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**Capital Comments**

Timely topics on public policy issues related to state and local government in Indiana published once a month.

Latest Episodes:

Reasons to Celebrate the Indiana Fiscal New Year Jul 22, 2021

Show notes

Indiana's fiscal new year began on July 1, and there are reasons to celebrate. Listen to Dr. Larry Deboer explain why.

What Kind of Inflation Problem Do We Have? Jun 24, 2021

Show notes

We’ve got an inflation problem. What should we do about it? That depends on what kind of inflation problem we’ve got.

In May the consumer price index was 4.9% higher than it was 12 months before. The last time we saw an inflation rate that high was July 2008. The last time it was that high, and it was more than just rising gasoline prices, was October 1990. It’s the highest inflation rate in almost 31 years.

Inflation has increased these past three months, March through May. Partly that’s because the 12-month rate compares to March through May 2020, when prices were falling. That means the 12-month inflation rate would register high even if prices were just getting back to normal.

It’s more than that.

A State Revenue Forecast for the Ages May 19, 2021

Show notes

Might things be looking up? Dr. Larry Deboer takes a closer look at Indiana state revenue forecasts.

Pent-Up Demand, Then and Now Apr 21, 2021

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What will happen with all the pent up demand for goods and services once the pandemic has passed? Dr. Larry Deboer has some thoughts...and a history lesson.

It’s Tax Season. Where Do Your Local Taxes Go? Mar 18, 2021

Show notes

Tax season is coming up. Federal income taxes are due on April 15, back to the normal date after last year’s delay. That’s the due date for Indiana’s state and local income taxes, too. The first installment of the property tax is due on May 10. You pay your motor vehicle excise tax with your vehicle registration each year. The due dates are based alphabetically; my last name gives me an April 7 due date. And, of course, sales taxes and motor fuel taxes know no season. You pay those when you shop or fill your tank, all year long.

The debates about federal spending and the state budget are in the news, so we have some idea of where those taxes go. But what about local governments? Property taxes, income taxes, sales taxes, motor fuel taxes and vehicle excise taxes all fund local government, too. Here’s how.

Okun, Phillips and Our Economy Feb 17, 2021

Show notes

If you want to be remembered in economics, get yourself a curve. There’s the Lorenz curve, the Laffer curve, the Kuznets curve, and, probably most famous, the Phillips curve. Phillips was A.W. Phillips, an economist from New Zealand who worked in London. In 1958 he drew a curve connecting the dots between inflation and unemployment. When unemployment went down, inflation went up. The Phillips Curve took the economics profession by storm.

The Recession May Be a Light Hit for LIT Jan 20, 2021

Show notes

The December state revenue forecast for Indiana projected that individual income tax revenue would be about $6 billion this year. But Indiana uses local income taxes too, and we know that the income tax revenues that local governments receive in 2021 will be just over $3 billion.

The State Revenue Forecast: We Might be OK Dec 17, 2020

Show notes

Can it be, is it possible, that 2021 won’t be terrible? The state revenue forecast was released on December 16 to provide a starting point for the Indiana General Assembly to craft a new state budget. Might the coming biennium be OK?

It didn’t look OK last June. State revenues suffered an extraordinary drop in the last quarter of fiscal 2020, down $1.4 billion, 27 percent less than expected. We covered the loss by restricting agency spending and drawing down balances. What had been $2.3 billion in the bank was suddenly $1.4 billion. It wouldn’t last long at that rate, and then much bigger budget cuts would be needed.

A Tale of Two Recessions Nov 19, 2020

Show notes

How does the Great Recession of 2007-2008 compare to the COVID Recession of 2020? Larry Deboer, ag economist at Purdue University, explains.

COVID Recession Makes Farmland Tax Predictions Harder Oct 22, 2020

Show notes

Though some predictions are harder than others, we are confident about this one: Property tax bills for farmland owners will go down next year.

We can predict this because we know the base rate for farmland for tax bills in 2021. The base rate is the starting point for the assessment of farmland. The state’s Department of Local Government Finance applied its formula to six years of data on corn and soybean prices, land rents, interest rates and costs, and came up with $1,280 per acre. That’s 18 percent less than this year’s base rate of $1,560. This value is adjusted for soil productivity and other factors to come up with the assessed value for each acre.

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