November Referendum on Property Tax Caps

There is an important issue for government units, libraries, and other public supported institutions in this election year. Indiana residents will have an opportunity with a referendum to vote on whether the current property tax caps should be added into the Constitution of the State of Indiana. If the 2010 Tax Cap Constitutional Referendum passes, the property tax caps of 1% (homeowners), 2% (farmland & rental), and 3% (other property) will become part of the Constitution. The caps are presently law but not part of the Indiana Constitution. For local taxing units, including libraries, the support to provide the services citizens expect and want are primarily based on the amount of tax revenues generated including property taxes.

Regardless of how the tax rates are determined or what resources funds come from, public units such as libraries have the responsibility and obligation to use tax dollars wisely for the taxpayer and community. Recently I attended a workshop where Larry DeBoer, Professor at Purdue University, gave a presentation on the effects of the 2010 tax caps if this law became part of the Indiana Constitution. According to Professor DeBoer, who focuses on local government issues in Indiana, approval of the referendum will not provide additional property tax relief since the tax caps are in place already (DeBoer). Further the inclusion of the property tax caps as a part of the Indiana Constitution will prevent future adjustments in property tax bills above the caps (DeBoer). Across the state, local units of government are facing lower tax revenues and, in many instances, are struggling to make sure important public services are funded. Many government taxing units are looking at increased fees and other options to combat the reduced revenues in property taxes.

Although I understand the argument for the caps, I worry about the inflexibility that results in making the caps part of the Constitution. It may affect the availability of public services provided by libraries and other governmental entities. What will be the long term effects on providing important and crucial services by local governments and tax based institutions? What resources could be tapped to compensate for this lost revenue, including other taxes?

I don’t know the answers, but I know this issue will be prominently on my mind this fall and beyond. If I can try to answer questions on this subject, please let me know.

See you at the library!
Ware W. Wimberly III, Director

Work Cited:

DeBoer, Larry. Indiana’s Constitutional Referendum on Tax Caps, November 2010. Purdue University, Department of Agricultural Economics: August 2010. p. 9.