Thursday, April 07, 2005

The Nature of Temporary Taxes

There is nothing quite so permanent as a temporary tax. Kudos to the Indy Star's Matthew Tully for showing it to be so in today's paper. Article.
The new stadium-financing proposal has residents such as Frances Eggert scratching their heads. The Southside retiree loves the Colts and isn't too worried about a new tax. But she has a question:

"Can someone tell me what has happened to the food tax we've been paying all these years?"

Eggert remembers the early 1980s debate and the promise that the tax would fall off the books after the stadium debt was paid off. Phil Borst, who was on the City-County Council then and is now its Republican leader, said the promise of "sunsetting" the tax "was a real selling point." According to law, the tax would expire about two years after the stadium debt was eliminated.

So what happened?

According to city controller Bob Clifford, the dome debt has been refinanced, setting back its payoff date, and more bonds were issued to cover major dome renovations. Today, the tax is "co-mingled" with others that helped finance Conseco Fieldhouse, convention center expansions and Victory Field.

The tax is helping pay off about $496 million in debt.

Originally expected to go away by 2013, the restaurant tax is now on the books until at least 2030.

I guess that means that it still a temporary tax, in the sense that it could end one day before the end of human civilization. I love this factoid:
Even if the RCA Dome is demolished in 2008, as planned, the tax created to fund the facility will stay on the books. In all, the tax has generated more than $250 million over the years -- far beyond the original $77 million cost of the dome.

Einstein's definition of insanity is doing the same things over and over and expecting different results. Is there any reason not to expect that the new tax will be defined by overruns, "co-mingling", and decades-long extentions?

Of course not. It's kind of like continuing to vote Republican in the hopes of less taxes and smaller budgets. Insanity.


LP Mike Sylvester said...

Fort Wayne knows all about "temporary food and beverage taxes!" We had one instituted many years ago to pay for The Coliseum. We had provisions included that "promised" that the tax would end as soon as the Coliseum was paid off and that the tax could not be used for renovations, additions etc.

The debt expired a few years ago. Our local officials polled the public and found out that we wanted the tax to end.

So they went to Indianapolis and got them to RENAME the tax and extend it indefinately. The tax payers of Allen County were not consulted...

That "temporary" tax is still being paid in Allen County, long after the building was paid for...

What is the moral of this story? There is no such thing as a temporary tax!

Mike Sylvester

QuestionMan said...

for more on this and related material.