Indiana has had a long-running problem with its property-tax system. This year, that problem came home to roost as a combination of higher residential assessments and reduced taxes on businesses and commercial property led to shockingly high bills for homeowners. Governor Mitch Daniels ordered localities to roll back their rates to last year's levels, but that was only a temporary fix--and it came after heavy political fallout had been stirred up. Twenty-one mayors around the state lost their jobs in the May primaries. "If I were a local elected official in Indiana, I would really not want to be on the ballot in November," says Brian Howey, publisher of a state political tip sheet.
In Indianapolis, property-tax bills more than doubled in many places this year. Even so, Peterson decided he needed additional revenue to pay for public safety and pensions. In July, he raised the income-tax rate from 1 percent to 1.65 percent. That may not sound like much, but it translated into headlines about a 65 percent increase--and plenty of public anger. "The income tax increase...didn't come at a good time," says Deputy Mayor Steve Campbell.
To make the situation worse, citizens found themselves blocked from attending Peterson's annual budget announcement, and the council imposed new rules to muzzle frequent protesters. So things are in a highly fluid state, to say the least. One recent poll suggested that more people were willing to vote for Greg Ballard, the Republican challenger to Peterson, than had even heard of him.
Peterson thinks he has enough residual support among Indianapolis voters to ride the situation out. And he insists his financial moves have put the city on a firmer footing and will make life easier for future mayors. But he can't be entirely sure that the list of future mayors is going to include him.
