Strong support and diligent work by Republicans and Democrats during the 2008 session enabled us to pass a bill that provides significant and permanent property tax relief—including immediate additional relief of $870 million for homeowners.
Thanks to this legislation, the average homeowner in Indiana will see their property tax reduced by nearly 30 percent.
Find Out More
Additional information about property taxes and how they fund local government services can be found at the Indiana Department of Local Government Finance website.
Property Taxes Fund Local Needs
With all of the attention the state legislature gave to property taxes during the 2007 and 2008 sessions, it is always good to remind ourselves that local units of government and schools receive nearly all of this revenue.
The pie chart at right was developed by the Indiana Department of Local Government Finance. It shows how each dollar of property tax revenue was distributed.
As you can see from the information presented in the chart, Indiana's property tax is used to meet local needs, including schools and libraries.
Many people are surprised by this fact, considering how much attention the state legislature gives to the subject of property taxes.
Public hearings provided guidance and key concepts
I had the privilege of serving on the Indiana State Tax and Financing Commission last summer and fall. Our charge was to produce recommendations on how the legislature could reduce the dependence on property taxes, thus providing substantive property tax relief. Many of our final recommendations were included in the property tax legislation.
During the fall, I held eight community meetings throughout Indiana House District 60. During these meetings, the main topic of conversation was property tax relief. I shared with my colleagues the input I received during these meetings.
And as a member of the Indiana House Ways & Means Committee, we traveled the state to allow citizens the opportunity to share their concerns and suggestions. We took those suggestions to heart as the bill went through the long and tedious legislative process to final enactment.
Bipartisan Plan for Property Tax Relief
The 2008 legislative session ended on March 14. Though we passed into law 147 bills, the property tax relief outlined in House Enrolled Act (HEA) 1001 dominated the session.
Maintaining Public Safety & Schools
As you probably already know, property taxes do not fund state government but rather the services provided by local units of government: cities, towns, counties, libraries and fire districts.
Citizens have made it clear that they want the opportunity to vote on school and local government construction projects.
To this end, the property tax relief plan enacted this year will require voter approval for school projects that cost $20 million or more at the high school level and $10 million or more at the elementary/middle school level. Local government building projects will require voter approval if the cost is at least $12 million or the value equals at least one percent of a taxing district's assessed valuation.
One of my main hesitations about this legislation was the possible impact upon our schools. My concerns were eased with the provision of $120 million over the next two years to help school districts offset potential funding losses. We also increased the Tuition Reserve Fund by $50 million.
We provided the ability for local governments to raise additional revenue—when absolutely necessary—through local option income taxes (LOITs).
Key Elements of the 2008 Tax Relief Plan
Some of the most prominent provisions contained within HEA 1001 are listed below:
- $870 million in immediate relief for homeowners in 2008
- Average property tax cut of 30 percent for homeowners
- Increased homestead credit for all homeowners
- Elimination of entire property tax levies for school operations and child welfare
- Additional protection for senior citizens
- Assistance for school districts that might face a funding shortfall
- Voter referendums on major school and local government construction projects
- Transfer of assessment duties from local trustees to elected county assessor
- Greater oversight over non-elected boards with taxing power
- 20-percent increase in the income tax deduction for renters
- 50-percent increase in the earned income tax credit for lower-income taxpayers
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