Letter: Potential public safety tax caused by misuse of taxes
The current situation in Huntingburg and Jasper, where elected officials are considering increasing the income tax for safety reasons, raises critical questions about their management of local finances and spending of property taxes.
Historically, property taxes have been a primary funding source for essential services such as police and fire departments. However, a combination of increased spending on non-essential projects (pools, downtown beauty projects, etc.), the impact of Tax Increment Financing (TIF), and possibly mismanaged priorities of non-essential over safety have led to a situation where these property tax funds are running out before they should. This difficult subject is wrapped around your local taxes, a subject you are never taught about. Let’s explore this and follow the money.
Property taxes are calculated using the formula:
Tax Rate = Levy / Net Assessed Value
This means the tax rate is determined by dividing the required spending funded by property taxes (levy) by the total assessed value of properties in the taxing entity. The resulting tax rate is then applied to the value of individual properties to determine each taxpayer’s contribution. Historically, this method has ensured that sufficient funds are available for necessary services and taxing entities.
Both cities are claiming they don’t get enough money from property taxes for fire and police services, even though that’s a primary purpose of property taxes. Now they say they need a new income tax! This suggests that taxpayer money for fire and police is being spent on other things as the funding is there in their revenue. However, this balance can also be disrupted if the levy increases significantly or if the assessed value of the tax base grows slower than expected, which is exacerbated by TIF. Lets look at TIF.
TIF is a tool that local governments “use” to promote economic development. When a TIF district is created, the current assessed value of the properties within the district is frozen. As improvements are made and property values increase, the additional tax revenue (the increment) generated by the increased value is “reinvested” into the TIF funds, not the local taxing entities, to fund further projects managed by the various Redevelopment Commissions (RDC).
In Dubois County, the impact of TIFs has raised the county tax rate by 2.1% in 2020 and now 3% in 2023. In Jasper, the impact of TIFs has been pronounced. For instance, TIFs have significantly increased the tax rate by 3.0% in 2021 and are projected to increase it by 12.9% in 2023. Outside of this jacking up property taxes to a point where the courthouse went into lockdown over angry residents, It cuts funding to all entities by getting the rate to the cap, making the amount of revenue smaller, therefore making the amounts handed out smaller. It is akin to ordering a fast meal and not getting three-quarters of the meal. In short, TIF lowers the Net Assessed Value in the previous formula and drives the tax rate skyward harming all non-TIF entities.
When looking at RDC spending from TIFs, there is evidence suggesting that local governments have prioritized non-essential projects and private entities over critical safety services. Investments in amenities like a private YMCA, road pavers/landscaping/facade improvements, while potentially beneficial for community aesthetics and quality of life, have diverted funds away from essential services.
The proposal to increase the income tax for public safety in Huntingburg and Jasper can be seen as a symptom of broader fiscal mismanagement and the unintended consequences of TIF. Property taxes have traditionally funded essential services effectively, but the diversion of funds to TIF districts and spending on non-critical projects have created a shortfall. This has led to the current situation where additional revenue is being sought through an increased income tax.
This revenue really isn’t about safety but raising taxes to spend on private entities on their choice or truly low-priority items. They have created a ‘phantom menace’ of safety to distract you from the real purpose of the tax increases.
We all should critically evaluate the necessity of this tax increase and consider advocating for better fiscal management and prioritization of essential services. This means calling and emailing all government taxing entities.
Transparency in government spending and a reevaluation of TIF usage and other non-essential projects are crucial steps in addressing the root causes of the financial shortfall. Speaking out against unnecessary tax increases and demanding accountability from elected officials can help ensure that public safety and other critical services are adequately funded without placing an undue burden on taxpayers. If they will not listen, next time around you should consider replacing them.
Adrian Engelberth
Chair of the Libertarian Party of Dubois County
Jasper, Indiana
