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Commentary: Steele: State government needs to be better at its meddling

Updated: January 28, 2014 12:56PM



Elsewhere in Indiana, a new law has some school communities very concerned about paying to keep the busses rolling.

House Enrolled Act 1072 (2012) is a follow-up to the property tax caps instituted several years ago. The cap law has limits of 1, 2 or 3 percent of assessed valuation on taxes charged to property owners, depending on the type of property.

But those general caps were applied to a variety of independent taxing units — municipalities, townships, counties, schools, libraries, etc. Cuts have to be imposed, and they’ve been spread among the various levies taxing entities collect. The new law, though, creates new “protected taxes” — essentially, debt service funds that now must be fully funded, and will no longer share some of the circuit-breaker cuts.

The law, which takes effect July 1, impacts schools most significantly because property taxes fund four specific parts of the school budget: debt service, capital projects, transportation, and bus replacement.

The new law says debt service comes first. So, the circuit breaker cuts have to be spread out among the remaining three. You’d think debt service would always have been “protected,” but it wasn’t. One of the reasons for the new law was so that bondholders (and potential ones) would be confident their bonds will be fully financed.

Another reason for it is the general Statehouse scolding attitude. Punishing local officials is a favorite pastime.

Meanwhile, some schools will be hit hard. According to the AP, “Nearly 60 school corporations across Indiana will lose at least 20 percent of their tax revenue, and five will lose 90 percent, the Indianapolis Business Journal reported.”

State law requires three years’ notice for a school system to cancel bus service. Some are considering it. News like that from home has some legislators rethinking the law, and action may be taken his session to relieve school corporations hit hard.

The good news here is that Lake County (and St. Joseph) is largely exempt from this. When the tax caps were created, debt in those counties was exempted from the 1-2-3 tax caps — so service on debt incurred before July 1, 2008.

Crown Point schools are hardly impacted at all. Hanover and Tri-Creek take moderate hits, but are not among those hit hard.

But imagine if Lake County debt hadn’t been exempted, and suppose the debt loads forced a local school system to consider cutting or seriously reducing bus service. The idea of the state forcing that is absurd.

Protecting tax revenue to ensure debt payments is fine, but perhaps legislators should look at an exemption similar to Lake and St. Joseph’s.

That would “punish” the offending communities by collecting higher taxes, but still get the kids to school.



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