[r54] Rep. Saunders Explains HB 1001, SJR 1 "No" Vote (3/14/2008)

Friday, March 14, 2008

Start Date: 3/14/2008 All Day
End Date: 3/14/2008

I take my job as a state representative very seriously. When I am considering far-reaching plans that span over 800 pages of text and bring about massive changes to our Indiana law, I refuse to rush to conclusions or buy into smart-sounding, but ultimately vague, talking points. As a long-time advocate for property tax reform, I am continually reviewing solutions proposed by legislators, constituents and experts. The legislature has heard many ideas from these groups this session on how to fix Indiana's broken property tax system. Some ideas have had more merit than others, and some proposals worked better for our communities. Unfortunately, the current property tax plan, contained within House Bill 1001 and Senate Joint Resolution 1, which the General Assembly just passed, does little to address the concerns of many property-tax payers and local governments in our area.

I voted against this bill for a variety of reasons, but I was perhaps most concerned about the effect on local services we all enjoy. The bill cuts into the funding for many local governments, effectively putting cherished services such as police, fire and transportation at risk. I find it simply unacceptable to force local government to cut funding for departments that ensure our safety and our health without giving them the tools to make up that revenue. The plan removes police and fire pension liabilities from local government's control, which is aimed at reducing operating costs for local governments. This particular plank in the plan falls flat in our area, however, as rural areas have no pension liabilities for police and fire due to the volunteer nature of these services. In essence, the plan would cut local government budgets and attempt to offset the loss in revenue by removing responsibilities our area does not have.

Furthermore, I am concerned that placing hard property tax cap numbers in our Constitution denies Indiana the flexibility it may need in the coming years. Many economists believe our nation is heading into a recession. and it seems risky to tie future Legislatures' hands if they face a strong economic downturn. I also strongly dislike the idea of taxing different types of properties at varying levels. Our Constitution is our most cherished document in state government and the ideas contained within it should be able to stand the test of time.

I appreciate that the current plan caps and then sets property taxes at a fixed amount for senior citizens. Most senior citizens live on fixed incomes and the ever-increasing property tax bill adds an enormous burden to their lives.  I am committed to this provision even if I find other aspects of the current plan to be detrimental to our communities.

Many homeowners will see initial cuts in property taxes, but it remains unseen if the cuts will remain after the first couple years the plan has been in effect. The bill tends to benefit those with expensive and high-value properties and provides much less benefit to those who live in more modest homes. Residents may even end up paying more in total taxes than they do currently, as property tax bills can rise up to the cap set by the Legislature. Farmland property taxes will be capped at a level of assessed value higher than that of many tax bills, providing little relief for our agricultural community. Additionally, all Hoosiers will be required to shoulder a sales tax increase of more than 16 percent, which would place a 7-percent tax on most goods sold within the state. I have seen little fiscal data to convince me that this increase in taxes is worthwhile in the name of alleged property tax reform.

I am hopeful that in the coming months, further ideas can be pursued in order to make Indiana's updated property tax system more equitable for all. Despite this bill moving forward, I know the legislature has the right idea in mind and with changes it can be greatly enhanced. I certainly plan on working hard toward a workable system. If I can answer any questions or address any concerns at all, please do not hesitate to contact my office at 1-800-382-9841.