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December 26, 2013

LADWIG: Strapped local government? Try setting priorities

— Did you hear them, the howls of pain from local officials on announcement that the Gov. Mike Pence administration would phase out their golden goose, the business personal property tax?

The governor thinks it will level the playing field, attract investment, create jobs.

Please know that the anguish is genuine. The amount of revenue to be lost — about a billion dollars a year statewide — cannot be finessed. County and city officeholders may have to set priorities; they may have to decide what local government should and should not be doing and then explain it to a constituency.

If you assume that your councilman is doing that already, you might double-check. In my county, public officials have reduced responsibility to a scheme: 1. a budget crisis is spotted on the horizon; 2. the political and fiscal costs are carefully tallied; 3. everybody sits tight until the only option left is to raise taxes.

Legislators, alas, are in on it. Even the Republicans operate on a “revenue neutral” basis, meaning government must be compensated for any lost revenue. Before the governor could make his announcement, Sen. Brandt Hershman, R-Buck Creek, the chairman of the Senate Tax and Fiscal Policy Committee, was warning that “absent finding a replacement revenue source that mitigates the impact (of cutting the business personal property tax) we have to be cautious.”

Instead of guarding his revenue stream, Hershman might be introducing “core functions” legislation. Such proposals are being considered in several states as a way to organize the discussion around the question of “what, exactly, is the job of local government?”

Oregon state Rep. Kim Thatcher began a campaign to identify core functions with nothing more than loose bipartisan agreement that government “can’t and shouldn’t do everything.”

“Our system of budgeting wasn’t working,” she told the American Legislative Exchange Council. “Instead of agencies pestering lawmakers for more and more money, we first needed to establish what the core functions of government were and then decide how to divvy up the available funds.”

Ryan Cummins, an adjunct of the Indiana Policy Review Foundation, already has started a list of core functions for Indiana. As a former Terre Haute councilman and finance chairman, Cummins travels the state questioning whether citizens truly want their government to own cemeteries, swimming pools, parks and golf courses. And do they care whether the emergency personnel who answer their 911 calls are municipal union firefighters or comparably trained and equipped private contractors?

Finally, Indiana needs a new model of public official, one who does not reflexively seek to enlarge government and test budgets to a breaking point. One nominee would be Judge Dan Heath of the Allen County Superior Court.

About the same time the governor was proofreading his press release, Judge Heath was going over details of a contract to privatize food service at his county’s juvenile center. Heath and his staff spent months negotiating the price points on the contract as well as squaring it with a stack of federal and state regulations.

In the end, he expects to see savings for his county’s taxpayers of more than $50,000 a year. And that figure does not include the fact that they will no longer be paying related taxpayer-funded pensions years into the future.

So those are a few ways that at least Republicans can help their governor make good on his pledge that a tax cut need not “unduly harm local government’s abilities to meet obligations.”

Democrats will have to set their own priorities, if they can find any.

— Craig Ladwig is editor of The Indiana Policy Review, a nonprofit education foundation focused on state and municipal issues.

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