News From Terre Haute, Indiana

October 14, 2012

EDITORIAL: Tax policy of next session must be based in reality

Election rhetoric must give way to prudence

The Tribune-Star

TERRE HAUTE — Ear-pleasing promises are flowing fast on the 2012 campaign trail right now, with candidates hoping theirs hits the perfect pitch with voters. The problem is, those promises, if eventually implemented, may cause side-effects the office seekers fail to mention or even consider.

In that atmosphere, it was heartening to hear Indiana Republican House Speaker Brian Bosma inject some sensibility into the discourse about more tax cuts, promised by the top two candidates for governor. Republican Mike Pence proposes a 10-percent cut in personal income taxes. Democrat John Gregg wants to cut the sales tax on gasoline and the corporate income tax for businesses based in Indiana.

That sounds good to lots of people and entities who pay those particular taxes. Then again, so did the vows to install other tax cuts. Those reductions have already been approved by the Legislature, including a phase-out of the inheritance tax and a drop in the corporate income tax. Both measures will have an impact on state revenues.

Earlier this month, Bosma issued a reminder of those earlier legislative actions and warned of unhealthy results from slicing yet deeper. The speaker made his comments while unveiling the House Republicans’ agenda for the 2013 session, which could see the GOP with a super majority, depending on the election’s results. Even with a dominance by one party — the party known for tax frugality — the reductions envisioned by Pence and Gregg could face resistance.

“Some worthy programs have taken it on the chin,” Bosma said in a report by CNHI’s Maureen Hayden. In particular, Bosma was referring to cuts in social services, education and local public safety services over the last two budget cycles.

Instead, the time has come, Bosma added, for some “restorations and strategic investments.”

The earlier reductions are real, and are being felt by city and county services by local governments, as well as schools, including those in Terre Haute and Vigo County. Just last week, as the city of Terre Haute’s financial health and 2013 budget were being debated by city officials and the general public, Mayor Duke Bennett, a two-term Republican, expressed frustration about the loss of city revenue over the past few years because of Indiana’s property tax caps.

“Nobody ever talks about the loss of revenue we’ve had,” Bennett said. That decline, he said, amounts to approximately $6.7 million annually.

Back at the Statehouse, Bosma emphasized that future tax reductions would not be etched in election fervor.

“Any tax cut in addition to those has to be sustainable,” Bosma said. “Our team definitely has a long-term vision, not a campaign-oriented vision, for how we budget.”

Of course, as Hoosiers have seen during the past two legislative sessions, Bosma can only guide but not control the actions of a body comprised of 60 fellow Republicans and 40 Democrats. That said, Bosma is in a position of some influence and power, and his acknowledgment of budget realities is helpful as Nov. 6 approaches. The agenda items he mentioned included greater access to pre-school for low-income families, an emphasis on expanded and bolstered vocational training in high school and beyond — not as sexy as a tax cut, but prudent.