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Capital Comments

By Purdue Agriculture
Timely topics on public policy issues related to state and local government in Indiana published once a month.
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What Kind of Inflation Problem Do We Have?

Capital Comments

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$6 Billion in Balances
Mid-July is number-cruncher nirvana if you follow the Indiana state budget. That’s when the State Budget Agency releases its closeout for the previous fiscal year. This year the glorious day fell on Friday, July 15, and we learned one astounding fact: At the end of June, the end of fiscal year 2022, Indiana balances were $6.1 billion. Our state has six billion dollars in the bank.
06:41
July 21, 2022
Inflation and Indiana School District Budgets
The inflation rate in May was 8.6 percent, the highest since the bad old days of the Great Inflation 40 years ago. We’re all paying higher prices. So are our school districts. School districts face some costs that increase as prices rise, and other costs that don’t. Food, fuel and equipment prices rise, and schools must pay. But teacher salaries are set in contracts, and until those contracts expire, inflation won’t have an effect. In 2021, Indiana public schools paid 62,000 teachers $4.4 billion in salaries and benefits. That’s more than one-third of total school budgets. Teacher contracts run for one or two years, and until they expire, pay will rise at rates set before inflation increased. After a year or two contracts will be renegotiated, and it’s likely that teachers will expect their pay to keep up with higher inflation.
06:31
June 21, 2022
Shocked and Not Shocked by Home Assessments
Have you received your Form 11 from your Indiana county assessor? Purdue Economist Larry Deboer has. He was both shocked and not shocked by his new assessment. In this month's episode, Larry walks us through potential impacts of property assessments. 
06:25
May 24, 2022
How to Read an Indiana School Referendum Question
Election Day is coming up – on Tuesday, May 3 – and school referendums will be on the ballot in nine school districts. It’s best if voters investigate the referendum issues in advance, so they know whether to vote yes or no. What if you didn’t do your homework and want to do the benefit-cost comparison on the fly, in the voting booth? Larry Deboer has advice just for you. 
06:17
April 19, 2022
The Residential Share of Property Taxes is on the Rise
Here’s one way to think about property taxes: The local government sets its budget, subtracts all other tax revenue, and raises the remainder with the property tax levy. The assessor measures the value of all the parcels of taxable property inside the boundaries of the government. Then the government measures the share of each parcel in total assessed value. That is the share of the levy that the owners must pay. In other words, your property’s share in the total value of property is your share of the property tax levy. We use property value shares to divvy up responsibility for funding local government.
06:30
March 30, 2022
What Will Happen to Inflation?
The inflation rate was 7.5 percent from January 2021 to January 2022, the highest inflation in 40 years. It arrived suddenly and unexpectedly. A year ago the inflation rate was 1.4 percent, which was lower than the 1.7 percent average rate over the previous decade. It’s an unwelcome throwback to the Great Inflation of the 1970s. What happened, and when will it go away?
06:27
February 22, 2022
Farmland Assessments will Increase for Taxes in 2023
Farmland property taxes have been falling. Total property taxes paid by agricultural property owners fell 2.3 percent per year from 2017 to 2021, mostly because of lower farmland assessed values. But farmland prices are rising. A Purdue Agricultural Economics survey showed that average farmland selling prices increased 12.5% from 2020 to 2021. Eventually, farmland assessed values will rise too.
06:48
January 28, 2022
What Happens to Property Taxes During Inflation?
The property tax is the biggest source of tax revenue for most Indiana local governments, and they were worried about the effect of the COVID recession on property tax revenues. But rising home values in 2020 will increase assessed values for tax bills in 2022.
06:32
January 04, 2022
We Finally Know How the Recession Will Affect Property Taxes
What will be the effect of the COVID recession on the property taxes that fund Indiana local governments? I’ve been thinking and writing about the possibilities for a year and a half. Now we have enough data to answer that question. No spoilers, though. Let’s consider what could happen—and what did happen after the Great Recession in 2007-09. The Great Recession depressed new construction and reduced the demand for property. Property prices fell, especially for homes. Statewide, assessed values fell in 2011 and again in 2013. Assessments declined in 54 of 92 counties in 2013 alone. The COVID recession was in 2020. Changes in property values were assessed in 2021, for tax bills in 2022. The recession of 2020 would hit local government budgets in 2022.
06:49
November 29, 2021
Birth Rates Have Been Falling for a Long Time
Americans are having fewer children. Reports this past summer showed that the fertility rate dropped in 2020, to 56 births per 1,000 women age 15 to 44. Only 5.6 percent of women in their child-bearing years had babies. Early indications for 2021 showed a further decline. Fertility has been dropping for more than a decade. Fertility rates peaked in 2007 at 69 per 1,000 women age 15 to 44. The rate had been rising in the decade before that. Let’s take a longer view. Much longer.
