We are now in the first week of the short session. By law, the General Assembly must conclude all of our work by midnight on March 14. We have a lot of work to do before then, and it will not be easy.
Our major goal this session will be property tax relief. As a member of the Ways & Means Committee, which considers all bills dealing with money, I have already heard testimony from many residents around the state on property taxes. The Ways & Means Committee has held hearings in different areas of the state, listening to testimony from people. The point of holding these meetings was to hear from regular Hoosiers instead of just special interests and lobbyists.
I believe that we first need to reduce and control spending at all levels of government, which includes state, counties, cities, towns, schools and libraries. We can do this by tying government growth to income growth. If citizens in Hancock County make an average 2.3 percent more in 2008 than 2007, than government units in Hancock County growth should be restricted to no more than 2.3 percent. The local government would not be required to spend all of that increased money. While the state has done a good job recently keeping spending down, it is imperative that we institute these caps for state spending as well. State spending growth should be restricted to the average income growth for Hoosiers.
My goal is to have permanent, true relief and transparency to the entire property tax system. People should not be confused about which unit of government is getting their money. Most people do not know that the state only receives 0.01 percent of property tax revenue. The rest of property tax money goes to support local governments. Additionally, the state provides approximately $2.3 billion to subsidize property taxes, which has continued to grow over the years. The unchecked growth in government means that we cannot afford to keep making payments to offset property taxes. We need to create a clearer system that does not involve transferring money from one government unit to another.
Gov. Mitch Daniels has put out a plan that would cut most homeowners bills by approximately 40 percent. While there are a few other plans, this has received the most consideration to date. Under the proposal, homeowners' bills would be capped at 1 percent of their assessed value, non-homestead residential property at 2 percent and all other property at 3 percent. These caps would be placed into the Indiana Constitution to ensure that taxpayers would be permanently protected from large increases. All property taxpayers want certainty in their bills and the property tax caps will prevent some of the sticker shock that taxpayers experience year to year. However, I do have concerns with taxing different properties at different rates. Indiana is striving for economic development and these caps, with higher taxes on businesses, farmers and rental property, might send the wrong message to the business community. These businesses are providing jobs for Hoosiers so that they can pay income taxes and sales taxes.
Gov. Daniels is proposing that the state pick up all of the levy costs for K-12 school operating fund, school transportation costs, child welfare, state fair and state forestry. All of the levies would be paid for with state money, instead of property taxes, beginning Jan. 1, 2009. These levies would be permanently removed from property taxes. Picking up the state fair and state forestry levies would mean state government would no longer receive any money from property taxes. All the money would go to local governments.
This session, we will also be looking at some of the major government restructuring proposals that the Kernan-Shepard Commission presented in December. Gov. Daniels asked former Gov. Joe Kernan and Chief Justice Shepard to look at ways to streamline and update Indiana's government structure. The commission made 27 far-reaching recommendations that would modernize Indiana's government to the 21st century.
Indiana has 10, 746 elected officials on all levels of government. Additionally, Indiana has 2,730 units of government that are able to levy property taxes, which is the 10th-highest total in the country. The report concluded that, "for its size and population, Indiana has far too much local government."
Many of the recommendations of the report will not be taken up this session because there isn't time to fully study the impact. I'm hopeful that we can begin the process of passing some of the less controversial recommendations this year. To view the full report online, go to http://indianalocalgovreform.iu.edu/assets/docs/Report_12-10-07.pdf .
As always, please contact me with any questions, comments, or concerns as we begin the 2008 legislative session. Send letters to State Rep. Bob Cherry, 200 W. Washington St., Room 401, Indianapolis, IN 46204. E-mail: H53@in.gov. Call toll-free: 1-800-382-9841.