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Column: Taxpayers willing to spend more where they see results

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Having spent the past decade forecasting the economy, I am accustomed to being wrong about my predictions. So, I ask readers to forgive my gloating a bit when I correctly foretell the future.

I am talking, of course, about the recent school referenda in Indiana. Let me explain.

Since the passage of property tax caps in 2008, I have prophesied a day in which local governments became more adept at their fiscal management and local taxpayers more supportive of higher taxes. The May 2014 elections suggest that day is coming.

In this election cycle, only one of 10 school corporations saw its referendum fail. Nine other districts won additional property taxes for a variety of construction and operations efforts. This loss was understandable.

Of the 10 school corporations asking for referenda, seven had raw performance or student growth scores that were above average in the most recent year. All of these won their referenda. Of the three school districts with below-average achievement and student growth, two school corporations asked for operating funds, primarily for transportation. They both won.

Madison Consolidated Schools asked for a large tranche to build a new gymnasium and choral rooms along with other infrastructure   improvements.

Unfortunately, Madison had arguably the worst school performance of the 10 seeking referenda in this election, and there’s not much to suggest they are improving. The measure lost badly, with three out of four voters opposing the measure.

We should draw two lessons from these recent referenda.

First, the vigorous reform efforts of 2007 through the present, including the tea party movement and numerous small constituencies across the state, were never really an anti-tax movement. They were something altogether bigger and more important. What we have seen in Indiana and elsewhere is broad frustration over the value of government, not simply its cost.

Second, those school corporations that won their referenda were on average better performing than those who lost. I also think they did a better job of explaining their needs to taxpayers, but this is only a hypothesis because we cannot directly measure that.

These two lessons have potentially enormous implications for the future of Indiana local government. We must think them through carefully, but I think a few issues are clear.

The much better state and local tax burdens we have since 2007 are not the end to grassroots efforts to improve the value of state and local government.

Anti-tax zeal will (hopefully) be replaced with the far more difficult effort of holding state and local leaders accountable for value in public goods and services.

This is critical because the gravest challenges to prosperity in many Indiana communities are not high taxes but low-quality public services. Any effort to foster growth through public policy will have to come primarily from better public services, not from tax cuts.

I have long argued Hoosier taxpayers are willing to spend more in places where they can see results. The results of the recent election suggested I am right about that.

Michael J. Hicks is the director of the Center for Business and Economic Research and an associate professor of economics in the Miller College of Business at Ball State University. Send comments to letters@dailyjournal.net.

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