s OK as long as it’s an acceptable risk that one's house doesn’t catch fire, one's family isn’t burglarized, or one's grandmother doesn’t need an ambulance or other services.

The question becomes: Now that the citizens have more money in their pockets, do our local leaders have the intestinal fortitude to pass the insurance policy (LOIT) that the state provided, or are they going to gamble our safety and security in hopes of a vote come next election?

Is it really a wise decision to "wait & see" how many homes get broken into or burned to the ground, or worse yet, how many helpless citizens die waiting or an ambulance to arrive?

The stuffed shirts in Indianapolis may be quite willing to take that risk.

I hope our local leaders have more concern for us than that.

Dare WE loiter on LOIT? (Part 1).

I’ve been striving for nearly a week to open a thread of discussion concerning the benefits as well as the costs of adopting a Local Option Income Tax.

The delay has been mostly due to confusion on my part as to what, how, and when of this option that Their Man Mitch so graciously left available to local government following his property tax reform initiative.

Never mind that such action has effectively hamstrung cities and counties around Indiana, while ensuring the state's budget is not only balanced but is able to show a surplus as well. But then that does look good on a resume if one’s political ambition is to descend on Washington, although I’m getting off point here.

So, to continue, not being satisfied neither with the explanations I’ve read in local newsprint nor heard from local politicos, I decided to go to online to the horse’s mouth, so to speak. What I quickly found was that as per most other research, one needs to know what to ask, how to ask, and whom to ask.

Having tried that approach there is still a modicum of confusion on my part, so I’m going to throw up what I’ve gleaned and open a discussion in the hope that clearer minds are out there to help clarify facts.

First of all my understanding is the LOIT option provides two primary benefits. The one being another 1% reduction in property tax that goes directly into the state's coiffures.

That fuels the first question: Does some portion of that one percent gain at the state level ever filter back down to the local level? If so, how & when?

The provision for a 0.25% Public Safety Tax looks to be self explanatory. These monies stay in the county to be used exclusively for funding additional police, fire & medical needs.

The third option is where I get confused. As I read the briefs this 1% option is billed as a Property Tax Replacement,” so now the question becomes: Does the word “replacement” mean that if a county adopts this option in conjunction with the above, they eliminate all property taxes and function on income tax revenue alone?

Or, does it indicate that adopting that option would merely result in yet another 1% reduction in one’s property taxes?

My position is if elimination of property taxes period is the goal and that is what the wording of the statute means we would be remiss in not taking advantage of the opportunity.

So now comes the argument that in doing so some will pay taxes and some won’t! To which I respond, “and your point is?”

Yet another source of confusion is the time frame in which a county must take action in order to reap the benefits of LOIT. I understand that there is a December 2008 deadline for adoption which brings forward these questions:

A) Must we adopt by this December or lose the option altogether?

OR

B) Must we adopt by this December in order to receive the funds for use in 2009?


OR


C) Does delaying until after the first of the year mean we won’t see them until 2010 or later?

There more questions to consider at the New Albany/Floyd County level, so Part 2 will be forthcoming.

----

Note: I've perused many sources but my best understanding thus far has come from this site:

Indiana's Local Income Taxes

Reading comprehension and the New Albany Syndrome.

At the rental registration and code enforcement meeting on Saturday, I heard one rental property owner state that he is "taxed twice."

Later, on another blog, a trogonymous correspondent claimed that rental property owners pay higher property taxes than "business" owners. Leaving aside the fact that rental property ownership is a business, irrespective of how effectively one's Indianapolis lobby extracts legislative concessions and in the process twists common English into semantic pretzels, here's one reference among many (from a South Bend real estate blog) that explains the property tax situation following the "reform" bill earlier this year.

The passed bill retains the “one-two-three” percent caps on property that is residential and owner-occupied (1%), rental or agricultural (2%), and commercial (3%) but requires more than a few asterisks ...

That seems fairly clear to me. You?

"We already get taxed different rates depending on where we choose to live..."

Earlier in the week, NAC post Distance Education led to a lively discussion of school transportation methodology and who should bear the brunt of financing it.

Regular reader Brandon W. Smith offered an astute question in the comments section:

We already get taxed different rates depending on where we choose to live (well, at least where we choose to own property). If it turns out that county folks are having a disproportionate impact on school resources, then why shouldn’t the school corporation tax rates be able to reflect that?


The "who should pay" or "why should we pay" question is one we seem to ask quite often, but usually in regard to services for low income populations for whom choices are limited. That makes it all the more intriguing then, that the same type of question never seems to come up in the context of services for those who generally can afford to pay but choose more expensive outcomes.

Indeed, if distance is a major contributor to the cost of government service delivery, why then is it not calculated in the price of those services?