[r44] Change to Residential Property Tax Cap Does Not Reflect Goals (2/22/2008)

Friday, February 22, 2008

Start Date: 2/22/2008 All Day
End Date: 2/22/2008

Just over a month ago, things seemed promising in the General Assembly. Legislators from both sides raved over the unprecedented spirit of bipartisanship in the House, bipartisanship borne out of what was thought to be a sincere desire to create reasonable, effective and permanent reforms to Indiana's system of property taxation.

This week, that spirit of bipartisanship fell beside the wayside, when Senate Joint Resolution 1 was drastically changed in the House Ways and Means Committee.

Senate Joint Resolution 1 is a resolution carrying one of the primary components of Gov. Mitch Daniels' property tax plan: constitutionally protected caps on residential, rental and business properties at 1, 2 and 3 percent respectively.

The House had its own version of the resolution, House Joint Resolution 1, which also would have begun the process to constitutionally protect the governor's proposed property tax caps. Our version was called to the House floor for second reading but quickly withdrawn by Rep. William Crawford (D-Indianapolis), chairman of the Ways and Means Committee, rendering HJR 1 dead to further legislative action.

Many of us held out hope for SJR 1. House Democrats pledged early in the session to support the tax caps, but on Wednesday, they chose to forgo their commitment to see this resolution to passage in the form it was intended by the governor. The majority Democrats in the Ways and Means Committee abruptly amended the resolution so that the tax cap on residential property taxes would be based on a household's total income - not the home's assessed value.

The proposal, made by Chairman Crawford passed 11-10, along party lines. Republicans voted against the amendment because there were no data available to forecast the results of this change on homeowners and Indiana's overall economic well being. What's more, many of us simply are philosophically opposed to a proposal that so closely resembles redistribution of wealth - an action that stands in stark contrast to America's democratic principles.

Later in the committee meeting, members voted on the resolution, and it passed. Republicans were forced to vote for the resolution in this new form we found incredibly unsatisfactory. Even in its awful form, SJR 1 is our only hope to pass the originally proposed constitutional amendment creating 1-, 2- and 3-percent tax caps to protect Hoosiers from exorbitant increases in the future.

Last month, the House overwhelmingly passed House Bill 1001, which reflected Gov. Daniels' plan. The governor's plan is in line with many of my own goals to effectively confront our property tax problem:

  • Immediate 40-percent property tax cut by May 2008
  • Strong state and local spending caps
  • Permanent 1 percent of assessed valuation homestead cap
  • Remove schools and welfare from property taxes
  • Make caps and levy removals permanent in the state Constitution

Passing a resolution for constitutionally protected tax caps is critical to our success this session for two reasons. First, history has shown that merely putting the caps into state law is not enough. Whenever this has been done, the general assembly has simply changed the law to increase the caps when budgets ran short. Second, the process to pass a constitutional amendment is lengthy and complicated. The resolution to pass such an amendment must pass two separately-elected general assemblies before heading to a ballot in the next general election. So, if we are able to pass SJR 1 this session and next session, it can be on the ballot for voters to decide in 2010, becoming law in 2011. If we are unable to pass SJR 1 in an acceptable form, then we lose even more critical time to protect Hoosier homeowners.

There is still time to do what is right for Hoosier taxpayers, and I remain committed to that goal: cut property taxes now and cap them forever!

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Contact Rep. Thomas with questions or concerns through e-mail at h44@in.gov, by calling the Statehouse toll-free at 1-800-382-9841 or by writing him at the Statehouse, 200 W. Washington St, Indianapolis, IN 46204.