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Dillon: Bill to control local debt moves to House
(STATEHOUSE) – State Sen. Gary Dillon’s (R-Columbia City) bill to control and manage local debt - which he says is a significant contributing factor to rising property tax bills statewide – will move to the House of Representatives.
Dillon’s Senate Bill 18, was presented for its third and final reading Tuesday in front of the full Senate and received the majority vote of 31-16 which sends the legislation to the House. House sponsors of the bill are Reps. William Crawford (D-Indianapolis) and Jeffrey Espich (R-Uniondale).
“Debt service represents 24 percent of the net property tax levy,” said Dillon, member of Tax and Fiscal Policy Committee. “If we want to deal with property taxes and deal with them effectively, we have to deal with debt.”
Other provisions of the bill include:
- Prohibiting extension of bond pay-off dates;
- Mandating that savings realized as a result of refinancing must be used to repay debt or reduce levies instead of starting other projects or making new improvements;
- Requiring a steady level of retirement of principle throughout the financing period, ending a common practice of paying small amounts of principal early in loan period; and
- Allows for a referendum on capital projects to the lesser of $7 million or .5 percent of taxable assessed valuation. Dillon said this would protect people living in smaller, less populated areas, giving them a voice in projects that may not be large but still require significant additional tax burdens to residents of a particular government entity.
Dillon said there are pros and cons to voter referendums but capital projects can obligate taxpayers for 20 or 30 years. Rep. Dan Leonard (R-Huntington) will help the bill in the House as it moves along in the legislative process and said SB18 is a step in the right direction.
“Property taxes fund local government and if local debt continues to grow at a rapid rate, the burden of property taxes will continue to increase,” said Rep. Leonard. “This bill will reduce dependence on property taxes, and whatever we can do to reduce property taxes is a good thing.”
Much of this legislation is a result of recommendations made by the Commission on State Tax and Financing Policy which met throughout the fall to study ways to reform Indiana’s broken property tax system.
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Sen. Dillon represents Senate District 17, which includes, Allen, Grant, Huntington, Kosciusko, Wabash and Whitley counties.
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