Indiana Tax Cuts Hurt PLs

Indiana has joined Florida in approving lower property taxes, which hurts public library budgets. The Indiana General Assembly March 14 overwhelmingly passed state property tax reform legislation that lowers the average homeowner's tax bill by 30 percent. Not only does the legislation mandate a reduction in taxes for FY08 and further cut taxes in FY09, it allows for a permanent tax cap by 2010.

Property taxes account for approximately 80 percent of public library budgets in Indiana, according to Jeff Krull, director of the Allen County Public Library (ACPL), Fort Wayne, so the state's libraries are facing challenging times. The homeowner cap, currently two percent, will be lowered to one percent by 2010.

By raising the state sales tax, the plan ameliorates the impact of the plunge in state revenues. However, no income gained is guaranteed for libraries. The legislation includes a mechanism for making the new tax plan permanent; taxpayers will vote in the November 2010 general election.

Krull told LJ that until recently the state legislature added state general funds to property tax revenue. When it couldn't afford to do this, property taxes went up. “There's been lots of finger-pointing between the legislature and local governments,” said Krull.”

He expects ACPL to lose approximately $1.5 million. The St. Joseph County Public Library, South Bend, likely will cut all Saturday hours this summer, according to the AP.

The Indianapolis-Marion County Public Library relies on property taxes for 82 percent of its budget, CFO Rebecca Dixon told LJ. “It reached a perfect storm last year” when taxes increased up to 400 percent. “

The library has already made budget cuts in the past few years, said Dixon. It now has a floating collection, and bookmobiles have made way for smaller, hybrid mini-vans that require only one staffer. “We're pursuing grants more vigorously,” she explained, and some jobs will remain unfilled through attrition.