Morrison: Local control over the business personal property tax

Posted by: Jessica Baker  | Monday, February 17, 2014

I have a tremendous respect for Indiana’s local leaders. After working with many of them to resolve issues affecting West Central Indiana, like me, they are constantly striving to make our state a better place to live and raise a family. When strong cooperation exists between state and local government, efficiency increases and issues affecting Hoosiers can be addressed and solved more quickly. Although we might not agree on everything, I appreciate the dialogue we share as we work to find common-ground on problems facing our communities.

Recently, I spoke at a cracker-barrel at the Vigo County public library where residents and local officials expressed concerns about the House’s and Senate’s proposed business personal property tax (BPPT) reform. Not only has the issue garnered enormous attention in the media, but with the two bills currently going through the legislative process and the governor weighing in on the issue, some confusion seemed to exist while I was addressing those individuals.

While the Senate has their own BPPT proposal, through the Indiana House we passed House Bill (HB) 1001 –a measure I supported. The purpose of this bill is not meant to harm local government; it is intended to spur economic growth. With this legislation, local leaders would have the option of exempting the BPPT only on new investments. Since this revenue stream directly affects local governments, school corporations, libraries and other entities, those officials should be able to decide how best to manage their finances. Under HB 1001, the control is theirs.

Revenue generated from old personal property would continue to be collected, and the exemption would solely apply to newly purchased business items. Often times, companies large or small are unable to upgrade their equipment or expand their operations on account of the tax. This exemption would remove that barrier and incentivize businesses to upgrade or purchase new equipment, boosting the economy.

Another concern expressed by local leaders is that HB 1001 will create competition among counties. The bill does not allow businesses to move existing personal property from one county to another in order to have their personal property exempted.

Now, eliminating the tax on new investments might not be the right decision for some counties as each county relies on this tax to a varying degree. Parke County receives just over $450,000 from the tax, which is 4.6 percent of their total budget, and out of all 92 counties, Parke is the third least reliant on the tax. On the other hand, Vigo County receives about $17 million from the tax, which is 19.7 percent of their budget, and is ranked 11 out of 92.

Every state surrounding Indiana either doesn’t tax BPPT or does so at a lower rate than our state. This puts us at a competitive disadvantage, especially for Indiana’s border counties like Warren, Vermillion and Vigo. New business projects can have a substantial impact on the economy through job creation, and we want to provide our counties with every advantage to attract businesses here.

Ultimately, if HB 1001 passes, it is just another tool for local governments to use. Whether or not they do; that is up to the local leaders to decide. As I continue to meet with county officials and our friends and neighbors in West Central Indiana, I am committed to listening and working together on this issue. HB 1001 is still moving through the legislative process, so I encourage you to visit our website to learn the status and more information about the bill.

Like always, I urge you to contact me with your thoughts, concerns or suggestions about HB 1001, or any other bill, so that I can represent you more effectively. Please contact me by emailing or by calling my office at 317-234-2993.