Indiana Lawmakers Have No Idea What They're Doing

All right, with that said, I have to start the program today with a bit of shocking news. If you’re out on the highways and byways, make sure you have both hands on the wheel. If you’re in an office somewhere, grab onto the nearest sturdy piece of furniture. This might come as a huge shock. I don’t think our elected officials have any idea what they’re doing. This next story from the Indiana Capital Chronicle is simply amazing. It’s one of those situations where you can shout at these people, “Hey, don’t do this. This is a really bad idea,” and it doesn’t matter. Somehow the radio guy or podcaster shouldn’t know the policies better than the people voting on them. These are people who get paid $70,000 or more to vote on these things, and they only work three months out of the year. Yet we keep seeing the same thing happen over and over again. Which tells you something we’ve been saying for years: these people don’t read anything. They don’t read, they don’t comprehend, and they just do what they’re told to do. They’re foot soldiers. Your average rank-and-file Republican in the Indiana General Assembly is a foot soldier. They have no idea what’s going on. Understanding public policy is hard. You have to read it, understand it, and understand the people impacted by it. So the Indiana Capital Chronicle has a new article out about Senate Bill 1, the property tax bill. Last year we said this bill was going to be horrible for a variety of reasons. One of the biggest issues was what it would do to local income taxes, LIT — Local Income Taxes. Local governments, meaning county government, have the ability to set a local income tax rate. A percentage of what you make, based on your county’s rate, is taken from your check and sent back to the county government. The county then distributes it among the municipalities. As part of Senate Bill 1, lawmakers started tinkering with the local income tax rate. They sold it to you by saying, “Look, collectively we’re lowering the local income tax rate.” Technically that was true. But what they didn’t talk about was allowing local governments — cities and towns — to set their own income tax rate without needing permission from the county. Previously they had to request permission from the county, and if the county said no, that was it. Now cities and towns could set their own local income tax. So if your county’s income tax rate was below a certain percentage, cities and towns could now create their own rate. That meant your overall local income tax could go up. Some of us raised our hands and said, wait a minute. This sounds like a tax increase. As usual, they said no. They insisted the overall income tax rate was going down. But that wasn’t the whole picture. If your county’s income tax rate was below a certain number and cities and towns could suddenly raise their own taxes, then many people were going to end up paying more. Think about it. If your town raised your income tax by 1% and you make $100,000 a year, your taxes go up by $1,000. That would far outweigh any property tax decrease you might receive. But the response was basically that Kendall was just spouting nonsense, fear-mongering, and trying to gin people up. Now, according to the Indiana Capital Chronicle story — which we encourage you to read after we get off the air today — the state government has now extended the timeline for implementing this income tax change multiple times. Originally it was supposed to happen in 2027. Now it’s been extended to 2029. And in the most recent General Assembly session that wrapped up a couple weeks ago, they passed something called House Bill 1210. It allows counties to establish what they call a “municipal unit strategic task force” with county and municipal representatives. The goal is to negotiate how local income taxes will be distributed in the future. According to the Capital Chronicle, those agreements will be compiled by the state’s Department of Local Government Finance and reported to legislative leaders by December 1. Why are they doing this? Because the legislature has now admitted they have to debate this again. Why? Because they had no idea what they were doing. It’s all messed up, and everyone will be impacted differently. Which is exactly what we were saying last year when we warned them not to do this. Let me read you a quote from Travis Holdman. He carried Senate Bill 1 in its original form and heads tax policy in the Senate. He said, “We really are looking for the counties and the cities and towns to get together and come up with a plan they would recommend to us on how that (referring to income tax)distribution needs to occur in each county, because the counties are all not alike.” That was the quote. They didn’t even have a plan. They passed a massive piece of legislation that could potentially raise taxes by thousands of dollars for individuals, and they didn’t have a plan for how it would work. The article also acknowledges that some counties are already above the threshold allowed under the new bill. Remember, they lowered the overall local income tax collectively but allowed cities and towns to raise their own. So counties under the threshold could see taxes go up if their cities or towns increased rates. Counties above the threshold could see taxes go down. People asked where the uniformity was. Now the head of the Senate tax committee is saying they’re looking for counties, cities, and towns to get together and figure it out themselves. But that was supposed to be the legislature’s job. That was the whole purpose of the bill. And now they’re admitting they didn’t think it through. We’re already a year into this process. They’ve extended implementation to 2029 because they know there are major flaws. Now they’re basically begging local governments to come up with a plan and tell them what to do. Holdman even said, “Contrary to our efforts to put everybody in the same box, it just doesn’t work that way.” No kidding. That’s what people like me were screaming about last year. Just the income tax portion alone should have been enough reason not to vote for the bill. There were too many moving parts. Too many layers of local government affected. But they did it anyway. And now they’re admitting they had no plan. Carey Hamilton, a state representative from Indianapolis, once told me something on the old radio show. I asked her what percentage of lawmakers actually read the bill. She said maybe 10 percent. That’s about 15 out of 150 lawmakers. And here’s the proof. They’re now admitting they didn’t have a plan and didn’t fully understand what they were doing. If that’s the level of effort they put into major legislation that gets a lot of attention, imagine how little effort they put into the smaller bills that also have huge consequences.