Saturday, March 8, 2014

Vic’s Statehouse Notes #176 – March 8, 2014

Dear Friends,

The “Replace Don’t Erase” Coalition has invited all who can make it to the Statehouse on Monday, March 10th to share the view that dollars cut from school budgets and local government to reduce the business property tax must be replaced with state dollars.

If you can come on Monday, link up with Mayors and other municipal and county officials to protect local property tax funding needed for vital local government and school services.

While you are there, ask your legislators to delete Sections 10 and 11 from the preschool bill to break the link between helping preschoolers and a major expansion of K-12 private school vouchers which would further damage public education.

Where the Business Tax Reduction Now Stands

The latest Senate proposal has reduced the fiscal impact to units of local government and schools from $54 million to $6.5 million. This includes a $2 million reduction in school revenue and $2.4 million less for cities and towns. These provisions would take effect in FY 2016.

While Governor Pence has said he favors using state dollars to replace this revenue loss, there is no provision in the current proposal to do so. While the magnitude of revenue loss has been reduced by the Senate, the latest reduction in business property tax would mean less revenue for local government and schools and a property tax shift to homeowners.

“Replace Don’t Erase”

The “Replace Don’t Erase” Coalition is a coalition of 22 statewide local government and school associations, including the Indiana Coalition of Public Education. The coalition has been led by the Indiana Association of Cities and Towns, representing 470 Hoosier cities and towns, which issued the invitation to come to the Statehouse on Monday. In a statement issued on March 6th, the IACT said that the Senate’s latest proposal demonstrates “great movement” and then commented on the county by county option to eliminate the property tax on new equipment which originated in the House:

“In terms of remaining areas of concern, IACT continues to be intensely opposed to the county by county option to eliminate the tax on new equipment being pushed in the House. We continue to raise the red flag that this provision leaves too many cities, towns, counties, schools, libraries, townships and other local units with little to no voice in a decision to eliminate a relied upon source of revenue. What’s being considered is NOT a local option and represents a serious step backwards for economic development and growth in our state. The language in this proposal represents the beginning of a complete phase out of the tax as counties will be gradually pressured into elimination and old equipment ages out and is replaced. It’s a slippery slope and is certainly the most detrimental piece of PPT legislation still alive.”

The Indiana Association of Cities and Towns invited their 470 members to the Statehouse in the following words:

"Please come to Indianapolis on Monday, March 10 and make one-on-one contact with your legislators. We are working to make one final push to inform lawmakers of our concerns regarding PPT reform. While there has been significant evolution on this matter since the beginning of session, there is still much to say and saying it in person is how you can be most effective for your community."

IACT then added talking points, which along with the talking points provided in yesterday’s ICPE newsletter can guide your discussions with and messages to legislators. The key points prepared by IACT that I would pass along are as follows:
  • "All Hoosiers support the ideas of a great business climate and lower taxes. At the same time any changes to the current system must be well thought out in cooperation between the State, local governments and business so that any change in tax burdens is fair and both permits the local governments that generally provide significant incentives to business to continue to be competitive and, at the same time, to provide the services, infrastructure and education that all the members of the community embrace and desire.
  • Supporters maintain that the elimination of business personal property is necessary in order to attract business to Indiana, although the IEDC's website proclaims that Indiana already has the "Best Business Environment" and the "Top Tax Climate," ranking first in the Midwest in "business tax climate." If Indiana already has the "best business environment" and the "top tax climate" why is this necessary?
  • The top rankings for business climate are not true for Indiana's ranking in education, college graduation, high school graduation, nor is it true for the condition of Indiana's roads, bridges, water and wastewater facilities, its parks, or many of the other factors business and industry look at when deciding where to locate.
  • Prior to 2010, under Indiana's "frozen levy" system of property taxation, a decision to provide tax abatement simply shifted the property tax liability to residential taxpayers and to other business taxpayers. Since the enactment of the property tax caps, a decision to provide tax abatement shifts the property tax liability to other taxpayers until the caps are reached; at that point, the schools and local governments must forego tax revenues in order to provide the tax abatement. A further loss of those tax revenues also means Hoosiers forgo quality of service, infrastructure and education.
  • The decision to provide tax abatement is based upon the local government's determination that the benefit the new investment and new jobs would bring to residents, other taxpayers and to the state and local government outweighs the added costs, including increased property taxes and decreased quality of services, infrastructure and education, to our citizens. It is not clear what, if any additional benefits from the current proposals will outweigh the additional costs imposed on homeowners, other taxpayers, schools and local governments. If there is less assessed value, tax rates increase, causing tax bills to all other taxpayers to be higher and circuit breaker tax credits to be higher as well, thus reducing revenues for local governments.
  • A decision to exempt all new business personal property from property taxes affects all taxing units and all non-business taxpayers. What public process protects residential taxpayers, schools and others that do not benefit from, and may be harmed by, the exemption?"
It is amazing that public school revenues are again under attack. Public school educators don’t need this headache. If you can come to the Statehouse to join in one-on-one discussions with your legislators on Monday or even on Tuesday, please do so. Please do what you can in this final week of the session.

Thanks for contacting your legislators and for your active support of public education!

Best wishes,

Vic Smith

ICPE has worked since 2011 to promote public education in the Statehouse and oppose the privatization of schools. The 2014 session of the General Assembly is now past the half way mark in its deliberations. We need your membership to help support our hard working lobbyist Joel Hand. Many have renewed their memberships already, and we thank you! If you have not done so since July 1, the start of our new membership year, we urge you to renew by going to our website.

Although ICPE entered this session of the General Assembly in better financial shape than in any previous session, we still need additional support to fund the commitments our board has made for our lobbying efforts. We are counting on your financial help during the session.

We have raised the needed money in past sessions, and we must do so again. We need additional members and additional donations. We need your help and the help of your colleagues who support public education! Please pass the word!

Go to for membership and renewal information and for full information on ICPE efforts on behalf of public education. Thanks!

Some readers have asked about my background in Indiana public schools. Thanks for asking! Here is a brief bio:

I am a lifelong Hoosier and began teaching in 1969. I served as a social studies teacher, curriculum developer, state research and evaluation consultant, state social studies consultant, district social studies supervisor, assistant principal, principal, educational association staff member, and adjunct university professor. I worked for Garrett-Keyser-Butler Schools, the Indiana University Social Studies Development Center, the Indiana Department of Education, the Indianapolis Public Schools, IUPUI, and the Indiana Urban Schools Association, from which I retired as Associate Director in 2009. I hold three degrees: B.A. in Ed., Ball State University, 1969; M.S. in Ed., Indiana University, 1972; and Ed.D., Indiana University, 1977, along with a Teacher’s Life License and a Superintendent’s License, 1998.

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