For immediate release:
March 14, 2008

Statehouse Report from State Rep. Bob Bischoff

INDIANAPOLIS —— When lawmakers came here in early January for the start of the 2008 session of the Indiana General Assembly, our priority was clear: property tax relief for families.

At the close of the 2008 session this week at the Statehouse, we were able to pass a measure that provides tax relief. Whether it is the final answer to the property tax problems we face is another matter.

House Bill 1001 contains much of the plan advocated by the governor several months ago, as well as some bipartisan changes that help offset the tax shift that rests at the heart of the governor's plan to reduce property taxes by increasing the state sales tax and enabling counties to enact additional local option income taxes.

The plan will provide nearly $900 million in property tax relief this year. This relief will be financed in part through an increase in the state's sales tax from 6 to 7 percent.

It will phase in caps on property tax bills. By 2010, the cap on homeowners' bills will be 1 percent of assessed value, rental and agricultural property at 2 percent and business property at 3 percent.

Along with phasing in the caps, the Legislature passed a separate measure (Senate Joint Resolution 1) that will begin the process of amending the cap language into the Indiana Constitution.

Other provisions of House Bill 1001 allow referendums to give voters and property taxpayers a voice in whether expensive school and local government building projects will take place.

The plan contains increases in the standard homestead deduction. Renters will see their income tax deduction increase to $3,000. Seniors on fixed incomes will see property tax increases on their homes capped. Working families will get assistance through an increase in the Earned Income Tax Credit from 6 to 9 percent.

The state will assume child welfare and juvenile justice costs, as well as the rest of school operating costs, moves which will provide added property tax relief.

These provisions carry a price tag. Along with the increase in the state sales tax, local units have the chance to increase local option income taxes to provide additional property tax relief and assistance for public safety services.

By implementing the caps, we are telling schools and local units of government that they are going to have to reduce spending and live within their means. We did include $120 million in the bill to help schools offset funding losses.

This was one of the most important votes I have cast during my time in the Legislature. We need to do something to stem the tide of rising property taxes across this state, but I also realize that we must protect the ability of government and schools to provide needed services.

In matters like this, a legislator must weigh whether the bill contains enough good things to offset the bad. After much consideration, I chose to support House Bill 1001. It contains substantial, immediate property tax relief and protects homeowners from unchecked property tax growth.

At the same time, I must admit there are many warning signs on the horizon that cause me some concern.

Chief among them is our economy. You might prefer to say we're in an economic downtown, or you might just call it a recession, but there is no doubt that the economy is slowing down.

You can see the impact at the state level in many ways, but I am paying particular attention to the fact that state revenues are more than $80 million behind projections over the past three months, and that the state has not met its revenue targets in six of the last seven months.

If these trends continue, it will make it difficult to write a new state budget when we return to the Statehouse for our 2009 session. I would like to think that the work we've done in 2008 will resolve our property tax problems once and for all, but I fear we may have to address this issue again, perhaps as early as next year.

If you need to reach me to discuss property tax issues or other matters that have come before the Legislature, you can call the toll-free Statehouse telephone number of 1-800-382-9842, email me, or write to me in care of the Indiana House of Representatives, 200 W. Washington St., Indianapolis, IN 46204.


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