In 2007, Indiana property taxpayers rose up and demanded property tax reform. The Indiana General Assembly delivered.

Now cities across the state are left with the consequences of possibly the largest tax shift in the state’s history, a shift that chopped property tax bills everywhere.

Kokomo’s Harold Hjelmeland, an Air Force retiree, saw his property tax bill go from $1,388 in 2007 to $274 this year.

But unlike most of his fellow property owners, Hjelmeland is upset about the change. So upset, in fact, that he voluntarily sent another $236 to Kokomo City Hall.

“Voluntary taxation to help employee costs,” Hjelmeland wrote on the check’s memo line.

“I know it’s kind of off the wall, but if you’re going to talk the talk, then you’ve got to walk the walk,” Hjelmeland said.

“These idiots in the state Legislature have just cut the bottom out of these communities. They went way beyond the original intent, and they just killed the communities,” he said.

Specifically, Hjelmeland said he’s upset about the $2.5 million budget hole faced by the city of Kokomo.

The tax caps voted in by the Legislature cut property taxes, but then the economy tanked.

Increases in income and sales taxes — which were supposed to offset the property tax cuts — couldn’t keep pace. As a result, city and county officials have been forced to cut budgets drastically.

Kokomo Mayor Greg Goodnight has cut dozens of city jobs, including 16 Kokomo firefighters. What began as a property tax protest has now become a public safety debate.

“These are tough times. No one would argue that. But Mayor Goodnight is using these tough economic times to wreak havoc on the Kokomo Fire Department, all the while putting the public at an increased risk,” retired Kokomo Fire Chief Pat Donoghue wrote in a recent op-ed.

Hjelmeland, however, is backing Goodnight on the firefighters issue, saying those blaming Goodnight are missing a larger point.

“[Goodnight’s] taking a lot of flack for things he had no say in,” Hjelmeland said. “I feel sorry for a lot of people in office right now. They’re damned if they do, damned if they don’t.”

Matthew Greller, executive director of the Indiana Association of Cities and Towns, said the public safety layoffs in Kokomo and Muncie Mayor Sharon McShurley’s threat to lay off 40 firefighters are “the tip of the iceberg.”

“This is not an isolated problem due to auto manufacturing in Kokomo, or manufacturing in Muncie,” Greller said, saying that numerous Indiana cities are already planning severe cutbacks for 2010, including Mishiwaka, Marion and South Bend.

“We think the governor and the Legislature have done a superb job in reducing property taxes statewide,” Greller said. “But what we haven’t addressed yet is how we’re going to fund local government going forward.”

Greller said communities must be given “home rule” authority to raise revenues to keep essential services.

“Mayors in Indiana aren’t doing the sexy stuff; they’re doing the basic stuff. When you compromise their ability to do these things, there are going to be problems,” he said.

In Kokomo, various ideas have been floated. Two city councilmen, Kevin Summers, R-At Large, and Bob Cameron, D-2nd, have suggested adding a trash pickup fee to raise money. At the state legislative level, State Sen. Jim Buck, R-Kokomo, has fought unsuccessfully in the past for a local commuter tax.

And county officials have discussed increasing local income taxes — which have already been raised 78 percent over the past two years — yet again.

Hjelmeland, however, is the first to have raised the very obvious issue of the property tax cuts.

Goodnight said Wednesday he’s never criticized the property tax cuts.

“I do believe there were some adjustments needed. The truth is that’s what people demanded across the state,” Goodnight said. “I haven’t been critical of that, but the reality is it has forced a lot of local leaders to make some tough calls.”

Goodnight said he was trying to give the check back to Hjelmeland, who also happens to be his next-door neighbor.

“I told him he didn’t have to do that, and I told him I needed to get it back to him, and he was pretty insistent I keep it,” Goodnight said. “So I told him I’d talk to him later about it.”

Hjelmeland, of course, has the right to dispose of his own money as he sees fit, and the city is legally allowed to accept donations.

And unlike many of the people criticizing the city’s budget cuts, Hjelmeland said he can at least say he pays city property taxes.

And he’s urging other city property taxpayers to follow his lead.

“How does anyone expect that the city administration [and other local leaders] can maintain the same level of employees, benefits and services with this huge reduction?” he asked in a letter to the Tribune.

• Scott Smith is a Kokomo Tribune staff writer. He may be reached at (765) 454-8569 or via e-mail at scott.smith@kokomotribune.com