-House Speaker Pat Bauer (D-South Bend) forced a showdown over property taxes with the Republican-controlled Senate.-

 

Bauer and the House Democrats are in a much more tenuous position. Bauer controls the body by a single vote. If someone’s car doesn’t start that morning, the chamber is up for grabs. So why would Bauer want to drag lawmakers into town for three weeks and push his property tax relief package when the Senate Republicans could crush it as easily as, say, conflict of interest legislation?

The answer is good government. No, I’m kidding.

The answer is most people in the Statehouse are up for election next year and that tends to eat away at the slender threads of common sense that hold the place together. Next year half the Senate, all of the House and the governor are up for election. Speaker Bauer would like to keep his job. Come on, if you could call a mini session of the General Assembly to keep your job, wouldn’t you? Me too.

The most well-publicized recipient of the political attention is Rep. David Orentlicher, D-Indianapolis. The first term Democrat won a narrow victory in a heated campaign, which was filled with negative ads and other such things that describe a heated campaign. He also has the rotten luck of representing the Meridian-Kessler neighborhood, which not only leans Republican but also happens to be at the epicenter of the property tax meltdown.

In 1998, the Indiana Supreme Court ruled the state’s property tax system was partially unconstitutional. After much hemming and hawing the state revamped the rules. The new system is sort of based on the selling price of homes. The old system had heavily depreciated older homes, which lowered their tax bills. Older homes in the more expensive neighborhoods have the biggest gap between the old system and market value. In other words, people who own expensive homes in the trendy parts of Meridian-Kessler saw their tax bills perform cartwheels.

Only about half the state has received tax bills but the outcry from parts of Indianapolis either means there is a crisis brewing in the property tax system or rich people are much crabbier than they have a right to be. It may be a bit of both.

To set the drum beat for a special session, the House Ways and Means Committee held meetings around the state. Senate Finance countered with its own hearings. The Senate agreed to turn Organization Day into a three-week mini session. In pushing for the mini session, I assumed the wily Bauer, with more than 30 years in the General Assembly, had found some unseen leverage to use on the Senate. It wasn’t out of the question. As the Senate Republican caucus grows larger and more sprawling, the more junior members grow restless for power.

By junior, I mean anyone who hasn’t been in charge since the early 1970s, which is when the current GOP unbroken streak of leadership began with Finance Chairman Larry Borst and Senate Pro Temp Robert Garton. Garton has already had to fend off a challenge from one-time governor candidate Sen. Murray Clark. Even Borst has his problems. Sen. Luke Kenley, who attempted to run for governor himself, has taken to encouraging other Republicans to stand up to Borst in caucus, telling them he’s not really that scary.

Borst: the ability to scare the hell out of people

Borst, of course, has built a reputation as being scary as hell. On the floor of the Senate he binds his opponents with a circular rhetoric that leaves them confused and often embarrassed into silence. You can see senior senators choke up when he meanders to the podium to ask a question. His reputation in the Statehouse and the sheer power that comes from controlling the purse strings have left him unchallenged in his suburban Indianapolis district for decades. But this year he has an opponent in the Republican primary. Don’t get me wrong. He’ll win. Given his hold on the state budget, if things became even remotely close Borst could call in decades of favors to bring down more money than Jesus on top of any rival.

Borst and Garton took advantage of the three weeks in the spotlight to make themselves unusually available for TV. Until mid way through the last week, I thought Bauer had something. Some overly optimistic members of his inner circle said they thought they could work out a deal, leading me to believe Borst’s private face was a little less smug than the one he was using in public. It sounds a little crazy now, considering at one point Borst publicly complimented the speaker of the house for having the courage to back down. Ouch.

The Democrats in the House were hanging their hats on a series of new deductions for homeowners and farmers, including a new farmstead credit and deductions for 50- and 100-year-old homes. Democrat Gov. Joe Kernan even came out against new deductions, at least until more counties sent out tax bills.

Well, I was dead wrong. Bauer didn’t have any leverage. He ended up passing out the Senate version of the bill unchanged, then vowing to come back in January and fight another day. Somewhere in the spin of numbers coming out of House Ways and Means and countered by various business trade groups, there is a real issue. Over the last year the General Assembly has re-written the tax code. The tax on business inventory will go away by 2006. That will shift $162 million more property taxes onto other taxpayers. Reassessment is almost certain to shift more of the taxes onto homes.

Raising the sales tax by 1 penny offset some of the most dramatic increases in property taxes. In fact, many people around the state saw their property taxes drop. Of course, they saw the price of everything from a pack of gum to a burger and fries increase to pay for it. A state study commissioned through the Indiana Fiscal Policy Institute is expected to sort through the impact of reassessment and tax restructuring. The institute’s work won’t be done until summer.

Until then, we won’t really know who got socked and who walked away happy from the tax war of 2002-’03. Of course, by summer the news may have very little impact. By then, the 2004 legislative session will be over, the TV lights will have gone out and the rhetoric prodding lawmakers to do something may have long since faded away.

Steve Walsh covers the General Assembly for the Gary Post-Tribune.