Pharos-Tribune

Opinion

February 2, 2014

HOWEY: Tax repeals and the promise of Gov. Pence

Seven out of 10 Hoosiers live in a city, suburb or town.

In the past month, I feared that Gov. Mike Pence and legislative Republican leaders had a rude surprise for us middle-class working stiffs. They want to repeal the business personal property tax in an effort to improve what is already one of the best business climates in the nation. They are attempting to begin a phase-out on new business equipment this year, with the goal of a total repeal a few years down the road.

This is good, right? Aren’t all tax cuts good?

Perhaps, unless the tax cut for businesses and big corporations is made up in the form of local option income taxes. A local option income tax means that they want individual counties to make up the $500 million to $1 billion or so in revenues lost to local governments, libraries and schools by dinging your paycheck.

Earlier this month, Gov. Pence said in his annual State of the State address, “To make Indiana more competitive, let’s find a responsible way to phase out this tax. But, let’s do it in a way that protects our local governments and doesn’t shift the burden of a business tax onto the backs of hardworking Hoosiers.”

So that is the dilemma facing the governor and legislative Republicans. The constitutional property tax caps passed by voters in 2008 have already sliced away significant portions of municipal budgets. Cities like Terre Haute and Muncie have had to slash budgets by millions of dollars. What mayors and city councils are now facing is cleaving into bone.

Terre Haute Mayor Duke Bennett, a Republican, told the Tribune-Star it could lose $4 million of a $33 million general fund budget. “We can’t sustain another $4 million hit on the general fund.” Bennett said that without replacement revenue, the city would be forced to cut 150 employees. “A big portion of that would be policemen and firemen,” he said. “We’ve cut all of the other areas to the bone, basically.”

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