Jasper County Democrat, Volume 23, Number 30, Rensselaer, Jasper County, 10 July 1920 — A CHAOTIC CONDITION INDEED [ARTICLE]

A CHAOTIC CONDITION INDEED

Supreme Court Tax Case Decision Puts Officials Op in the Air. Indianapolis News: Three possible solutions for the serious tax situation now perplexing every public official in the state, from Governor Goodrich, and the members of the state board of tax commissioners down to town clerk, were under consideration at the state house Thursday. One plan proposed was that the legislature at Its special session enact a law to provide that when-, ever tax valuations are dhanged, by order or otherwise, the tax levies based on the valuation shall be changed proportionately, so that the same revenue shall be yielded under the changed valuation. This solution has been presented to the governor, it is know!!. Thus far it has received the most favor. Such a proposal would raise every levy In the state affected by the supreme court decision Wednesday, that the horizontal increases in valuations ordered by the state tax board were illegal. The levies would go up, however, only enough to produce the revenue they were designed to -produce when they were fixed on the valuations after the state board ordered the horizontal assessment Increases last August. Under such a law the taxes paid this spring and to be paid this fall would not be changed and the revenues of taxing units would not be reduced. To Issue Bonds Another proposal is that the legislature enact a law that would authorize taxing units affected by the supreme court decision to issue bonds at present rates of interest, higher than the legal rates so as to produce money enough to make up for the revenues cut off by the decision, with the expectation that the levies this fall will be made high enough to meet the situation. While such a solution might take care of the present situation, it has been pointed out, it would throw on to next year’s tax, the burden of correcting this year’s defiicits. t Third Proposal The third proposal is that the legislature one way or another legalize the action of the tax board last fall so as to preserve the status quo of the situation. This proposal has been rejected by most of the state officials as impossible, because such a law would have to be retroactive, which, it is believed, would be unconstitutional. Whether the legislature will be called on to provide for the board in future times the power which it exercised last August and which the supreme court yesterday held it does not possess, has as yet received little serious consideration, the first problem being to solve the present situation.

State Officials Confer governor Goodrich Thursday confllkgd with Chairman Fred Sims of tWllax board, Ele Stansbury, attor-ney-general, and others on the problems: Both the governor and Mr. Sims said they were 1 very much at sea. They spent the greater part of Thursday trying to ascertain what the present situation Is by a close examination of the decision handed down by the court. Fred A. Sims, chairman of the tax board, said today that a motion for a rehearing of the case is being prepared. The supreme court Is now In vacation, however, and ordinarily will not assemble again until Oct. 5. It sometimes meets in vacation, but only when an extraordinary circumstance arises. Effect on State Funds The state treasury will fall sl,350,000 short in receipts because of the $750,000,000 shrinkage In valuations, it was estimated in the office

of Otto L. Klauss, auditor. On this basis it was estimated that the state fund, which is distributed to the public schools in Indiana, will fall $390,000 short of expectations. Losses in other state funds were estimated as follows: Benevolent institutions $292,500, state highway department $292,500, three state educational, institutions $210,000, the state general fund $150,000; and the state vocational education fund $15,000. Many taxing units in 90 of the 92 counties, which already have practically spent anticipated reve-i nues through bond issues, will find various funds far short of requirements. Marion County an Example “The decision of the supreme court will be calamitous to local government In Indiana,” said Leo K. Fester, Marion county auditor, when he heard that the horizontal increases

made by the tax board last fall are nullified In the decision. He estimated that the city of Indianapolis, the school city of Indianapolis and Marion county, with its townships, will lose more than >600,000 in expected revenues as a result of the ruling. “Other taxing units of the state will fare similarly, the amount of their loss in revenue depending, of course, on the amount of the horizontal Increases by the tax board,” Mr. Fesler said. “The decision not only will rob the local governments of .large amounts of expected revenues, but it will make it impossible to borrow money to make up for the loss. The credit of practically every taxing unit of the state is now strained, and we are having a mighty hard time borrowing money at the legal rate of Interest. With this Immense amount of revenue shut off, it will be more difficult than ever to make temporary loans. How the local governments can operate with this loss in revenue, I can not see.” The tax board last fall, Mr. Fesler pointed out, in making the horizontal Increases in Marion county, authorized an increase of 20 per cent in the valuation of improvements for taxation, 30 per cent in the valua-* tion of real estate and 50 per cent in the valuation of personal property. This increased the valuation of Marion county property for taxation to virtually $700,000,000. In anticipation of this expected increase in revenue, the city and school city have borrowed large sums of money.

County May Default on Bonds Mr. Fesler pointed out that Marion county has issued approximately >l,000,000 of three-mile road bonds, of which the interest and one-tenth oi the principal are due each year. Payment of the principal and interest due in 1920 was barely taken care of when the horizontal increases were made last fall, anu with the expected additional revenue cut off, the county will have to default on its bonds, both for principal and interest due this year, he said. “The only way we can keep from defaulting,” Mr. Fesler said, “would be to make a temporary loan, but how are we to do it? It will be impossible to borrow the money.” Taxes paid this spring, Mr. Fesler said, included those based on tha horizontal increases in valuation. The supreme court ruling will make it necessary* to refund the additional amounts paid in, but to do this will be a difficult task, he said. The county officials will, however, he said, in some way take off the addi-> tional amounts. It most likely will give credit to each taxpayer when the time comes for the fall payment in November. This will cut off practically one-fourth of the expected revenues in November, Mr. Fesler said.