Tuesday, February 19, 2008

Senate Forwards Property Tax Relief Bill

The Senate Tax and Fiscal Policy Committee voted 9-0 to send Gov. Mitch Daniels' property tax relief plan to the full Senate with some significant changes according to the Star's Mary Beth Schneider. The most significant change takes away a lot of the tax relief the underlying bill afforded taxpayers. That provision authorizes counties to increase the local option income tax 0.5% to make up for lost property tax revenues caused by the capping of property taxes. Marion County just increased its local option income tax by 65% last year from 1% to 1.65% without providing any property tax relief. Marion County couldn't afford to raise its income tax any higher because it is already the highest in the state. That will only encourage more people to move to the suburban counties.

The good news for Marion County is that the Senate-passed plan calls for the state to pick up more local costs, including the cost of school debt service, juvenile incarceration, school pension debts and the pre-1977 police and fire pensions. The pick up of the police and fire pensions alone will save Marion County taxpayers abour $30 million a year. That would free up that much money from last year's local option income tax which was earmarked for the pension liability.

Another change the Senate made will really take the teeth out of a provision of the House plan which allowed county councils to control spending by other units of local government. County councils will only have authority to review and not approve all budgets for local taxing districts as the House version required.

The property tax relief promised by HB 1001 is very good news, but the end product is beginning to look more and more like a tax shift as opposed to real, overall tax relief. That should make the schools and local governments which have been lobbbying lawmakers hard these last few months at our expense happy, but I'm not so sure taxpayers will be all that pleased with the final product.


Anonymous said...

Not only does the "new" solution to fix the property tax mess include a increase in non-ductucable sales tax and but also a increase in local income tax.

Somehow it won't surprise me that the savings from consolidating local government and a decrease in overall spending levels mysteriously disappear leaving only a tax shift along with a hevty tax increase.

Bipartisan government-reform panel led by Indiana Supreme Court Chief Justice Randall Shepard and former Gov. Joe Kernan recommend the elimination of 1,155 units of government and 5,833 fewer elected officials statewide saving $400 million each year.

We've got to quit governing like this!

Message from former Governor Joe Kernan:


Study shows that Kernan-Shepard recommendations would result in between $200 and $400 million in savings each year

If not now, When?

Anonymous said...

We'll remember in November!

Anonymous said...

I have more questions than comments.

How much of the school debt would the state take over? All future, while we still have to pay the current debt through property tax?

I read elsewhere that the school bond referendum would not apply to 'growing' school districts. That's not enough in my book. The people should get to vote on all of the bond issues.

How would the proposed referendum work with the state taking over debt service???

My school district's current debt already costs me over 1% of my home's assessed value. Would the 1% cap still apply? Or, do school districts get a pass on the cap?

Anonymous said...

The insane lapdog relationship between school superintendents and architects must end.

In a perfect world, the capital project referendum would not be needed. But we're not in aperfect world.

1:42--you should run for governor. Or the House. You've got in exactly right.

For a primer on what will happen with this "tax relief package," revisit Gov. Bowen's disasterous 1973 package, the last major overhaul.

Anonymous said...

Excuse my ignorance, but please tell me this eliminates the bloated township governments! Please!