Governing magazine - in an extensive package about states' antiquated tax systems - has singled Indiana for accomplishing what it calls "a substantial rewriting of its tax code" last June and has credited state leaders for taking the effort beyond mere discussion.
"Tax reform is to current American politics as the weather was to Mark Twain: Everybody talks about it; nobody does anything," the magazine said in its February issue. "Except Indiana. That state, with a little impetus from the courts, has done more than talk."
"It is gratifying for an objective source to look at Indiana, compare it to other states and recognize that we've taken significant action to improve the tax climate in our state," Governor Frank O'Bannon said.
The magazine recounts how O'Bannon and Lieutenant Governor Joe Kernan - recognizing that a court-ordered reassessment would cause property tax bills to skyrocket - decided to overhaul the tax system to make it fairer to homeowners and more conducive to job creation. (The story can be found at http://www.governing.com/gpp/2003/gp3in.htm.)
It quotes Bill Sheldrake, president of the Indiana Fiscal Policy Institute, saying that the changes the General Assembly made, at O'Bannon and Kernan's urging, "will provide a better tax climate for economic development. . . Indiana looked at the particular handicaps in its business tax climate and tried to address those. That's appropriate behavior for any state."
It is part of a package about all 50 states in which Governing concluded that most states' tax systems are unfair and inadequate for funding 21st century needs. Indiana fared well in the ranking, earning three stars out of four for adequacy of revenue and management of system and two stars for fairness to taxpayers.
According to Governing, three stars means a state is performing well. Two stars means a state could continue to function as it currently does, but that there are some elements of the tax system that could benefit from change. Indiana, with eight stars total, was tied for fifth among the states.
"The court order may have forced our hand, but we knew that it was imperative that, to grow, our state had to have a predictable and stable climate for businesses to plan for the future," O'Bannon said. "The administration and the legislature worked together to do what had to be done - to do what was right for all Hoosiers - and I'm glad that Governing magazine took notice." The Indiana report card is attached.
Reporters' contacts: Mary Dieter or Andrew Stoner, 317-232-4578