December 20, 2002 Indianapolis Star Editorial


Here's how city can fund future needs

December 20, 2002
Our position is: The Marion County Tax Alliance has identified flaws in the tax structure and sensible ways to fix them.

Over the next few years, Indianapolis is going to need more money -- lots more. It will need millions for public safety, police and firefighter pensions and developing a permanent solution to jail overcrowding. It will need $74 million for Mayor Bart Peterson's homeless initiative; $600 million to complete planned renovations of Indianapolis Public Schools; up to $1 billion for solving the longstanding problem of combined-sewer overflows.

Taxpayers could rightly be nervous at the specter of a mammoth tax hike to pay for this convergence of needs.

Thankfully, a group of business leaders has already issued a set of recommendations for restructuring the county tax system in a way that will meet current and future funding obligations.

The goal of the Marion County Tax Alliance, formed by the Indianapolis Chamber of Commerce, was to present solutions early in the tax discussion game -- before the debate gets overly politicized by City Hall politics in 2003. To that end, the alliance has succeeded already.

The specific recommendations will be controversial, for sure. They include a variety of tax increases and funding shifts that will cost all taxpayers something; they place a heavier burden on those who don't live in Indianapolis but rely on county services for work or play.

But by putting the possibilities in writing, backed up by financial reality, the alliance has neutralized the debate, forcing people to focus on facts and not emotion.

Among the recommendations: increasing the county option income tax from 0.7 to 1 percent; increasing user fees that apply mostly to visitors, such as the auto rental and hotel tax; and considering the adoption of a regional sales tax or commuter tax.

Commuters will howl in protest, but they are an obvious source of revenue considering that 25 percent of the Indianapolis work force -- 150,000 people -- comes from 43 other counties. "In effect," the report notes, "these working commuters are getting valued goods such as public safety and infrastructure for free."

The alliance also recommended consolidation of some existing taxing districts, in particular a countywide approach to funding police service needs. As it is now, residents within the Indianapolis Police Department boundaries pay for both IPD and sheriff's services, while those who live outside IPD pay only for the Sheriff's Department.

The 33-member alliance had done the mayor a huge favor by taking on this unpopular task and has established an excellent starting point for future discussions.

"No new taxes" will no longer be an acceptable platform for running for city or county office. As the report makes clear, the funding situation is too complicated to address with simplistic slogans.

Indianapolis must increase its revenues over the next few years to fulfill its obligations to the citizenry. The question is how. With the alliance's help and the input of citizens, we can and must figure it out.