News From Terre Haute, Indiana

Flashpoint

December 28, 2013

FLASHPOINT: What are government’s essential functions?

Here are some questions regarding the distressed reaction by some in local government to Gov. Pence’s stated intent to eliminate business personal property taxes.

• Business personal property tax (BPPT) represents over 70 percent of all abatements supported, signed and implemented by the current mayor and City Council. The reasoning given is that these abatements create jobs at the tax-advantaged company. Why then would a mayor or council member oppose creating jobs at companies that would receive the same tax treatment as the companies chosen for a special deal? If “jobs” are a responsibility of a mayor, commissioner or council member, shouldn’t they be thrilled that this “job creation” strategy is being expanded to every business?

• Both the current and former mayors and council members have argued for years that abatements do not shift the tax burden to others. In his interview with Arthur Foulkes of the Tribune-Star, Mayor Bennett stated that elimination of BPPT would shift the tax burden to others. Since these two actions (abatement of BPPT and elimination of BPPT) are the same thing, which is true? Does it shift the burden or doesn’t it?

It does, and that is not an opinion but a mathematical fact. Of course, this begs the question of why are the mayor and council members OK with shifting the tax via abatement but not by elimination of the BPPT?

• Mayor Bennett claimed in an interview with WTHI that “the city simply cannot function” without this revenue. Here are some very specific questions for any elected official about “basic government services.”

1. Are property tax subsidies to golf a basic service? If so, why don’t we subsidize shooting ranges, paintball or horseback riding? Should we also send tax dollars to the privately owned Idle Creek golf course, just to be fair?

2. Are rides to Walmart a basic service? If we should subsidize the purchase of transportation, should we also subsidize the purchase of shoes, electricity or furnaces, all of which are necessities?

3. Is operating cemeteries a basic service? If so, do Roselawn, Calvary, Grandview or other privately owned cemeteries have a claim on property tax

dollars?

4. Is a swimming pool or skate park a basic service that must be provided by government? Bowling alleys, fitness centers, health spas are all nice activities that add to quality of life; why don’t we pour property tax dollars into these?

5. Are charitable donations made with tax dollars a basic service of government? Is charity still charity when it’s not voluntary?

In short, just what are the essential functions of government and even more critical, what are not? This is a vital question when a mayor is claiming that a city “can’t function” without some specific tax revenue.

• When speaking with the Tribune-Star and WTHI, the mayor claimed a loss of $1 million to the sewer utility from the elimination of BPPT. The City of Terre Haute has been taking over $2 million out of the sewer utility each year for several years and putting it into the general fund. (It is called PILOT or payment in lieu of taxes, which is just a roundabout way of imposing additional taxes.) Why doesn’t the city just stop taking half of this money out of the sewer utility? Wouldn’t the sewer utility be in better financial condition to stand this potential loss if the city hadn’t been siphoning money from this entity? If the sewer utility can do without over $2 million per year being skimmed away, what’s another million among friends?

• Mayors and many state legislators are claiming we must “make up” for this lost source of revenue. The statement is predicated on the belief that the money belongs to the government first, rather than the taxpayer. Why do they believe government has a prior claim on these dollars rather than the folks who earned the money?

• Do your elected officials favor increasing the burden of local income taxes before they would cut dollars from a local government budget? This is a simple “yes” or “no” answer that should be on the record for every mayor, commissioner and council member. Why does an elected person who answers “yes” believe they know what to do with your money better than you?

Every citizen should be asking these questions of their elected local and state officeholders, and they should be expecting clear and unequivocal answers.

Ryan Cummins is a local businessman and former member of the Terre Haute City Council.

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