FOR IMMEDIATE RELEASE
KENLEY TO OFFER ALTERNATIVE PROPERTY TAX RELIEF PLAN
Senators ‘interested, prepared' to consider proposal same week measures must pass committees
(STATEHOUSE) – State Sen. Luke Kenley (R-Noblesville) says he will unveil an alternative plan for property tax relief and reduction next week – the deadline for measures to pass legislative committees. But the chair of the Senate Tax and Fiscal Policy Committee says senators on both sides of the aisle seem “very interested and well prepared to discuss and vote on the measure” despite the looming deadline.
Property taxes across Indiana have increased $4 billion–nearly 350 percent–since 1980, Kenley said. “What's worse is they are expected to climb between 10-15 percent for homeowners within the next year alone (due to trending). That's bad news for all of us – senior citizens and young families alike.”
Kenley says the good news is legislators in both parties and both chambers list property tax reform as priorities this budget session. “For too long, state government has tweaked and tinkered with a property tax system many say is in dire need of an overhaul. Clearly, long-term bi-partisan solutions are needed and needed now. We want this to be substantial, permanent and lasting reform.”
FINDING OTHER REVENUE SOURCES
This week's Senate vote to allow slot machines at the state's two horse tracks could also add dollars lawmakers may dedicate to property tax relief, Kenley said. The proposal calls for Hoosier Park in Madison County and Indiana Downs in Shelby County to each pay the state $400 million in license fees plus wagering taxes. Estimates put the state's annual tax collections from the slots at $63.3 million in 2009 and $87.5 million in 2010.
Kenley, who actually voted against expanding gambling, addressed his fellow senators immediately after Thursday's slots vote and encouraged “every bit” of the state's share be used for property tax relief.
CONTAINING COSTS OF GOVERNMENT;
SHIFTING BURDEN FROM PROPERTY OWNERS
Shifting some costs of local government to the state level and providing mayors and councils alternatives to their heavy reliance on property taxes are two ways reformers like Kenley propose to contain the cost of government and ease the burden placed on property owners.
Kenley's proposal would also have the state permanently assume responsibility for all school general fund expenses, juvenile detention costs and share with locals the cost of child welfare increases.
“These are among the largest drivers of property tax increases,” says Kenley. “Local government would be given flexibility to establish local option taxes, but tied to cost-of-living increases. County boards would be granted oversight authority on all local construction projects presently funded by property taxes--schools, libraries, etc.--to contain costs and avoid over-burdening taxpayers with too many simultaneous projects.”
Latest figures show schools account for 48.3 percent of property taxes; county governments, 21.1 percent; cities and towns, 18.4 percent; other local government functions, 4.8 percent; libraries, 4 percent; township governments, 3.2 percent; tax increment financing (local economic development), 0.2 percent; and state government 0.1 percent.
“Most homeowners are surprised to learn that while solving the problem appears to rest with legislators, state government receives only 0.1 percent of property taxes collected,” Kenley said.
HOW KENLEY'S PLAN WOULD WORK
1. Reduce dependence on local property taxes. Kenley's bill allows local governments to raise local option income taxes dollar for dollar as an alternative to property taxes for funding police, fire service, trash collections and other services. Businesses would not face LOIT, but would pay their fair share through a higher circuit breaker of three percent of assessed valuation on real property.
2. Control excessive spending on new construction projects. Kenley's proposal creates local capital projects control boards to review and approve taxpayer-funded building projects based on need, costs, size and potential conflicts or overlap. Boards would include representatives from county and city governments, schools, three citizens – two elected and one representing the largest private landowner in the county.
3. Increase state responsibility for K-12 education and child protection. Instead of paying some portion of many local levies, under Kenley's bill the state would absorb all school general fund costs, juvenile incarceration costs and 50 percent of child welfare increases. Special allowances would be made to balance current differences in levies from community to community.
4. Supplement the state Homestead Credit. Kenley said some additional homestead credit would be given homeowners yet this year to give immediate protection against impending increases in property taxes. The two percent circuit breaker for homeowners would remain in place -- a guarantee from lawmakers to Indiana residents that property taxes will never be higher than two percent of assessed value.
“The advantages of the plan are clear,” Kenley said. “There would be savings on future property tax bills. It gets the state out of the subsidy game. It more closely aligns state spending with state responsibilities and local spending for local responsibilities. It will further simplify the school funding formula and takes schools out of decisions concerning local option income taxes.”
Kenley says he continues to discuss his proposal with senators and representatives. He plans to hear the bill in the Senate Tax and Fiscal Policy Committee on April 3.
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Kenley represents Hamilton, Grant, Madison and Tipton counties.
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