The cornerstone of the relief is a one-cent state sales tax increase. Many might wonder whether increasing one tax to lower another is just a tax shift. Data from fiscal offices show that for every $1 of sales tax increase, Hoosiers will receive $1.80 in relief. The reason for the tax relief is the circuit breaker caps that are in the bill. As the bill was passed, future property tax bills would be capped at 1 percent for homeowners, 2 percent for rental property and 3 percent for businesses.
Another part of the bill will also save taxpayers a lot of money. The Little Red School House, a Republican initiative, creates pre-designed and pre-approved school building plans for communities to choose. This has the potential to save millions of dollars in architecture and other construction fees. Each time a community needs to build a new school, they can skip the costly design process.
I was disappointed in certain aspects of the bill. The property tax proposal requires local government spending to be tied to the average amount of income growth in that county. I support this idea and believe that a government should live within its means. House Republicans proposed an amendment that would require a state spending cap that would also limit state spending growth to the average income growth for Hoosiers. If we are going to require spending caps on local government, state government should be under the same restrictions. When it comes to spending less money, what's good for one level of government should be good for all levels of government. Unfortunately, this state spending cap was not adopted. I hope to work that into the final version of the bill.
Another item that I believe we should have included was local referendums on major spending projects. I believe that voters should be given the opportunity to decide on major capital projects that will directly affect their property tax bill. One of the big drivers of your tax bill is school construction. Voters should be able to determine if a project is too lavish and should be pared down. The referendum language was cut back to only include things like athletic fields, pools and gyms.
This is only the first stage of the property tax relief and I will keep you updated as the legislative process continues. As always, I urge anyone with questions or concerns to contact my office. I here to work hard for you and I am more than willing to help with anything that I can. Either you can call me at-1-800-382-9841 or you can e-mail me at H49@in.gov.