Essay # 3   Our Taxing Situation

Once upon a time in NW Indiana there were massive manufacturing facilities that employed thousands upon thousands of people who produced tons and tons of products on a daily basis; mostly steel and petrochemicals.  In this essay, “the mills.”

Money generated by the mills fueled our local economy and built our communities.  Nearly every person and every dollar could somehow be traced back to the mills.  The mills also largely funded local government through the property taxes they paid.  Property taxes pay the bill for local government.  Princely sums were piped into local political coffers to assure happiness and harmony in the local communities where their employees lived.  Given the torrential flow of revenue, production was the priority.  So long as the profits and paychecks kept coming “everything was good.”  We were all very busy and quite content.

Until one day when the flow from our “cash cow” slowed.  Our mills faced inflation, and recession, and globalization.  Some mills were forced into bankruptcy, but all thinned their operations, trimmed their ranks, and scrutinized the amount they were spending on everything; especially property taxes.  Pandora’s box was open.  The mills would no longer foot the bill for the government created with their once deep pockets.  They’d still be paying, but not like before.  Responsibility for the bill would increasingly fall to the residential taxpayers for the government we’d all grown accustom to.

The mills effectively authored their own tax credit by doing the same thing you or I would. They appealed the assessed value of their property.  Property tax bills are calculated upon a property’s accessed value (AV).  The mills won their appeals on the large assessments placed upon their property.  As the value of their property plummeted, so did their tax bills.  The mills were forced to go on a crash diet and did, but in most cases local government did not follow suit. Now someone else would be responsible for “feeding the beast.”

Residential tax payers are great enablers.  We’ve grown fond of our government services and often have inflated expectations.  Rather than dieting, we expect more and more from local government and our elected officials.  The mills reasoned that those who most directly benefit from local government services should be the ones paying for it.  Given the mills were and are largely self-sustaining, their needs and expectations of local government are minimal. 

Consequently, the bill for local government was passed to the residential taxpayers.  Some folks in Lake County reacted by filing a lawsuit claiming they were paying an unfair share of the bill under the reapportionment – a lawsuit they won.  As part of his ruling a judge ordered not just Lake County, but the entire State of Indiana to change how it determined assessed value.  To restore fairness, the property in the entire State would be reassessed using a new method called “fair market value.” To provide balance, the reassessment included a feature called “trending.” 

When our mills reduced their financial contribution to local government, we all discovered what local government was actually costing us.  It inspires us to ask: what exactly are we paying for? is this necessary?  what’s important? how did government manage to get into “this” business (substitute “this” for a laundry list of services)? What can and should we reasonably expect from local government?

We can parrot the mills and appeal the assessed value of our residential property.   While that may prove to be an effective short term strategy to reduce an individual tax bill, long term we need to streamline local government, evaluate our priorities and adjust our expectations.  The blame game and finger-pointing only delays the inevitable.   

There’s no free lunch and nobody’s left to pass the bill to.