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Decatur Daily Democrat
"The Howey Report"
May 24, 2005

Spiking Property Taxes...and Retribution

By Brian Howey

INDIANAPOLIS - Because of the recently passed biennial budgets, news accounts from around the state this past week have reflected the coming pain: Muncie Community Schools will cut 43 teaching positions; 13 positions will be cut in Mount Vernon. The teacher-of-the-year in South Bend was laid off. The Fort Wayne Journal Gazette reported that 18 of 33 northeastern Indiana school district will probably raise property taxes.

The Richmond Palladium-Item reported, "Area school administrators still are deciphering Indiana's new two-year budget, but most are pretty sure they already know the bottom line: Get by with less money or raise local property taxes."

And this is just the beginning. Expect more and more such news accounts. And everytime a school corporation decides to raise your property taxes, superintendents and school board members are going to be blaming state legislators.

This past week, Gov. Mitch Daniels attempted to deflect some of that criticism, releasing an Indiana Department of Local Government study that revealed that Indiana school districts build or add on facilities that cost 15 percent more per square foot, are 27 percent larger, and cost 46 percent more than the national average.

"If we were as careful about construction spending as the average state, we could free up millions of dollars for other projects," Gov. Daniels said. He said if communities built at the national average savings would be $234 million, which is about the figure that Democrats estimate property taxes will go up due to educational spending.

This has initiated what looks to be a long-running battle between the Daniels administration and local school boards, with some educators accusing the new governor of "meddling" in local affairs.

This, I promise, will be fodder for future columns.

But for the next two years - before (and if) school construction practices can be reformed - public schools are facing federally-mandated No Child Left Behind standards with depleted resources.

Your local state representatives and senators will attempt to tell you that this is because of Gov. Daniels' insistence on balancing the budget before the next recession commences. That is a valid concern. However, Gov. Daniels and Republican legislators had another option: gaming.

By allowing slot machines at Indiana's two horse tracks at Anderson and Shelbyville, the state could have taxed the proceeds to the tune of tens of millions of dollars annually that could have been used for education.

Going into this session, it was obvious that either increased gaming or higher taxes would be the reality for a new Colts stadium and a balanced budget.

Legislative Republicans chose higher taxes: a regional restaurant tax in Central Indiana for the stadium; and the need for scores of local school corporations to raise property taxes to fund operations.

It was a conscious decision and one that is likely to have huge repercussions in the 2006 legislative elections.

Critics of gaming see it as an "evil" influence that "doesn't manufacture anything." Before riverboat casinos were legalized in 1993, anti-gaming forces told us that restaurants and movie theaters would close. That didn't happen. Downtown Indianapolis, for instance, has more restaurants and movie theaters now than it did in 1993 and the establishment of an off-tracking betting parlor.

The same legislators who tell us that gambling "doesn't produce anything" will turn around and vote to build half-billion dollar stadiums for professional sports franchises. Peyton Manning, Reggie Miller and Edgerrin James don't "manufacture" anything either, beyond touchdowns and fieldgoals. But they do have something in common with casinos: they provide entertainment. Hoosiers have emphatically embraced both of these forms of entertainment.

Critics of gaming say that it ensnarls people into addictive behavior. And professional sports don't? No one can tell us how much is spent in legal casinos or race tracks, as opposed to illegal bookmaking. In fact, there are no academic-caliber research on the economic and social costs of gaming after a decade in Indiana because legislators - both pro and con on the issue - don't want to know the facts.

There's another reason why legislative Republicans opted for higher taxes for you as opposed to slot machines at two horse tracks. They blame the May 2004 primary loss of Senate Finance Chairman Larry Borst to Republican State Sen. Brent Waltz on "the gamers." Waltz had a $1,000 campaign donation from former Indiana Republican chairman Rex Early, who has a tiny stake at the Shelbyville track. And that was it. Waltz has made it clear he will vote against any expansion of gaming.

This is ironic, because not only did Borst engineer the 1993 casino and horse track deals, he had more to do with the decade of unbalanced budgets that Gov. Daniels has consistently decried than any other legislator. In the minds of legislative Republican leaders, it was payback time for Borst's defeat. Thus, House Speaker Brian Bosma and Senate President Pro Tempore Robert Garton took slots off the table early on.

You need to remember that when you discover your property taxes are going up.

Howey is publisher of The Howey Political Report, the weekly briefing on Indiana politics. See www.howeypolitics.com.