For immediate release:
Nov. 19, 2007

Plan to cut property taxes for Hoosiers by $2.8 billion
advanced by State Rep. David Orentlicher

INDIANAPOLIS — State Rep. David Orentlicher (D-Indianapolis) today announced the first in a series of proposals to fix Indiana's property tax system. His initial reforms will reduce property taxes for Hoosiers by $2.8 billion.

Flanked by area homeowners, Orentlicher said the proposals will "make our property tax system more affordable and fair. The reforms also will bring greater fiscal restraint and accountability to decisions about government spending."

"Homeowners and renters will see a reduction in their property taxes of nearly $2.3 billion—a cut of 62 percent," he continued. "Their total tax payments will be reduced by nearly $700 million."

Under his proposal, Orentlicher said, any homeowners who saw their property taxes double this year will see the full increase rolled back and their property tax bills drop another 24 percent.

The Orentlicher plan will provide:

  • Greater fiscal restraint—The plan includes $400 million in immediate savings by transferring child welfare and other local costs to the state budget. By absorbing several areas of local spending into the state budget, Orentlicher said there will be better oversight to limit future increases in spending. To provide additional restraints, the plan calls for a county's board of tax and capital projects review to sign off on total property tax rates, with ample time allowed for public consideration.

  • Fairer balance between individuals and corporations—An increase in corporate taxes of $300 million will provide part of the $2.3 billion in property tax relief for homeowners and renters.

  • Fairer taxation of homeowners and renters—$1.6 billion in property taxes will be replaced by income and sales taxes (a one-percent increase in each). This will make our tax structure fairer because (a) tax rates will vary less from one township to another, (b) a person's taxes will be much more predictable from year to year, and (c) taxes will be based more on ability to pay.

  • Greater protection for people on lower and fixed incomes from unaffordable property tax bills by capping property taxes when they exceed a certain percentage of the homeowner's income.

To preserve stability in budgeting, all revenues generated through the new sales, income and business taxes will go into a dedicated property tax relief fund that will prevent diversion of revenues to other uses.

"Reducing reliance on property taxes will make sure that homeowners continue to invest in our older, urban neighborhoods so that our cities can continue to thrive," Orentlicher said. "It also will ensure that our seniors are not forced to sell their homes because their property taxes are unaffordable."

Orentlicher will offer additional recommendations at a later date on ways to restructure local government and improve the way properties are assessed.
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