Is Lake County stuck in property tax freezer?
Lake County taxpayers have reason to be thankful this holiday season, Councilman Larry Blanchard said.
The state-imposed freeze on the property tax levy—the total amount of taxes local and county government can collect—spared the businesses and homeowners from having to pay an additional $43 million this year, according to Blanchard’s calculations.
He said the freeze is projected to produce even more savings—$65 million—in the new year.
Blanchard, a Republican from Crown Point who leaves office Dec. 31, praises the reduction in taxes as overdue austerity. At the same time, though, he worries the progressive growth of freeze-related tax reductions eventually will cripple local government if the state Legislature doesn’t allow some growth in tax revenues.
Forget it, replies state Rep. Chet Dobis, D-Merrillville, chairman of the Indiana House Select Committee on Government Reduction.
“I’ve talked to some of my Republican friends in Indianapolis, and it’s just not going to happen,” he said of thawing the freeze.
The savings are the result of a 2007 law forbidding Lake County from boosting property taxes by about 3 to 4 percent annually to keep up with inflation, a benefit Indiana’s 91 other counties enjoy.
Legislators passed the law to punish local officials for overspending—and for refusing to approve a personal income tax on county residents and workers, something the other 91 counties have done to avoid high property tax rates needed to fuel local government, particularly in large cites.
Legislators may have expected Lake officials to fold immediately. The County Council almost passed an income tax in 2007 but couldn’t muster a super-majority of five votes to overcome a veto by county commissioners.
Since then, officials have dug in their heels and refused on grounds that such a tax would unfairly exempt corporate income and would amount to a reallocation of wealth from the wealthier suburbs to the county’s free-spending city governments.
Blanchard said county officials have trimmed tens of millions of dollars from county spending since 2007 by reducing payroll through layoffs and early retirements and relying more on user fees.
“That is something I’ve been trying to get the County Council to do since the early 1990s,” Dobis said. “I have nothing but praise for the County Council in office the last four years who have done the cutting necessary to start to eliminate the patronage system. But they have been forced to do it.”
But the freeze continues to bite deeper, and combined with tax-cap reductions in individual property owners’ tax bills and the economic downturn, reduced tax collections persist.
Blanchard said there is nowhere else to cut except essential services. Even investment revenue the county once received by temporarily banking taxes and other funds dropped to less than half a million dollars this year, from $9 million in 2007. Blanchard said 75 percent of county government’s tax revenues are needed by the courts, prosecutor’s office, the coroner, county police and jail.
Lake commissioners have swung from threatening to take the state to court, to gently cajoling the Legislature to give them relief.
Dobis acknowledges the freeze has hurt smaller communities “much more than county government,” but he said his fellow legislators are certain that if they reduce the pressure on Lake County “they will go back to their old ways and hire those ‘ole’ people who couldn’t deliver a vote outside their own household.”
Dobis said county officials have only one choice: Pass an income tax and reduce property taxes.
“They can file a lawsuit, they can hire a lobbyist, but it won’t matter because 91 other counties have adopted this (income) tax,” he said.