The failure of the General Assembly to pass a tax-restructuring bill during the last legislative session has been followed by quite a bit of confusion about why Indiana needs to restructure taxes.
State government does a lot more than just welfare, environmental protection and other policy areas delegated from the federal to the state governments.
Began during the Nixon administration, accelerated by Reagan, and now the mantra of the Republican Party, the problem is that while the federal government has tremendous revenues the state of Indiana has a much smaller ability to raise funds. Money the state used to be able to dedicate to K-12 and higher education now must go to pay for environmental protection and welfare.
Secondly, the economy isn't as strong as when the budget was written last year. The state depends on revenue projections to determine the amount of money that it has to spend. When the economy sours, actual revenues don't meet projected revenues. So there isn't enough money to pay all of the bills.
The good news is that the state keeps a rainy day fund, but that's for emergencies. The Indiana constitution forbids deficit spending, and that's why the state doesn't have debt like the federal government does. There are only two options available to the state: raising revenue or cutting spending.
The failure of the General Assembly means the governor has to cut state spending. The Republicans would have you believe that government spending is evil, but these cuts must come from somewhere. The Republicans claim they are trying to cut fat, but they've cut to the bone. This means less money for universities and higher bills for students. There is, however, an historic opportunity available.
Indiana must restructure property taxes. The ruling in the St. John case forces the state to move to market value assessment for property. The problem is that some homes are assessed at values far below their true market price and the move to market values is going to raise taxes for the people who can least afford it. The affected neighborhoods are going to primarily be older, urban areas where people don't have income like suburbanites.
Gov. Frank O'Bannon and Democrats in the House and Senate have tried to spread this burden over a mix of income taxes, sale taxes and dockside gambling. Dockside gambling in particular is a good idea that's been shot down by Senate Republicans.
All the state has to do to raise hundreds of millions of dollars is let people get on and off the boats as they please. By raising the sales tax to 6 percent, the state will be able to fund much of the spending the Governor has been forced to cut. A graduated income tax can provide even more funds. The state can pay the bills without cutting your financial aid. This is just a cynical manipulation for political gain.
Early in the session the chairman of the Senate Finance committee was working on a bipartisan tax-restructuring plan with other legislative leaders, but it is fairly obvious this isn't what the president of the Senate wanted to happen. He wants to earn political points by forcing the governor to cut spending. He thinks that by bankrupting the state, he'll be able to buy a quorum-proof majority for the Republicans in the Senate.
A quorum is the number of legislators who must be there to conduct business, and right now Democrats must be in the Senate for business to be done. The president of the Senate wants to stop that so he and his cronies can do whatever they want.
He's willing to cut financial aid and place a hardship on students. That's not right. There's something we can do. We can call Sen. Garton, the president of the Senate at 1-800-382-9467.
Education is essential. Let's tell him we don't think it's right to score points with college student's educations.
Write to Courtney at sturgeoncourtney@hotmail.com
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