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Our Economic Recovery Depends on Consumers

Tuesday, May 19th, 2020

Enough already. The economy is bad. This is the sharpest, deepest recession in 80 years. We get that. Let’s talk about something else. Like, how does the economy recover? Unfortunately, to answer that question we need to know what kind of recession we’ve got. So let’s look at some measurements that tell us what’s been…

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Indiana’s State Budget in the Corona-Recession

Monday, April 20th, 2020

How will Indiana’s state budget do in the corona-recession? We don’t know how deep the recession will be, or how long it will last, so there’s not much point to predictions. But we can ask what sort of recession the budget can handle, and what sort would cause trouble. Here are three questions. One, can…

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Supply and Demand and the Coronavirus

Monday, March 16th, 2020

The coronavirus is a world tragedy. Millions will get sick and too many will die. All of us will worry about family and friends. All of us will miss important events in our lives. The economy will suffer too. But how much? Let’s see if we can think it through using the economists’ tools –…

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The MLGQ is Long Overdue

Friday, February 21st, 2020

House Bill 1113 is 139 pages long. It covers lots of local government tax issues. It’s not controversial. It passed the House, with 95 members voting yes, and none voting no. The bill has moved on to the Senate. Perhaps the simplest change in this very long bill is this: It changes the name “assessed…

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Farmland Assessments: Is this the End of the Downward Trend?

Tuesday, January 21st, 2020

Just after the new year Indiana’s Department of Local Government Finance announced the new base rate for farmland assessment. It was $1,280 per acre. The base rate is the starting point for setting the taxable value of farmland for the property tax, to be used for tax bills next year. The number was down considerably,…

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Gross Domestic Product for Counties

Tuesday, December 17th, 2019

We just received the most wonderful gift from the U.S. Department of Commerce, Bureau of Economic Analysis. For the first time ever, the BEA has calculated Gross Domestic Product for counties. GDP is the value of goods and services produced each year, in current prices or adjusted for inflation. It’s the most complete measure of…

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How Tax Bills Are Calculated, and Where the Money Goes

Thursday, November 21st, 2019

The second installment for Indiana property tax bills was due a couple of weeks ago. If you own a house with a mortgage you probably didn’t notice. Let’s hope the bank remembered to pay!  But the rest of Indiana property owners had to send a check to the County Treasurer for the second half of…

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How Low are Indiana’s Taxes?

Thursday, October 24th, 2019

We’d like our taxes to be low. Sure, we value the schools, police and fire protection, roads and parks and libraries that our taxes support. But we all like a bargain. We’d like to have all those things at a low, low price.  How low are taxes in Indiana? The Census Bureau provides a great…

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Money for Schools

Tuesday, September 17th, 2019

Spending on K-12 education is by far the largest piece of Indiana government. Appropriations for schools make up half of the state’s general fund budget. School budgets are 55 percent of all local government budgets. Total local school appropriations are $11 billion in 2019. About $7 billion of this comes from state support, and $3…

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Is the Long Expansion Over?

Wednesday, August 21st, 2019

July 2019 marked the 121st month of the economic expansion that began after the Great Recession. That makes it the longest expansion in American history, surpassing the 10-year expansion of 1991-2001. But wait. The yield curve has inverted. Recreational vehicle sales are down. The “R-word,” recession, is trending on Twitter. Are we in recession already?…

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Why Does Indiana Keep Balances, and How Much is Enough?

Friday, July 26th, 2019

The Indiana State Budget Agency wrapped up the fiscal 2019 budget on July 11, with its annual closeout statement. There was good news. Revenues came in $267 million above forecast, and that meant that Indiana ended the year with more money in the bank than expected. State balances were almost $2.3 billion, which was 13.6…

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The Yield Curve Inverted. Is There a Recession in Our Near Future?

Tuesday, June 18th, 2019

It happened. The yield curve inverted. The big one. The 10-year Treasury bond rate dropped below the 3-month Treasury bill rate. That’s the inversion that economists think is the most reliable indicator of a coming recession. Yield curve inversions have happened before each of the last seven recessions. Over the past 50 years, every time…

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Paging Professor Phillips

Monday, May 20th, 2019

Inflation should be increasing.  But it’s not. Economist A.W. “Bill” Phillips was born in New Zealand but moved to Australia as a young man to continue his education.  He traveled to China, but had to flee the Japanese invasion in 1937, via the trans-Siberian railroad.  He arrived in England, but the war followed.  He joined…

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Revenue and Medicaid Forecasts Squeeze the State Budget

Wednesday, April 24th, 2019

Every two years the Indiana General Assembly writes a new state budget. This year the legislature set spending for fiscal year 2020, which starts in a couple of months on July 1, and for fiscal year 2021, which starts in mid-2020. Of course, to budget for the future legislators need a reasonable guess about how…

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How Fast Can Our Economy Grow?

Thursday, March 21st, 2019

How fast can our economy grow? We often answer this question by talking about spending. Will people buy more consumer goods? Will businesses buy more equipment? What about spending by government and the rest of the world? Those questions imply that more spending means more production. If consumers want to buy more cars, companies will…

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What Has Happened to Indiana Local Income Tax Rates in 2019?

Wednesday, February 20th, 2019

Indiana reformed its local income taxes during the 2015 legislative session, and the new set-up took effect in 2017.  The old income tax acronyms, CAGIT, COIT, EDIT, and LOIT, were no more. Now we have LIT, for local income tax, with a single rate and a collection of revenue buckets for various uses. Three years…

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Assessed Value of Farmland Will Fall a Little in 2020

Friday, January 25th, 2019

The base rate of farmland will fall 3 percent from $1,610 per acre for taxes this year to $1,560 in for taxes in 2020. Indiana’s Department of Local Government Finance made the announcement on December 28. What does this mean? The base rate is the starting point for the assessed value of farmland, used to…

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Why the Alarm about Yield Curve Inversions?

Tuesday, December 18th, 2018

Are you sitting down? I’ll pause typing for a moment so you can find a chair. Good. On Monday, Dec. 10, for the first time in 12 years, the yield (or interest rate) on the five-year U.S. Treasury bond fell below the yield on the three-year U.S. Treasury bond. Alarm bells rang on Wall Street….

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Trends in Indiana School Referenda Results

Tuesday, November 27th, 2018

Indiana school districts can propose referenda to ask their voters for added property tax revenue. Twelve referenda were proposed on election day, and eight passed. That’s 67 percent, just a bit more than the 63 percent pass rate since 2008. Move along, folks, nothing to see here. But there’s been an upward trend toward passing…

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The Proposed Balanced Budget Amendment for the Indiana Constitution

Monday, October 22nd, 2018

Early voting has started in Indiana, and voters will see a constitutional amendment question on their ballot. The question asks whether the Indiana Constitution should be amended to require the General Assembly to adopt a balanced budget, unless two-thirds of the House and Senate vote otherwise. The amendment would add to Article 10, Section 5…

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