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Editor’s note: This letter is in response to both Sue Finkam’s letter published in the Friday, June 19 edition, and Bill Shaffer’s letter, published in the Thursday, June 18 edition.
Dear Editor:
I am glad to see Sue Finkam publicly address Bill Shaffer here. It is good and healthy for there to be debate and discussion. I hope Councilor Finkam or other elected Hamilton County Republican officials stay engaged here. I think, factually, neither Bill nor Sue are wrong: Technically, the city isn’t on the hook for this kind of debt, but the state does add it to the running total debt of the city. The state legislature or bureaucrats aren’t infallible. Go figure!
I would like to address more philosophical issues with our debt and tax structure. The Indiana Constitution limits government debt to 2 percent of assessed value, but also limits taxing to either 1, 2, or 3 percent of assessed value, depending on what type of property it is. One percent for homes and 3 percent for commercial, essentially.
My observation of watching Carmel and southern Hamilton County is that it is very rare for a new business or commercial building to occur absent some kind of government incentive, whether abatements, TIF-type diversions (including these developer-backed bonds), or government “investment” like the Hotel Carmichael (public-private partnership) or Grand Park. It is also common, to avoid the Constitutional debt limit, to “lease” new government buildings from often newly-created public building corporations.
I would suggest that the Constitutional limits on debt and tax rates, because they are arbitrary and too often “followed” in the breach, should be ended. Regarding the tax rates, we now have regular and expected referenda to overcome those limits, especially for schools, plus growing income tax rates (see new 911 tax), on the low side (1 percent for residential), and tax abatements and TIF-type incentives to lower taxes on the high side (3 percent for commercial).
All these add costs to government, enriching lawyers drafting the resolutions and financial consultants like Curt Coonrod analyzing them. The same occurs to legally avoid the 2 percent debt limit, with the creation of these shell corporations that “own” the buildings and from which the government-entity leases them.
Before I moved here, I assumed Mitch Daniels was like me, a libertarian, since he reads authors like F.A. Hayek, and these property tax caps were great. However, observing them in practice, plus reading critics from the right like the late Gary Welsh and the still very much alive Paul Ogden, has proven my opinion of My Man Mitch wasn’t based fully on facts.
I would encourage Councilor Finkam to use her “bully pulpit” to address these concerns head on with our state legislature. Debt, whether through leases or not, and tax incentives all make bankers, lawyers and financial consultants richer, while making the rest of us poorer, all under the well-intentioned goal of having lower taxes today.
Here is what then-Governor Daniels stated about Hayek’s classic Road to Serfdom: “Hayek, when I thumb back through it and look at what I marked when I first read it, was the book that, to me, convincingly demonstrated what was already intuitive: namely, the utter futility, the illusion of government planning as a mechanism for uplifting those less fortunate.”
Government planning, though, does uplift the 1 percent of crony-connected group of developers, lawyers, bankers and government financial planners, so ending these arbitrary limits of 1, 2, and 3 percent actually will, though counter-intuitively, reduce government micro-planning and bring more honesty to government rather than the smoke-filled halls of the 4CDC and Carmel Midtown Community Development Corporation.
The goal should be less government spending, whether couched in terms of “investment” or “prudent” debt or Public-Private “Partnership.” It is clear our tax structure disincentives private capital formation, the real goal, or otherwise these developers wouldn’t be needing to ask to divert significant parts of their tax payments to build the buildings in the first place!
Eric Morris
Carmel