The Hair’s Hair-Brained Property Tax Scheme

Credit where due; Speaker Pat “The Hair” Bauer has finally put forward a property tax plan that was not devised on the back of a napkin during a party put on by some big-bucks lobbyist.

The problem with this new Democratic plan, of course, is that it is not much less hair-brained than the plan that was napkin-born.

Let’s take a look at the write-up on it from the Courier-Journal:

House Democrats did an about-face yesterday, backing off a complicated plan they approved in January that would have restructured Indiana’s tax system largely as proposed by Republican Gov. Mitch Daniels.

They actually voted for Mitch’s plan, before they voted against it.

Instead, House Ways and Means Chairman Bill Crawford, D-Indianapolis, told Republicans in a negotiating session that Democrats want a simpler tax change — an increase of 1 percentage point in the sales tax that would fund a new property-tax break for homeowners.

The Democrats’ new plan would shift almost no local costs to the state budget, would put no new spending limits on local governments and would not require referendums for local construction projects — all tenets of Daniels’ plan and part of House Bill 1001 as passed 99-1 by the House early in the session.

There you have it.

No accountability in local spending.

No measures to slow the growth in spending.

And no restrictions at all on the taxation of land used for businesses, rentals, and farms.

Yes, farms.

The Democrats want no caps at all on the property of farmers.

All of this means that, if approved, the Democratic plan would do nothing to stop the growth in spending that was in large measure responsible for this problem.

Worse still, it would place the burden for paying for that growth in spending upon business property, rental property, and farmers.

The governor’s plan capped property taxes at 3% for businesses (including farmers).

The Democrats give them no cap at all.

All this means is that, as the property tax levy grows, it will be businesses, renters, and farmers that will be squeezed the most.

That’s a heck of a plan.

It’s so bad that they almost, almost should go back to the one that was drawn on a napkin.

Because it is stripped of any spending restraint whatsoever, in four or five years, the Democratic plan would see this state in a property tax crisis again.

The whole point of the additional measures in the proposals put forward by the Republicans and the Governor is to ensure that this is not a crisis again in a few years’ time.

(Read the more after the leap)

The switch drew a tepid response from Republicans.

Senate Tax Chairman Luke Kenley, the chief GOP negotiator on the tax proposals, said he appreciated the suggestions. But Republicans raised questions about the fact that Democrats had no data to show how the new plan would affect homeowners and local governments.

Not having any data is par for the course for The Hair and his balding crony Bill Crawford.

They didn’t have any data for their napkin proposal either.

But Democrats said the change was necessitated in part by news yesterday that state tax revenues continue to fall below projections. That would make it more difficult for the state to take over local programs, Crawford said.

“We’re obviously facing a recession,” he said. “There is an economic downturn. This is undisputed.”

Gosh! The economy is tanking!

We had better tax people more!

Where do the Democrats find people this stupid?

The Democrats’ plan — which was offered to Republicans as a compromise during a negotiating session on the tax bill — does include a limit on homeowners’ tax bills of no more than 1 percent of assessed value. But it excludes all debt and school operating costs from the calculation, which Republicans said could total as much as 60 percent of a homeowner’s bill.

Such a cap “wouldn’t mean a darn thing” for homeowners, said Rep. Jeff Espich, the Republican fiscal leader in the House.

Debt is excluded, of course, because it pays for those expensive designer schools.

You know, the ones that Democrat gubernatorial candidate Jim Schellinger made his fortune building.

Let’s call this the Schellinger Loophole.

Not only does it screw over farmers, businesses, and renters, but it screws homeowners by leaving a loophole in the plan big enough to drive a natatorium through.

For those of you from Kentucky, natatorium is a fancy word for an indoor swimming pool.

The Democrats’ proposal came a day after House and Senate Republicans joined to unveil what they called a compromise offer — a version of Daniels’ tax plan that included income-tax breaks for renters and low-income workers. The latter are ideas that Democrats have said are necessary for a final deal.

Later, Daniels said he liked the Republican plan so much he would sign it into law and said anyone who didn’t endorse it wasn’t serious about capping property taxes.

Unsurprisingly, the Democrats have responded to a data-supported and reasonable Republican proposal with something that is hair-brained, unsupported by any data or analysis or reasoned thought at all, and merely kicks the can down the road.

The Hair’s scheme would guarantee that property taxes will be a crisis again in four or five years.

Indiana has a bleeding ulcer, and Hoosiers deserve more than the band-aid that the Democrats are offering.

Even Brian Howey pointed out how absurd and pathetic their proposals have been:

Neither Thompson or her primary opponent - Jim Schellinger - offered up their own plans… Schellinger’s campaign has been virtually mute on HB1001 despite the fact that it has been the most conspicuous public policy topic this winter.

While Crawford claims legislative Democrats won’t “negotiate in public,” the Democratic proposal will not get the kind of scrutiny - public town hall forums, legislative committee hearings, House and Senate floor debates, media commentary, public official and citizen commentary - that HB1001 has received over the past four months.

This is a classic cave-in by the Democratic Party that, other than the rebate, has been virtually devoid of public policy ideas. One pushed in February by Crawford that would have tied household income levels to the caps but had no statistical data laying out what the fiscal impact would be. Crawford backed off that folly last week. Friday’s Democratic proposals were also sans any kind of impact studies.

This is indicative of the kind of inertia that has characterized the Indiana General Assembly. It fails to take long term approaches to problems and easily derails at just about any economic news. Gov. Daniels has threatened a special session if the pillars of his plan aren’t passed. With 19 House members facing May 6 primary races and seven in the Senate - with many challengers basing their campaigns on the property tax issue - it might not take long for the white, hot, heat of public opinion to manifest itself if legislative Democrats continue this course.

The way things are currently going, a special session seems all but inevitable.

(This post is also available at the Hoosierpundit)