By: Wes Culver

Last year when state government worked to produce a property tax reform plan that capped property taxes, they took a step in the right direction.  The problem of rising property taxes is a regular story in Indiana.   It is almost with cyclical frequency that every decade or so we see Hoosier property owners rightfully express indignation about rising property tax bills.

In 2008 the property tax reform effort centered on shifting the cost of some local government activities to the state, raising the statewide sales tax from 6% to 7%, an overall increase of 16%, and placing caps on how high a tax bill could go in relation to the assessed value of the property.  For residential real estate the cap was placed at 1%, for rental property the cap was set at 2%, and for business property the cap was placed at 3%.  In 2010 these caps will be fully phased in and already many Hoosier property owners are seeing some form of property tax relief.

If we are not careful, though, the plan that we passed in 2008 will need to be fixed again in the not-so-distant future because we failed to address the fundamental and underlying cause behind property tax increases: government spending.

As legislators look to bring more permanent tax relief to Hoosiers, we must also realize that reigning in tax increases means reigning in government spending. Unless something further is done the end result will be higher taxes for all of us.  The only difference is in whether we pay them via a property tax or some other tax.

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A long-term solution to the problem of government spending increases is state and local government budget caps.  This plan is simple in its concept, but powerful in its application. As a legislator, I know the pressures that come with being part of the budget process.  There are always more ideas to be funded, and if you lack a store of ideas you can find plenty from the lobbyists that roam outside House and Senate chambers.  But more ideas for spending greater amounts of taxpayer money is not what citizens want.

Capping the growth of government does not mean that we limit the ability of the state or local governments to respond to legitimate expansions in their budgets.   Some budget growth is necessary, but certainly it is not necessary, or good, if our state budget keeps growing year after year regardless of how well our state’s economy is doing or by how much our state’s population is increasing.  Requiring policymakers to live on a strict budget would be a positive change for Indiana.

Because of the ongoing decline in state revenues, Governor Daniels has imposed budget cuts on state agencies under his control.  If these cuts are used as the baseline from which we index future state growth, we will be shrinking the already large size of state government to a more reasonable level before indexing and controlling its future expansion.

I propose that the rate of government spending not increase more than the rate of income growth for Hoosier families.  This means that state government could not grow faster than the ability of Hoosier families to move up the economic ladder.  If our state’s citizens did not prosper, then legislators would not be allowed to spend more than they did in the past.  If the average individual income around the state rises, then that is an indication that state government can grow on a limited basis to meet the greater demands placed on it.

Until we place a ceiling on how much government can spend, and by how much legislators can increase spending, attempts to reform government by shifting tax burdens around is like getting a glass of water in the desert: it’s only temporary relief for a hopeless situation.

State Representative Wes Culver represents Indiana House District 49. Do you believe state spending should be capped? E-mail your response to wes@electwesculver.com.