06:27
October 20, 2021
What Three Forecasts Say About Our Economic Future
Where is our economy going? Let’s ask some folks whose job it is to forecast the future of the U.S. economy. How about looking at three forecasts – one from government economists, one from academic economists, and one from business economists.
06:16
September 22, 2021
Last Year’s Recession Hits Indiana Local Governments Next Year
The recession may be over for the U.S. economy, but for Indiana local governments the recession is just about to start. That’s because the property tax and the local income tax respond to economic changes with a two-year delay. What happened to the economy in 2020 happens to local tax revenues in 2022.
06:30
August 19, 2021
Reasons to Celebrate the Indiana Fiscal New Year
Indiana's fiscal new year began on July 1, and there are reasons to celebrate. Listen to Dr. Larry Deboer explain why. 
06:22
July 22, 2021
What Kind of Inflation Problem Do We Have?
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.
06:16
June 24, 2021
A State Revenue Forecast for the Ages
Might things be looking up? Dr. Larry Deboer takes a closer look at Indiana state revenue forecasts. 
06:10
May 19, 2021
Pent-Up Demand, Then and Now
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. 
06:20
April 21, 2021
It’s Tax Season. Where Do Your Local Taxes Go?
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.
06:09
March 18, 2021
Okun, Phillips and Our Economy
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.
06:06
February 17, 2021
The Recession May Be a Light Hit for LIT
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.
06:29
January 20, 2021
The State Revenue Forecast: We Might be OK
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.
06:23
December 17, 2020
A Tale of Two Recessions
How does the Great Recession of 2007-2008 compare to the COVID Recession of 2020? Larry Deboer, ag economist at Purdue University, explains. 
06:12
November 19, 2020
COVID Recession Makes Farmland Tax Predictions Harder
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.
06:03
October 22, 2020
Don’t get spun: What’s happening in our economy, right now?
Forecasts? Don’t talk about forecasts. You kidding me? I just want to know what’s happening now! With apologies to Jim Mora, that’s our problem. What’s happening in our economy, right now?
06:00
September 16, 2020
Rents, Telecommuting and Harry Potter
Believe it or not, these three things get tied together as Purdue Extension specialist, Larry Deboer, explains. Spoiler alert, the pandemic is part of the story. 
05:43
August 20, 2020
Trouble for Indiana’s State Budget
We got trouble, my friends, "with a capital T." The Indiana state budget closeout for fiscal 2020 was held in mid-July, so we have a good idea of how bad things are. Now that we know the numbers, we can take a look ahead. Let’s do some “supposing” about what could happen during this fiscal year 2021, and during the next biennium.
06:11
July 23, 2020
Recession and the Indiana Property Tax
Timely topics on public policy issues related to state and local government in Indiana.
06:09
June 24, 2020
Our Economic Recovery Depends on Consumers
Timely topics on public policy issues related to state and local government in Indiana.
06:14
May 20, 2020
Indiana’s State Budget in the Corona-Recession
Timely topics on public policy issues related to state and local government in Indiana.
06:26
April 20, 2020
Supply and Demand and the Coronavirus
Timely topics on public policy issues related to state and local government in Indiana.
06:05
March 17, 2020
The MLGQ is Long Overdue
Timely topics on public policy issues related to state and local government in Indiana.
06:14
February 21, 2020
Farmland Assessments: Is this the End of the Downward Trend?
Timely topics on public policy issues related to state and local government in Indiana.
06:07
January 21, 2020
Gross Domestic Product for Counties
Timely topics on public policy issues related to state and local government in Indiana.
06:36
December 17, 2019
How Tax Bills Are Calculated, and Where the Money Goes
Timely topics on public policy issues related to state and local government in Indiana.
05:47
November 21, 2019
How Low are Indiana’s Taxes?
Timely topics on public policy issues related to state and local government in Indiana.
06:07
October 24, 2019
Money for Schools
Timely topics on public policy issues related to state and local government in Indiana.
06:05
September 17, 2019
Is the Long Expansion Over?
Timely topics on public policy issues related to state and local government in Indiana.
06:49
August 21, 2019
Why Does Indiana Keep Balances, and How Much is Enough?
Timely topics on public policy issues related to state and local government in Indiana.
06:01
July 26, 2019
The Yield Curve Inverted. Is There a Recession in Our Near Future?
Timely topics on public policy issues related to state and local government in Indiana.
06:25
June 18, 2019
Paging Professor Phillips
Timely topics on public policy issues related to state and local government in Indiana.
06:30
May 20, 2019
Revenue and Medicaid Forecasts Squeeze the State Budget
Timely topics on public policy issues related to state and local government in Indiana.
06:15
April 24, 2019
How Fast Can Our Economy Grow?
