The waiting is almost over.  Lagrange County property tax bills are expected to come out at the end of June, and Dekalb and Noble Counties’ tax bills are expected to be mailed by late July or August.  House Republicans persistently tried to protect Hoosier property taxpayers from substantially high increases to their 2007 property tax bills.  We continually showered our colleagues across the aisle with numerous requests to provide immediate property tax relief for Hoosiers.  Although we were successful in giving taxpayers 45 days to appeal their 2006 assessment after they receive their first property tax bill, our attempts to provide legitimate and immediate relief were unsuccessful and the General Assembly came up short. 

This fall, Hoosiers will receive a rebate check that is a 15 percent reduction of the projected 24 percent increase in their property tax bills.  Democrats claim this will only cost each county 41 cents, the price of a stamp, per rebate, but they are not taking into account the costs for time and materials required to undertake this endeavor.  I do not feel this is the relief the citizens of Indiana deserve.  I wanted to provide property owners with a Hoosier Homestead credit, which would have provided immediate relief.  The House majority leadership did not agree and insisted on providing relief in the form of a rebate, which has many unforeseen consequences that we are still trying to grasp.

Fortunately, there were small steps taken this legislative session which bring us closer to long-term, substantial property tax reform.  The bulk of this reform comes as part of House Enrolled Act 1478 (HEA 1478).  The law gives local government officials much more flexibility in structuring their local tax base.  In the past, local income tax revenues were limited by rate controls.  This often left property taxes as the only mechanism with which to fund local government spending.  Under the provisions of HEA 1478, local officials will be able to support existing property tax levies with local income taxes in two ways.  The first is through an incremental local income tax rate used instead of a rise in property taxes; the second option is a replacement local income tax rate, which replaces existing property taxes with income taxes dollar-for-dollar. Both the incremental and replacement local income tax options carry a maximum cumulative rate of one percent.  Counties may target the property tax relief to homeowners, to all residential property including rentals, or to all property.

 Additionally, the law grants officials the power to establish a dedicated public safety local option income tax rate of up to 0.25 percent, but only if the county takes advantage of the other two options.  The revenue gained from this rate may be used to expand public safety spending beyond the level allowed under existing local revenue controls.  In total, the maximum additional local income tax rate from all three of these options is 2.25 percent.  In LaGrange, Noble, and DeKalb Counties the decision to implement these options must be made by the County Council by August 1 of each year.
 
It has yet to be seen if local property taxes will increase at the near 24 percent level projected by the legislative services agency.  The illogical and inefficient rebate checks, if all goes well, may help to offset some of the sting of staggering property tax increases; however, the added protection offered with HEA 1478 will give counties the ability to ease the burden placed on property taxpayers to an even greater extent.  Still, the forecast is not ideal.  Some have expressed concern that HEA 1478 does not provide sufficient incentives for local officials to use the new options available.  Nevertheless, with all the recent bad news we have had to endure, and likely will continue to endure, regarding property taxes, it is promising to see that there are options available to lighten the situation, options that give local governments the power to restructure their local tax increases and take the burden off property owners. 

I encourage you to contact me with your questions or concerns on the subject. I can be reached by phone at 1-800-382-9841 or by e-mail at h52@in.gov. 

Marlin Stutzman is the state representative from District 52 which includes portions of DeKalb, LaGrange, and Noble Counties.