[r53] Cherry Chat: Property tax caps take a hit (2/22/2008)

Friday, February 22, 2008

Start Date: 2/22/2008 All Day
End Date: 2/22/2008
Property tax relief took a turn for the worse this week when the House Democrats decided to play games with the proposed constitutional caps on homeowners' property tax bills. With three weeks to go, I'm still confident that we can work out the differences and provide tax relief.

For the last four months, the governor and lawmakers have been talking about constitutional caps on the amount of property taxes you would pay based on the assessed value of your home. All property tax discussions were based on these premises, whether the cap would be 1 percent, 1.2 percent or 1.5 percent. During the first half of the session, the House overwhelmingly approved - 93-1 - the 1-percent cap on assessed valuation. All of that changed Wednesday when the majority party altered the course of discussion.

The majority party amended Senate Joint Resolution 1, the constitutional protection to cap homeowner's relief at 1-percent of their homes assessed value. Now, SJR 1 caps your property tax bill at 1 percent of household income. The caps for rental, agricultural (2-percent) and business property (3-percent) would still be based on assessed value of the property.

These changes were presented to the Ways and Means Committee, which I am a member of, with no supporting data. The chairman of the committee had no fiscal information on how this would affect homeowners or local governments. With the 1-percent cap on assessed value for homeowners, we had data that made us relatively confident on how each taxing unit would have been affected. From this data, we have been able to have discussions, based on facts, on how the caps would affect Hoosiers.

Republican members of the committee had many questions about the new proposal. One member wanted to know if the 1-percent limit would apply to the homeowner's income or the whole household's income. The author of the amendment indicated it was intended to include everyone in the house, even though the amendment's language did not say that.

Under the household-income scenario, if a teenager has a summer job, her income would be counted. If a college student listed his parents' home as his permanent address, any job he has on campus would count toward household income and, therefore, the income-property tax liability.

I raised privacy concerns about this plan. Currently, all property tax bills are public record. Anyone can look up how much a resident pays in property taxes. This proposal would allow everyone to know how much income a family has in a given year. That is a matter of privacy and should not be public record.

Another major flaw in the new plan is that the 1-percent cap would exclude old debt. Currently, 25 to 33 percent of a homeowner's property tax bill covers past debt. That would include school and local government construction costs. This new proposal would have households pay 1-percent of their income and all of the existing debt. The constitutional cap that I support would be a flat cap at 1-percent of a home's assessed value. There would be no hidden costs associated with the hard cap, unlike this new plan.

My House Republican colleagues and I are committed to voting for the taxpayer. We want to install spending caps on local and state government, which is the best way to slow rising property tax increases. If we don't live within our means, tax bills will keep rising. Property taxes go to cover local spending and that appetite must be curbed.

Gov. Mitch Daniels in his State of the State Address said, "Property tax reduction in all its dimensions will be hard work, time-consuming work. We must resolve to stay at it until success is achieved. Please don't make spring break reservations without a refundable ticket, because we're all staying as long as it takes."

We are here to work to the end to fix this property tax problem. I sometimes wonder if the majority party has the same desire I do.

We are down to the final three weeks of session, if you have questions or want more information on a bill, please contact me. Send letters to me at the Statehouse, 200 W. Washington St., Room 401, and Indianapolis, IN 46204; e-mail me at H53@in.gov; or call toll-free 1-800-382-9841.