Wednesday, November 3, 2010

The need for further local and state fiscal controls

The Indiana General Assembly election results are very encouraging. Economic issues, I believe, will be central for the 2011 legislative session. I do believe there needs to be a discussion from the General Assembly regarding a couple of central fiscal issues to local government.

With the approval of property tax caps to the Indiana Constitution, the GA must address the up-and-down cycles of business that naturally happens. The general economy will always have its cycles of expansion and retraction. Associated with economic cycles come the tax revenue increases and decreases. Many local government services were dependent on local property taxes. That issue is now changing. Many of these services are dependent on revenues from the state. The increase of sales tax was the offset to property tax caps. Sales tax revenue will follow the economic cycles. The GA must look to smooth out the disbursement of revenues to local governments.

This should include greater expansion and controls on the use of local “Rainy Day” funds. The use of these temporary savings accounts should have greater definition regarding the amount (percentage or dollar) that can actually be accumulated and then also how and when these funds should actually be used.

I ask local legislators to begin an in-depth discussion and evaluation of this issue.

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