Governor announces “cut now, cap
forever” property tax plan
by: Matt Norris, Lobbiest - The Corydon Group
Governor Mitch Daniels has announced his plan to address
the current property tax crises, calling for “fair,
far-reaching, and final property tax relief for Hoosier
homeowners.” According to the Administration, the
plan would provide significant immediate relief on property
tax bills and includes a proposal to cap future taxes
to prevent any future large increases.
- A Constitutional Amendment capping property taxes
at 1% of assessed value for homeowners, 2% of AV for
residential rental property, and 3% of AV for business
property
- For 2008 property tax bills, $700 million in homeowner
property tax relief (in addition to the $250 million
in relief already coming via the horse track license
fees) in the form of an expanded homestead credit. The
relief will be paid for in-part by an increase in the
state sales tax from 6% to 7%.
- State assumption of costs currently paid by local
taxpayers, including K-12 school operating and transportation
costs and care for abused and neglected children. In
return, the state will cease subsidizing local governments
the property tax replacement credit.
- A requirement that Capital Project and Tax Review
Boards in each county review and approve the spending
plans of all taxing units.
- Prohibition on local spending growing faster than
a county’s average personal income growth over
a six-year period unless approved by taxpayers via referendum.
- A requirement that all significant local construction
projects be approved by referendum.
- Transferring property tax assessments duties from
elected township and county assessors to a single professional
assessor in each county, appointed by the county council.
Reaction to the Governor’s plan has been mixed.
The Governor is in the midst of a statewide tour to discuss
his plan Hoosiers, and is reporting that people are generally
supportive of the concepts. Meanwhile, business leaders,
school officials and local government officials have all
criticized various aspects of the proposal. Representatives
from the Indiana Chamber of Commerce and the Indiana Manufacturers
Association have criticized the different property tax
caps for property owners (1% for homeowners vs. 3% for
business owners), going so far as to question the legality
of such a system under Indiana’s Constitution. School
officials are upset over the referendum requirement for
school construction projects, and local government groups
have criticized the spending restraints imposed on local
units as well as the elimination of elected asses positions.
As you would expect, Republicans in the legislature have
largely embraced the proposal, at least as representing
a good starting point. Senator David Long, Senator Luke
Kenley, Rep. Brian Bosma, and Rep. Jeff Espich have all
largely supported basics of the proposal. Probably more
importantly, Speaker Pat Bauer has stated that there are
no “deal breakers” contained the plan as far
as he’s concerned, though he did say that the “devil
is in the details.”
President Pro Tempore Long has stated his intention to
divide the plan into 10 separate pieces of legislation
and to conduct hearings beginning in December, a month
before the legislature is set to reconvene. He’d
like to vote the proposal out of Senate in early January,
accelerating the process in the hopes that final approval
will be granted in time for meaningful prop tax relief
to be granted before the Spring 2008 property tax bills
are sent out. Speaker Bauer has not yet weighed in on
possibility of conducting meetings in December.
Here is a snapshot of some of the proposals:
Joint Resolution 1: Proposed Constitutional
Amendment to:
- Require the General Assembly to establish a 1% Circuit
Breakers for Homesteads;
- Allow the General Assembly to enact credits and deductions
to limit the tax liability for other property; and
- Permit the General Assembly to exempt a mobile home
used as a homestead to the same extent as real prop
used as a homestead.
AUTHOR - Senator Kenley Committee: Tax and Fiscal Policy
Joint Resolution 2: Proposed Constitutional
Amendment to provide that buildings and personal property
predominantly used for religious worship are exempt from
property taxes.
AUTHOR – Senator Miller Committee: Judiciary
Joint Resolution 3: Proposed Constitutional
Amendment to prohibit the use of property taxes for common
school purposes other than for transportation, capital
projects and debt related to capital projects and employee
retirement severance liability.
AUTHOR – Senator Lubbers Committee: Appropriations
Senate Bill 1: Repeals the property
tax levies for the County Child Welfare and the School
General Fund beginning 2010.
AUTHOR – Senators Lubbers Committee: Appropriations
Senate Bill 12: Establishes statutory
Circuit Breakers as follows:
- 1% - Homesteads (dwelling and the land up to 1 acre);
- 2% - Other Residential Property (buildings of 2 or
more dwelling units, common areas shared by the dwelling
u and the land on which the building is located; and
- 3% - non-residential real and personal property.
AUTHOR – Senator Kenley Committee: Tax and Fiscal
Policy
Senate Bill 15: Extends the filing date
from June 11 to October 1 for the following credits/deductions
(begin pay taxes):
- Homestead Credit and Homeowner’s deduction;
- Mortgage deduction
- Elderly (aged 65 or older and surviving spouse);
- Blind and disabled; and
- Disabled veteran (and surviving spouse) and WW1 veterans
AUTHOR – Senator Meeks Committee: Appropriations
Senate Bill 16: Property Tax Assessing
Duties
- Eliminates the office of elected Township Assessor
on December 31, 2008 in townships where the assessor
would otherwise be subject to election on November 4,
2008;
- Provides that an individual holding the position of
Township Assessor prior to November 4, 2008 may remain
serve as Township Assessor when a township assessor
vacancy occurs; and
- Provides that the DLGF may approve contracts for professional
appraisers in counties on if it determines the firm
has sufficient number of qualified employees and adequate
training and experience.
AUTHOR: Senator Lawson Committee: Local Government
Senate Bill 18: Establishes controls
and requirements for the issuance and management of local
debt:
- Prohibits refunding bonds from final maturities that
extend beyond the final maturity of the original bonds;
- Requires savings realized as a result of a refinancing
to be used to repay debt or reduce debt levies;
- Requires annual level retirement of principle throughout
the financing;
- Lowers the threshold that triggers County Project
Review to the lesser of $7 million or .5% of taxable
assessed valuation; and
- Limits local bond issues to a maximum term of 30 years
and capitalized interest to 2 years.
AUTHOR: Senator Dillon Committee: Tax and Fiscal Policy
