Indiana House Bill 1229, which passed the Indiana House of Representatives by a vote of 70 to 24, will soon be heard by the Senate Local Government Committee. This bill removes the township trustee and seven-member township board from the decision on whether to consolidate Pike, Wayne or Decatur Township fire departments into the Indianapolis Fire Department (IFD) and leaves the decision to the mayor and the 29-member City-County Council.
As that Senate committee considers this bill, one of the arguments senators will surely hear from those who are opposed is that this is some sort of "unfair takeover" of a decision that should remain within the purview of the township. The problem for those who make that argument is the reality that those townships, with their fire service tax rates so substantially higher than IFD's rate, negatively impact other taxing districts that are outside of their township. How so?
First, here's a real-world example. IFD's total tax rate is .3131 cents per $100 of taxable real property, while Wayne Township's total fire tax rate is .9511 cents per $100. Thus, despite the fact that a large portion of Wayne Township is covered by the Airport fire department, the Town of Speedway's fire department and IFD, Wayne township's fire rate is 300 percent higher than IFD's. Thus, before applying the effect of the tax caps or any deductions, such as the homestead deduction:
- For a house assessed at $100,000 in Western Wayne Township that is inside Wayne township's fire taxing district, that homeowner/taxpayer pays $951.10 per year in taxes for fire service.
- For a house assessed at $100,000 in Eastern Wayne Township that is inside IFD's fire taxing district, that homeowner/taxpayer pays $313.10 per year in taxes for fire service.
The same math can be done for Pike Township, which has a total fire rate of .5080, and Decatur Township, which has a total fire tax rate of .8128. Pike's rate is 160 percent higher than the IFD rate and Decatur's is 260 percent higher than the IFD rate.
While some might stomach higher tax rates to their constituents to maintain political power, the harm to the taxpayer isn't confined to that township. These townships are negatively impacting schools, libraries, and IndyGo--services that are already under great strain from the national economic downturn and property tax caps and which just happen to be particularly important public services to those who might apply for township assistance (f/k/a poor relief). These unnecessarily high rates also negatively affect the Indianapolis Metropolitan Police Department (IMPD).
This occurs because, when a taxing unit has an unnecessarily high tax rate, it requires its property taxpayer to pay more for that particular service than the taxpayer should. But, when that taxpayer hits the property tax caps, the taxing units cannot collect more money from the taxpayer. Thank goodness for the taxpayer! But, that's bad for the other units that provide critical services because they are being harmed by the inefficiencies of the offending township.
Thus, since property tax caps work across the taxing units in each county, the decision for township fire consolidation in Marion County should be made by the City-County Council, which already oversees the tax rates of all county offices, all city departments, including IFD and IMPD, and the municipal corporations like Health & Hospital, IndyGo, and the library. Otherwise, the township has a perverse incentive to charge its taxpayers an unnecessarily high tax rate to the detriment of not only its taxpayers but much of the county.
This is why the council, which represents the entire city and county, and not the township, should decide whether a township fire department should be consolidated into IFD.