Another view: Give locals control of taxes

FORT WAYNE — The Indiana Association of Cities and Towns has the germ of a good idea, and it is now in the “be careful you don’t get what you ask for” position.

The association, which represents 470 cities and towns in the state, wants the General Assembly to pass legislation giving municipalities the authority only counties now have to adopt local option income taxes. The group also wants all cities and towns to be able to levy a food and beverage tax or an innkeeper’s tax of up to 1 percent. IACT officials said having such authority would allow cities and towns more options to offset the money lost to new statewide caps on property tax bills.

Counties, such as Allen, that now have such specialty taxes as the food and beverage and innkeeper’s tax have to have special permission from the state and usually have to give a specific reason — like our desire to remodel the coliseum.
That special relationship in which the state has an overbearing role has stayed somewhat constant even as slow, painful steps toward home rule have been taken. Letting such money be used for anything officials want to would be an even bigger step than giving cities the same taxing options as counties.

The state has made major moves in trying to reduce its (and local governments’) dependence on the property tax. That is good news both for the state’s long-term fiscal health and for the pocketbooks of property tax payers, especially those who are on fixed incomes. But that means other sources of tax income must be found (insofar as spending is not reduced). It is logical that the search for such funds includes a component giving cities and counties more local control.

But that control has always been needed.

Indiana has been inching toward home rule in recent years, but unless there is fiscal home rule, the rest doesn’t matter nearly as much. Local officials have — or at least should have — more knowledge than the state about what needs to be done and how much local industry can bear, what homeowners can tolerate, how much impact a sales tax would have.

But there is a flip side to that.

Voters also have more awareness of how their money is spent locally, so they have more incentive to use their votes to keep officials prudent. Those incumbents who would be reckless with local tax funds might all be one-term officials.

The state is under increasing pressure to keep its own fiscal house in order. Why wouldn’t it make things easier on itself by giving local governments — and citizens — more control over their own destinies?
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Distributed by McClatchy-Tribune Information Services.