Tuesday, October 21, 2014
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Cities and Indiana's future

Columnist Brian Howey looks at the numbers related to Hoosier cities and taxes.


Posted on Aug. 21, 2014 at 3:19 p.m.

NASHVILLE, Ind. – In the 2008 Indiana gubernatorial campaign, Democratic nominee Jill Long Thompson said she intended to save every Indiana community through what she called a “three-tiered” economic plan that would infuse distressed areas with new jobs.

I made this observation at that time: Indiana is home to dozens of forgotten communities. A town like Attica thrived 150 years ago because it was on the Wabash River. Then the railroads came and cities like my hometown of Peru thrived. Then came the National Road and U.S. highways and places like Greencastle did well. When the natural gas in East Central Indiana ran out, Gas City suffered. Then came the Interstates, and a city like Brownsburg (and now Gas City) do well. While it sounds good, I don’t think every community can be saved.

Recent demographic analysis of Indiana reveals that it will be the state’s cities that will provide the economic thrust in a state that has seen its per-capita income decline by more than 13 percent in the last decade. Yet, the word “city” is not mentioned in the Indiana Constitution. There is no active “urban caucus” in the Indiana General Assembly, a body that in recent years has been overriding a number of local ordinances.

The Indianapolis region generates 33.5 percent of state tax revenue, according to the Indy Chamber of Commerce, but receives 28 percent of state tax expenditures. Four percent of all Indiana jobs are based in a 2.6-square-mile area surrounding Monument Circle. About 205,000 income earners commute to Indianapolis daily, but pay income taxes in their home counties. “This leaves Indianapolis leaders with untapped revenue potential to tackle projects including road and infrastructure improvements,” the Indy Chamber notes. The constitutional property tax caps that passed by wide margins in many rural counties has resulted in a $164 million cumulative loss to Indianapolis from fiscal years 2010 to 2014. Cities such as Terre Haute and Muncie have been hard hit by the caps.

When surveying the list of per-capita net tax payments by county, the Indiana Fiscal Policy Institute identifies 22 of the 92 counties that give more than they receive: Vanderburgh, Hendricks, Hamilton, Bartholomew, Monroe, Dubois, Marion, Steuben, Clark, Kosciusko, Elkhart, Porter, Johnson, Boone, Adams, Allen, St. Joseph, Tippecanoe, Dearborn, Posey, Howard and Daviess.

The common thread is that each of these counties is a manufacturing, life science, research university, or part of a metropolitan area. The economic drivers of the 21st Century will be Indianapolis and the doughnut communities, Fort Wayne, Evansville, Columbus, Warsaw, Lafayette/West Lafayette, Bloomington, South Bend/Mishawaka, Lawrenceburg, Kokomo, Jasper and Princeton. The workforce for many of these economic hubs comes from not just the home county, but commuters within a 40-mile radius.

Brigitte Waldorf and Janet Ayres, professors in the Department of Agricultural Economics at Purdue University, took on the question about the economic viability of the 70 rural counties. Did they grow in population, or decline?

“There are actually two answers,” they wrote. “The first one is: Yes! Indiana’s rural counties gained almost 68,000 residents between 1990 and 2000, and an additional 16,766 residents over the last 10 years. The second answer is: Yes, the population of the rural counties grew, but not as fast as the population of the urban counties.

“Rural county population grew by 1.9 percent between 2000 and 2010 compared to 9 percent in the urban counties. Thus, urban growth is almost five times faster than rural growth. As a result, the percentage of Indiana residents living in rural areas is declining. And there is a second ‘but.’ As a whole, the population of rural Indiana counties was growing, but 18 of the 42 rural counties have lost residents since 2000.

And the implications?

“The slow population growth in rural Indiana, or even decline in some counties, poses a number of challenges, ranging from attracting and retaining businesses to school closures and the adequate provision of accessible health care,” Waldorf and Ayres write. “Addressing any of these issues is complicated, in part because a dwindling or slow-growing population often implies dwindling economic and political power. That is, insufficient population growth causes challenges and also serves as an additional hurdle when trying to tackle those challenges.

We are already witnessing these challenges, as Indiana ranks 47th in infant mortality, and at the other end of the age spectrum, we rank 44th in affordability and access to elderly health care, 42nd in choice setting and choice of provider, and 51st in support for family caregivers.

The prevailing policy culture has been a series of tax cuts that are supposed to create a business climate that generates jobs. But with that 13 percent decline in per-capita income, the jobs that are replacing high-end manufacturing jobs come in low-paying industries such as call centers and warehousing.

The tax cut culture and the property tax caps that are hammering the very economic engines that are creating jobs, and the evolving health care dilemmas at both ends of the life cycle, place into serious question how viable this state will be in the coming generation.

The columnist publishes at www.howeypolitics.com. Find him on Twitter @hwypol.


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