Problem is spending, not limits on taxes

It’s municipal budget season and is anyone else tired of listening to sky-is-falling rhetoric from officeholders unwilling to make hard decisions about spending in a tight economy? Recently, yet another Indiana mayor weighed in on the fiscal “disaster” wrought by property-tax caps.

David Kitchell of Logansport, in the always sympathetic Fort Wayne Journal Gazette, didn’t waste any time launching into the local version of the Washington Monument Syndrome in which cutting the most visible or appreciated service is the reflexive action when faced with a budget cut: “It means there may be fewer police on the streets and deputies on the road … It means there may be fewer firefighters and teachers …”

When the tax-dollar gravy train is in danger of derailing, you see, try to paint a picture of anarchy in the streets. Surely that will get them to cough up more money for all the vital services supplied by government. So the mayor goes on, quickly arriving at the solution of those without the principles or courage to solve the problems of government: “… other local taxes will probably have to be raised to compensate for the loss in property-tax funding.”

If you are a taxpayer in Logansport, grab hold of your wallet. If you are a business person currently considering Logansport, let Mayor Kitchell’s declarations sink in before you make your investment decision.

Kitchell of course is not the only Indiana mayor making this argument. But standing in opposition have been researchers who for 10 years have countered such policies of convenience. They have made clear in cited article after cited article that caps on property taxes are not a mere policy glitch but the signal that there has to be a significant change in the fundamental way local government operates.

That has not happened, sadly, and now mayors are warning about the tax-cap wolf at the door. Their beleaguered constituencies should know, though, that they don’t have a revenue problem, they have a spending problem. And if they don’t correct it, the State Board of Accounts will be telling their cities what it recently told mine, that there is “substantial doubts about its ability to continue to operate as a city.”

So what’s a modern mayor to do? Independent groups such as the Indiana Policy Review have documented in detail the challenges coming with property-tax caps and listed the specific steps necessary to meet them and remain financially solvent. They are summarized here:

Limit local government to only the truly essential functions, e.g., the protection of life, liberty and property. If it’s not essential, stop funding it.

Put essential functions to the market test.

Base compensation on objective, measurable standards; require public employees to compete both with each other and potential market providers of the same or similar services.

Again, there was a reason tax caps were implemented, that is, to protect property owners and other taxpayers from short-sighted, disastrous, out-of-control spending policies pushed by mayors such as the one in Logansport.

Ryan Cummins, an adjunct scholar of the Indiana Policy Review Foundation, is a Terre Haute businessman and former member and appropriations chairman of the Terre Haute Common Council. Send comments to awoods@tribtown.com.