August 2007 No. 35Table of Contents |
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Bi-partisan agreement. Everyone is saying property taxes are a mess. Some say they should change. Some say they should go away. No one seems to agree on what’s the best way to reform or replace them.
One point seems clear. Local governments have the power to introduce or increase income taxes to support public safety, but most don’t want to do either. Indiana adopted a new law this year (HEA 1478) “that allows counties to create a new income tax that directly cuts property taxes dollar for dollar,” Governor Daniels, IN Senate President Long, and House Speaker Bauer said in unison in a joint statement. So far, only 7 counties have taken this option, with the effect that property tax bills were cut 60% on average with adoption of a 1% local option income tax or reduced 30% with a ½% income tax. “But seven out of 92 counties are clearly not enough,” they chimed in together. Counties have until October 1st to enact this tax swap.
Lake Co. may become a test case for the triad’s argument that increased income taxes could offset property tax reductions. The Indiana Dept. of Local Gov’t Finance (DLGF) ordered the City of Gary to cut about $11 Million from its submitted budget. And Highland’s Rep. Dan Stevenson said he only voted for HEA 1478 because of provisions “designed to provide $1 billion in property tax relief” that he understood was to be distributed “equally across the state, with no strings attached.” Instead last hour provisions were added that he would have voted against if they stood alone. He wants the decision about a county income tax to “be made by the county’s fiscal body and not be forced by the state,” especially if they take effect during the same year that property tax hikes are increasing. The revenue-expense squeeze is on.
Eliminate property tax? In the meantime, some taxpayers are mounting an effort to get property taxes repealed. One disgruntled taxpayer showed up in the Delaware Co. Treasurer’s office with $12,656.07 in coins and $1 bills just to protest what he thought was his home property tax bill.
By mid-way through the August Indiana State Fair, the IN Farm Bureau got some thousands of signatures on a petition asking officials to drop the property tax. They handed out pre-printed postcards to send to lawmakers.
The American Family Assn. of Indiana reported in early August that 39% of Indiana lawmakers were willing to support a state constitutional amendment that would eliminate the state’s power to tax real estate property. To become law, this repeal would take action by two rounds of the Indiana General Assembly and a statewide referendum vote—several years off.
More reassessments. The DLGF ordered a new assessment of commercial and industrial property in Gibson Co. and is now looking at Jay, Montgomery, Pike, Sullivan, and Warren counties to see if reassessments are warranted. Reviews of Fountain, Hancock, Henry, Huntington, Knox, Lagrange, Madison, Martin, Miami, Orange, Porter, Pulaski, Tipton, Vermillion, and Warrick found nothing requiring further action.
Meanwhile, property taxpayers in Marion Co. who had already paid their higher now-voided 2007 bills can get refunds. The DLGF chief said all overpayments should get a credit on their November 2007 billings or a refund after spring 2008 bills go out. Some 40% of Marion Co. property taxpayers made payments via mortgage escrow accounts.
The Commission on State Tax & Financing Policy met August 13 to begin looking at exempt property and other issues that may become part of reforms it will propose to the IN General Assembly. The Indpls Star says there is $2 Billion worth of tax-exempt property in Marion Co. alone, as the IUPUI campus and state government buildings expand. Several key lawmakers and citizen groups had already made proposals for tax policy changes at its July 23 meeting.
Ideas in the hopper. The now-minority Indiana House Republicans offered several reforms to address current and avert future property tax issues. Democrats said “an immediate resolution to the tax crisis” is needed and offered their own solutions. Here’s a sampling of what’s in the mix for actions that may be taken as early as this November’s initial organizational meeting of the 2008 Indiana General Assembly:
Residential vs. business property. Homeowners whose older real estate multiplied in value due to location in vintage and historic neighborhoods complained of escalating property taxes. Many placed “For Sale due to Property Tax Increase” signs in their lawns.
The Indiana Chamber of Commerce said Indiana is among the top third of states for business property taxes and that Indiana’s 2004 elimination of the inventory tax was not “what went wrong” to inflame the tax crisis. In addition, the value of most business property far exceeds that of ordinary homes.
“Property tax caps are no remedy,” says the Center on Budget & Policy Priorities (CBPP). Holding a lid on this form of public revenue only makes it harder for localities to provide the services that residents demand and need, CBPP says. You can get their full report on local government trends on services and revenues at http://www.cbpp.org/6-21-07sfp.pdf.
In the meantime, the Governor’s new Commission created to find ways to make local government more effective and efficient has put up a Web page for IN citizens and groups to offer their suggestions, make their gripes, and have a say in the possible revamping process at http://indianalocalgovreform.iu.edu.
In addition to co-chairs, former Governor Joe Kernan and IN Supreme Court Chief Justice Randall Shepard, other appointees at their first August 22 meeting are:
After a lawsuit against Indiana Family & Social Services Administration’s hiring a Fort Wayne minister to counsel with its employees, the plan to create a statewide network of clergy volunteers was dropped because the program “hadn’t lived up to expectations.”
FSSA also announced it selected MDwise and Advantage Health Solutions to provide managed care and other services to blind, elderly, and disabled Hoosiers on Medicaid. On November 1, the new Indiana Care Select Program replaces the Medicaid Select program. It will slowly expand to all counties by 2009. Info begins at www.in.gov/fssa/careselect.html.
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