House Bill 1001, which contains Gov. Mitch Daniels' property tax relief plan, passed out of the House last week with only one "no" vote. Twenty-seven amendments to the bill were adopted on second reading - some very good ones and some very bad ones. While there were some onerous Democrat amendments adopted and incorporated into the bill, it still contains the basic components of the governor's proposal as well as most of the 10-point plan advocated by my Republican colleagues.
Under the original bill, all homestead property taxes (the taxes on your primary residence) would have been cut by a statewide average of 35 percent. The bill also places a cap on homestead property taxes of 1 percent of the assessed value. (For instance, the property taxes on a $100,000 home could never be more than $1,000 per year, and the taxes on a $500,000 home could not be more than $5,000).
Some constituents have been confused about the cap, fearing that their taxes would go up if they are currently paying less than 1 percent. That is not the case. Under the governor's proposal, every single property tax-payer should see a reduction in his or her property tax bill.
Some constituents have also been misinformed about one of the amendments adopted on second reading. Rep. Russ Stillwell (D- Booneville) offered an amendment to phase out a proposed supplemental deduction for homes above $200,000, with no additional property tax relief for the portion of the value above $800,000.
This provision was apparently misreported somewhere (not in this paper), leading many to believe that homeowners with higher-value homes might actually pay more property tax than they currently are. If the amendment were to become law, homeowners with high-value homes would not get as much relief as the governor proposed, but they would still pay less than they are currently paying. And for those with a high tax burden the 1-percent cap would still apply, no matter how high the assessed value.
It is important to remember that almost 99 percent of your property taxes are spent locally on services such as fire and police protection, parks, libraries and schools. With the adoption of HB 1001, the balance of the K-12 school operating fund and child welfare levy will now be paid by the state. Controls on local spending growth are also included to ensure that these tax cuts are permanent.
All in all, the amendments adopted in the House increased the "cost" of the tax relief by about $340 million. Fortunately, the bill is only about a third of the way through the process. The Indiana Senate will now deal with HB 1001, and I'm certain that they will be removing the more onerous amendments before sending the bill to conference committee.
Passing the bill out of the House was an important first step toward the governor's plan being enacted, and as the bill continues to move through the process, I will continue working for bold, immediate and permanent property tax relief for all homeowners and business owners.