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When my friend Ryan Cummins is in town, I always learn something. Cummins, a former Terre Haute councilman, comes to Indianapolis to buy flowers and plants for his family landscaping and garden business.
Did you catch that? The man actually makes a payroll. At my foundation’s occasional social event, I take mischievous pleasure in searching out other politicians so I can introduce Cummins as “a man who hires other people with his own money and figures out ways to pay all of our taxes.”
There is almost always an uncomfortable pause.
Cummins ran unsuccessfully for state representative in one of the state’s most Democratic districts. A glutton for punishment, he would run again.
He first took office in 2000 as Terre Haute’s only Republican councilman. He spent his first term opposing the city’s powerful public-sector unions, arguing that they should justify their pay increases just as his employees justify their increases—by being more productive.
The firefighter and police unions set up pickets outside his home. He was re-elected in no small part as a result of his training as a Marine artillery officer.
In fact, the leaders of the Democratic majority made him chairman of the finance committee. There is an unflattering explanation for that, however: The majority was going to pass all spending and tax increases, anyway, so its members didn’t want to waste time counting beans.
But count beans Cummins did. He has become the state’s premier independent expert on municipal finance. Three years ago, he toured Indiana as an adjunct scholar of the Indiana Policy Review. He carried detailed numbers on city spending trends, warning local politicians and opinion leaders that if they did not address the elephant in their budgets (public sector compensation), their cities would go broke.
He predicted correctly that scheduling press conferences to announce cutting back on cell phones, golf-course watering and take-home cars would not get the job done.
The Cummins mantra is threefold:
1. The economic situation demands that municipal politicians lead a straightforward, although perhaps heated, discussion of what a city government should and should not be doing.
2. Public-sector positions do not represent “jobs” but rather services, and as such should be rigorously tested for productivity and necessity.
3. Real jobs, on the other hand, are created not by political leverage or privilege but by a general free-market environment. If a tax break is good for one business, therefore, it should be good for all businesses.
Cummins suspects that the due-diligence attorneys of major corporations are too smart for your mayor and council. For example, he is critical of a popular decision to grant Sony a $72 million abatement on new equipment for its Vigo County plant. He was joined by Larry DeBoer, an economist at Purdue University who made clear how badly the city had played its hand in regard to rebates on property taxes.
DeBoer explained to Arthur Foulkes of the Terre Haute Tribune-Star: “There is a standard depreciation schedule on the assessed value of equipment, so by the time you actually get to tax it, most of the value isn’t there anymore. So you never really get to tax the equipment at its full value once you put the abatement on there.”
Cummins added that, in his eight years on the Terre Haute council, about 75 percent of the dollar value of abatements granted were for personal property. Foulkes concluded that most of those abatements never contributed the promised “half-a-loaf.”
“If lower taxes spur targeted ‘economic development’ for the abated entity, why wouldn’t lower taxes for all taxpayers spur economic development all over the place for everyone?” Cummins asked.
Answers to the question divide nicely between those who own a business and those who don’t. They divide even more nicely between those who own a business while serving as the chairman of their municipal finance committee and those who don’t have a clue.•
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Ladwig edits Indiana Policy Review, a quarterly journal studying local public policy. Send comments on this column to ibjedit@ibj.com.
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