Timely topics on public policy issues related to state and local government in Indiana.
06:15
March 21, 2019
What Has Happened to Indiana Local Income Tax Rates in 2019?
Timely topics on public policy issues related to state and local government in Indiana.
06:13
February 20, 2019
Assessed Value of Farmland Will Fall a Little in 2020
Timely topics on public policy issues related to state and local government in Indiana.
06:35
January 25, 2019
Why the Alarm about Yield Curve Inversions?
Timely topics on public policy issues related to state and local government in Indiana.
05:02
December 18, 2018
Trends in Indiana School Referenda Results
Timely topics on public policy issues related to state and local government in Indiana.
06:21
November 27, 2018
The Proposed Balanced Budget Amendment for the Indiana Constitution
Timely topics on public policy issues related to state and local government in Indiana.
06:03
October 22, 2018
Why is GDP Growth Higher than the Unemployment Rate?
Timely topics on public policy issues related to state and local government in Indiana.
06:05
September 21, 2018
Why Did the Unemployment Rate Increase in June?
Timely topics on public policy issues related to state and local government in Indiana.
06:20
August 23, 2018
Another Slow, Steady Year for the Indiana State Budget
Timely topics on public policy issues related to state and local government in Indiana.
06:21
July 25, 2018
Shedding Light on LIT
Timely topics on public policy issues related to state and local government in Indiana.
06:12
June 20, 2018
Why Are School Tax Referenda Passing More Frequently?
Timely topics on public policy issues related to state and local government in Indiana.
05:48
May 23, 2018
Taxes and Tariffs
Timely topics on public policy issues related to state and local government in Indiana.
05:48
April 27, 2018
What Will Happen When the Base Rate of Farmland Falls?
Timely topics on public policy issues related to state and local government in Indiana.
05:53
March 23, 2018
Amazon and Local Property Taxes
Timely topics on public policy issues related to state and local government in Indiana.
05:52
February 23, 2018
Some Facts About Indiana Townships
Timely topics on public policy issues related to state and local government in Indiana.
06:11
January 26, 2018
The State Revenue Forecast Update
Timely topics on public policy issues related to state and local government in Indiana.
05:50
December 20, 2017
Five Thursdays in November
Timely topics on public policy issues related to state and local government in Indiana.
06:08
November 21, 2017
Leading indicators point down for Indiana's economy
Timely topics on public policy issues related to state and local government in Indiana.
06:07
October 26, 2017
Jobs and JOLT
Timely topics on public policy issues related to state and local government in Indiana.
06:26
September 21, 2017
How fast can our economy grow at full employment?
Timely topics on public policy issues related to state and local government in Indiana.
06:15
August 24, 2017
The Indiana budget surplus and state balances for 2017
Timely topics on public policy issues related to state and local government in Indiana.
06:22
July 27, 2017
What's normal for Indiana property taxes?
Timely topics on public policy issues related to state and local government in Indiana.
06:18
June 22, 2017
Road work ahead in Indiana
Timely topics on public policy issues related to state and local government in Indiana.
06:20
May 25, 2017
Predicting the Base Rate of Farmland for Property Taxes
Timely topics on public policy issues related to state and local government in Indiana.
06:50
April 28, 2017
Property Tax Rate Destiny
Timely topics on public policy issues related to state and local government in Indiana.
06:22
March 23, 2017
Facts About the Cigarette Tax
Timely topics on public policy issues related to state and local government in Indiana.
06:20
February 23, 2017
How Could We Pay For Roads?
Timely topics on public policy issues related to state and local government in Indiana.
05:55
January 26, 2017
A Revenue Forecast for the New Biennium
Timely topics on public policy issues related to state and local government in Indiana.
06:33
December 22, 2016
Indiana's November Surprise
Timely topics on public policy issues related to state and local government in Indiana.
05:17
November 23, 2016
Coming Reductions in Farmland Assessments for Property Taxes
Timely topics on public policy issues related to state and local government in Indiana.
06:50
October 28, 2016
We've Got Really Low Interest Rates
Timely topics on public policy issues related to state and local government in Indiana.
06:03
September 22, 2016
Indiana Revises its Revenue Forecast
Timely topics on public policy issues related to state and local government in Indiana.
06:24
August 25, 2016
Indiana LIT
Timely topics on public policy issues related to state and local government in Indiana.
06:17
August 01, 2016
Circuit Breakers and Growth Quotients
Timely topics on public policy issues related to state and local government in Indiana.
06:12
June 23, 2016
What's Been Happening with Indiana School Referenda?
Timely topics on public policy issues related to state and local government in Indiana.
06:22
May 26, 2016
How Old is Our Economic Expansion?
Timely topics on public policy issues related to state and local government in Indiana.
