More Lawsuits In The Works

Advance Indiana learns today that there will be two separate lawsuits filed in coming days, which will be music to the ears of folks fed up with rising taxes. John Price is expected to file a lawsuit later this week challenging the constitutionality of Indiana's property tax on individuals to fund the state's schools. AI is told Price will rely on Section 2 of Article 8 of the Indiana Constitution, which provides a mechanism for the funding of the state's common school fund. Section 2 reads as follows:

The Common School fund shall consist of the Congressional Township fund, and the lands belonging thereto;
The Surplus Revenue fund;
The Saline fund and the lands belonging thereto;
The Bank Tax fund, and the fund arising from the one hundred and fourteenth section of the charter of the State Bank of Indiana;
The fund to be derived from the sale of County Seminaries, and the moneys and property heretofore held for such Seminaries;
from the fines assessed for breaches of the penal laws of the State; and from all forfeitures which may accrue;
All lands and other estate which shall escheat to the State, for want of heirs or kindred entitled to the inheritance;
All lands that have been, or may hereafter be, granted to the State, where no special purpose is expressed in the grant, and the proceeds of the sales thereof; including the proceeds of the sales of the Swamp Lands, granted to the State of Indiana by the act of Congress of the twenty eighth of September, eighteen hundred and fifty, after deducting the expense of selecting and draining the same;
Taxes on the property of corporations, that may be assessed by the General Assembly for common school purposes.

Specifically, the last sentence of Section 2 limited property taxes to support schools to "taxes on the property of corporations." Does it mean the property tax cannot be levied on individuals to support the common school fund? It is worth noting that both state and local government relied on the property tax as its major source of funding in the early history of our state. At the time of the adoption of our current constitution back in the 1850s, legislators were still debating whether there should be a free public school system for all school-aged children. That might explain the specific provisions in Section 2 for the funding of the common school fund. The state's heavy reliance on the property tax as a revenue source changed during the Great Depression when many people were unable to pay their property tax bills. Will the courts buy the argument that the legislature has been violating the constitution all these years by allowing property taxes to be levied on individuals to fund our schools? Probably not, but it does add a whole new dimension to the current debate over the property tax.

The other lawsuit you should look to see filed within a week or two is one challenging the legality of Indianapolis' recently passed $90 million, 65% increase in the county option income tax. As you all know, former City-County Councilor Patrice Abduallah (D) admitted he hadn't lived in his district since at least last January. Without Abduallah's vote for the county option income tax, Mayor Peterson's tax proposal would have been defeated. Backers of the lawsuit contend that Abduallah's vote should be voided since he was not legally serving as a member of the CCC. I doubt this claim will prevail in the courts; however, I think the backers of this lawsuit would be better-served to argue, in addition to the issue of Abduallah's residency, whether public employees, such as city firefighters and police officers, can legally serve on the CCC.

Article 3, Section 1 of the Indiana Constitution reads: "The powers of the Government are divided into three separate departments; the Legislative, the Executive including the Administrative, and the Judicial: and no person, charged with official duties under one of these departments, shall exercise any of the functions of another, except as in this Constitution expressly provided." As was all too apparent during the debate over the increase in the county option income tax, CCC members found themselves conflicted in having to choose to vote for a tax increase, which clearly would help finance their own payraises. One firefighter member, Councilor Isaac Randolph, announced he would abstain from voting because of the conflict of interest. He was ordered to vote on the proposed tax increase ordinance by the CCC President, Councilor Monroe Gray, who is also a firefighter. Randolph ignored the order and abstained from voting. Those who want to invalidate the county option income tax might at least succeed in bouncing some of the most offensive members of the CCC, even if they don't succeed in invalidating the income tax increase.