[r44] Final Property Tax Plan a Success for All Hoosier Property Owners (3/17/2008)

Monday, March 17, 2008

Start Date: 3/17/2008 All Day
End Date: 3/17/2008

Friday, the Indiana General Assembly passed House Bill 1001 and Senate Joint Resolution 1, creating substantial relief for all property owners, as well as reforms that will reduce Indiana's dependance on property tax revenue. Also, we took the first step to make reform permanent by passing Senate Joint Resolution 1. History has shown us that merely tinkering with the tax system will not solve Indiana's reoccuring problems with property taxes.

When then-Gov. Otis Bowen championed a series of bold proposals to reform Indiana's property tax system in 1973, Hoosiers thought their problems with sky-rocketing property tax bills were over. And they were - for a while.

As the years went by, however, property taxes continued to creep up due to the ever-increasing cost of local government services and constuction, unfunded state mandates and repeated tinkering with taxation systems.

During the 2007 legislative session, the bipartisan Legislative Services Agency released a report indicating that Hoosier homeowners were about to experience unprecidented increases on property tax bills because of a series of changes and circumstances that came together to create what many referred to as the perfect storm. In response to this data, the Democrat-controlled House devised a rebate-check plan, in which homeowners would first pay their bills and then receive a rebate months later. Especially in our local communities, we have witnessed firsthand the failure of this ill-conceived plan.

The pressure to create an effective and reasonable package of property tax proposals was immense heading into this session. Property-tax payers made it clear to the general assembly through phone calls, e-mails and letters that failure to provide immediate relief and permanent reform would bring dire consequences come election time in November.

The result of this pressure was a resolve to compromise to create the best policy possible for Indiana's property-tax payers. Despite a bit of partisan gameplaying, which is nothing out of the ordinary, members of the Indiana House and Senate were able to pass a comprehensive set of property tax proposals. In the end, I voted in favor of both HB 1001 and SJR 1, because the most important aspects of the House Republicans' and the governor's plan remained intact. Likewise, the portions I felt would hurt our area the most were removed, such as the residential cap based on household income instead of assessed value.

 Here are the highlights of the final tax plan:

  • Immediate Relief - The plan provides $620 million in relief this year, $140 million in 2009 and $80 million in 2010. Homeowner bills will be reduced by about 26 percent on average statewide this year and nearly 36 percent lower in 2010 over last year's bills. A one-cent increase on sales tax (to begin April 1) will help pay for this relief.
  • Tax Caps - Property tax caps will phase in gradually. They will begin at 1.5-, 2.5- and 3.5-percent of assessed value on residential, rental/agricultural and business properties, respectively. By 2010, the full 1-, 2- and 3-percent caps will by implimented. These caps will save taxpayers about $525 million in 2010. Senate Joint Resolution 1 passed and begins the process to constitutionally protect these caps. If the resolution passes in the 2009 session, it will be on the ballot for voters to decide in 2010.
  • State Assumption of Levies - The state will take on the remaining local school operating costs, expenses for child welfare services, for incarcerating juveniles in state facilities, for subsidizing hospital treatment for the indigent and for pre-1977 pension plans for police and firefighters. The state will pay for this through increased sales tax revenue and through wagering tax revenues from casinos and horse tracks.
  • Referenda - Future debt must be approved by referendum if it is outside the caps. Referenda also will be required for school building projects for elementary and middle schools that cost more than $10 million. For high schools, referenda will be required for projects costing more than $20 million. Finally, referenda for all other local government projects may occur if the cost is more than $12 million or 1 percent of a taxing unit's assessed value, if enough voters petition for the referenda.
  • Safeguards - The plan creates a Distressed Unit Appeal Board that could assist taxing units facing at least a 5-percent reduction in tax collections, allows counties to adopt new local option income taxes, provides $120 million to offset the impact on schools (schools can also have referenda to offset lost revenue) and creates credits for low-income Hoosiers and senior citizens.

We will see the effects of the plan immediately with the next round of property tax bills. By taking care to work towards permanent reforms, in addition to immediate relief, we can (I hope) avoid future increases in property tax bills.


Overwhelmingly, Hoosier homeowners were the driving force behind the Indiana Legislature this session. In 10 weeks, we were able to pass an extensive property-tax package, and this is truly a testament to the power of everyday Hoosiers to influence legislation. This year, it wasn't about the lobbyists or politics. It was about Hoosier property owners.


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.