05:57
April 28, 2016
The General Assembly Changed Farmland Assessments Again
Timely topics on public policy issues related to state and local government in Indiana.
06:34
March 24, 2016
What's the Unemployment Rate?
Timely topics on public policy issues related to state and local government in Indiana.
06:30
February 25, 2016
Changes in Farmland Property Tax Assessment
Timely topics on public policy issues related to state and local government in Indiana.
06:27
January 28, 2016
Indiana Revises its Revenue Forecast
Timely topics on public policy issues related to state and local government in Indiana.
06:50
December 22, 2015
How to Read a Property Tax Report
Timely topics on public policy issues related to state and local government in Indiana.
06:24
November 25, 2015
Where We're Going, We Do Need Roads
Timely topics on public policy issues related to state and local government in Indiana.
06:06
October 28, 2015
Indiana's Economy: What Have We Got, and How's It Been Doing?
Timely topics on public policy issues related to state and local government in Indiana.
06:17
September 24, 2015
A State Budget Snapshot
Timely topics on public policy issues related to state and local government in Indiana.
06:31
August 10, 2015
What's Going On in the U.S. Economy?
Timely topics on public policy issues related to state and local government in Indiana.
06:11
August 10, 2015
Indiana Reforms Its Local Income Taxes
Timely topics on public policy issues related to state and local government in Indiana.
06:14
June 25, 2015
Tax Relief for Farmland Owners
Timely topics on public policy issues related to state and local government in Indiana.
06:43
June 02, 2015
Tax Policy on the Business and Distributional Scales
Timely topics on public policy issues related to state and local government in Indiana.
05:24
April 23, 2015
Assessment Inequities and the Property Tax Caps
Timely topics on public policy issues related to state and local government in Indiana.
06:33
March 26, 2015
School Aid Number Crunching
Timely topics on public policy issues related to state and local government in Indiana.
06:14
February 26, 2015
Farmland Taxes Are a Hot Topic in the General Assembly
Timely topics on public policy issues related to state and local government in Indiana.
06:15
January 22, 2015
Revenue Forecast for the Next Biennium
Timely topics on public policy issues related to state and local government in Indiana.
06:35
December 29, 2014
School Referenda in May and November
Timely topics on public policy issues related to state and local government in Indiana.
06:11
November 26, 2014
Property Tax Trends in 2014
Timely topics on public policy issues related to state and local government in Indiana.
06:40
October 24, 2014
States and the Cost of Living
Timely topics on public policy issues related to state and local government in Indiana.
06:04
September 25, 2014
Strange Economic Orbit
Timely topics on public policy issues related to state and local government in Indiana.
06:14
August 28, 2014
The State Budget Closeout for 2014
Timely topics on public policy issues related to state and local government in Indiana.
06:31
July 24, 2014
School Capital Projects Referenda
Timely topics on public policy issues related to state and local government in Indiana.
06:35
June 26, 2014
Indiana's Low Per Capita Income
Timely topics on public policy issues related to state and local government in Indiana.
06:35
May 28, 2014
Has Indiana's Tax Burden Increased?
Timely topics on public policy issues related to state and local government in Indiana.
06:35
April 29, 2014
What the New Business Tax Commission Might Study
Timely topics on public policy issues related to state and local government in Indiana.
05:47
March 28, 2014
A Little Bit of Really Good Job News
Timely topics on public policy issues related to state and local government in Indiana.
05:50
February 27, 2014
Farmland Assessments Going Up
Timely topics on public policy issues related to state and local government in Indiana.
06:26
January 23, 2014
You Better Watch Out: The Assessor is Coming to Town
Timely topics on public policy issues related to state and local government in Indiana.
05:33
December 20, 2013
What Happens If We Eliminate Property Taxes on Business Equipment?
Timely topics on public policy issues related to state and local government in Indiana.
06:25
December 09, 2013
Homeowner Property Tax Bills in 2013
Timely topics on public policy issues related to state and local government in Indiana.
06:15
November 04, 2013
The Paradox of LOITs
Timely topics on public policy issues related to state and local government in Indiana.
06:11
October 10, 2013
Why Is the Unemployment Rate Falling so Fast?
Timely topics on public policy issues related to state and local government in Indiana.
06:09
August 28, 2013
Why Did Indiana's State Budget Recover so Fast?
Timely topics on public policy issues related to state and local government in Indiana.
06:01
August 23, 2013
School Referenda Splits
Timely topics on public policy issues related to state and local government in Indiana.
06:10
July 03, 2013
The Amazing Property Tax Reassessment of 2013
Timely topics on public policy issues related to state and local government in Indiana.
06:12
April 01, 2013
College Visits
Timely topics on public policy issues related to state and local government in Indiana.
05:35
April 01, 2013