MEETING MINUTES1
Meeting Date: December 2, 2013
Meeting Time: 9:00 A.M.
Meeting Place: State House, 200 W. Washington St., Senate Chambers
Meeting City: Indianapolis, Indiana
Meeting Number: 3
Members Present: Sen. Brandt Hershman, Chairperson; Sen. Edward
Charbonneau; Sen. Timothy Skinner; Rep. Eric Turner; Rep. Greg Porter.
Members Absent: None.
Sen. Brandt Hershman called to order a joint
meeting of the Commission on State Tax and Financing Policy (Commission) and
the Indiana Advisory Commission on Intergovernmental Relations (IACIR) at 9:07
a.m..
Local Tax and Budget Issues
Rep. Michael Karickhoff, Chairperson, IACIR,
and Mr. John Krauss, Director, IACIR, described the local government finance
issues that the IACIR has been studying.
Mr. David Reynolds, Senior Fiscal Analyst,
Indiana State Senate, presented the Report of the Local Tax Collection and
Distribution Working Group, which analyzes the distribution of tax revenue to
local governments (Exhibit A).
Mr. Andrew Berger, Association of Indiana
Counties (AIC), noted the AIC's support for the working group's analysis and
discussed various local option income tax issues.
Ms. Rhonda Cook, Indiana Association of
Cities and Towns (IACT), addressed local option income tax distribution from
the municipal perspective.
Mr. Bob Sigalow, Senior Fiscal Analyst,
Legislative Services Agency, presented the following reports:
(1) 2013 Budget, Appropriations, Levies, and
Tax Rates (Exhibit B).
(2) 2013 Budget, Appropriations, Levies, and
Tax Rates Sorted by Advertised Levy over Certified Levy Percentage (Exhibit C).
(3) Publication of Local Government Budgets
(Exhibit D).
Rep. Karickhoff noted that local units
advertise proposed levies that are higher than the Department of Local
Government Finance (DLGF) is likely to certify because the units fear being
caught short if they ask for too little.
Mr. Micah Vincent, Commissioner, DLGF, agreed
with Rep. Karickhoff's assessment of the situation and discussed the policy
implications of changing the law that currently prevents the DLGF from
approving a levy that is higher than the advertised levy. Mr. Vincent also
proposed replacing the requirement that proposed levies and budgets be
advertised in newspapers with online publication.
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Mr. Larry Hesson, IACIR and Hendricks County
Council, stated that the counties would welcome the opportunity to replace
newspaper publication with online publication.
Mr. Steve Key, Hoosier State Press
Association, presented the Association's case for retaining the newspaper
publication requirement (Exhibit E).
Mr. Bill Waltz, Indiana Chamber of Commerce,
Mr. David Holt, Indiana Association of School Business Officials (IASBO), and
Mr. Mike Shafer, IASBO, testified in favor of converting to online publication.
Mr. Holt and Mr. Shafer also requested more
flexibility in the use of school funds.
Tax Increment Financing
Sen. Jim Smith described the following
concerns about tax increment financing, particularly as used in Clark County:
(1) Increased usage.
(2) Increased burden on taxpayers and local
governments.
(3) The life span of TIF districts.
(4) The reduced role of the fiscal body.
Ms. Kelly Khuri, Clark County Council,
expressed her opposition to the use of tax increment financing and her concern
that local governments are going to be unable to pay for basic services because
of the property tax revenue lost to TIF districts.
Ms. Martina Webster, a Clark County resident,
objected to government intervening in the economy through tax increment
financing. Ms. Webster expressed her skepticism of claims that development
would not occur "but for" the use of tax increment financing and that
property values are increased in the proximity of a TIF district.
Mr. Jason Dudich, Controller, City of
Indianapolis, described the role of tax increment financing in the economic
development of Indianapolis and the ways in which the city attempts to mitigate
the impact on other units of local government (Exhibit F).
Former State Representative Bill Crawford
noted that he generally agrees with Mr. Dudich's positive assessment of the
role of tax increment financing in Indianapolis.
However, he urged city leaders to implement
the recommendations of the recent Marion County study of tax increment
financing in writing, preferably in ordinance form, and to make the policies
available and accessible to the public.
Ms. Cook described tax increment financing as
a very important tool for cities and towns. Ms. Cook submitted the following
reports:
(1) Tax Increment Finance: A Highlight of
Successful TIF projects in the State of Indiana (Exhibit G).
(2) IACT Legislative Briefing Regarding Tax
Increment (Exhibit H).
Mr. David Bottorff, Executive Director, AIC,
noted that everyone can identify a successful TIF project and suggested that
the economic development target company ultimately pays for improvements itself
through the captured tax increment. Mr. Bottorff discussed a number of possible
changes to the tax increment financing law.
Local Governments and Generally Accepted
Accounting Principles (GAAP)
Mr. Walter Kelly, a Fishers resident, urged
the state to implement financial reporting requirements for local government
that are more GAAP compliant.
Mr. Paul Joyce, State Examiner, State Board
of Accounts, cautioned the Commission that implementing a more GAAP compliant
approach could be costly. He estimated that the annual costs to implement GAAP
compliant reporting would range from $10,000 to $30,000 per unit. He also noted
that doing so would result in more accountability and greater transparency.
Mr. Kent Williams, Indiana CPA Society,
testified that the Society supports GAAP compliance on the grounds that
financial reporting would be more transparent and comprehensive while allowing
taxpayers to better compare units.
Mr. Berger expressed AIC's concerns about the
cost of implementation.
Mr. Mike Galliher, Boyce Systems, described
some of the challenges that a transition to GAAP reporting might pose with
respect to time, software systems, and staff training.
Mr. Shafer noted that IASBO is not opposed to
GAAP reporting, but suggested that schools could not implement it in a
reasonable time and at a reasonable cost.
Sen.
Hershman adjourned the meeting at approximately 2:20 p.m..
