Kenley, Dillon: Rising local debt is
significant factor in rising property tax bills
Committee hears testimony on bill to limit, reduce length of bond issues
(STATEHOUSE) – Today, Sens. Gary Dillon (R-Columbia City) introduced a bill to control and manage local debt –which he says is a significant contributing factor to rising property tax bills statewide.
Dillon’s bill was heard for the first time by the Senate’s State Tax and Fiscal Policy Committee.
“Approximately 24 percent of the net property tax levee goes toward debt service,” Dillon, member of Tax and Fiscal Policy Committee, said. “This bill encourages local government to pay off debt rather than extend it.”
“We’re aggressively pursuing all avenues to see what we can do to control property taxes,” Sen. Luke Kenley (R-Noblesville), chair of the Tax and Fiscal Policy Committee, said.
Other provisions of the bill include:
- Prohibiting extension of bond pay-off dates;
- Mandating that savings realized as a result of refinancing must be used to repay debt or reduce levies instead of starting other projects or making new improvements;
- Requiring a steady level of retirement of principle throughout the financing period, ending a common practice of paying small amounts of principal early in loan period; and
- Lowering the threshold that triggers County Project Review to the lesser of $7 million or .5 percent of taxable assessed valuation. Dillon said this would protect people living in smaller, less populated areas, giving them a voice in projects that may not be as large as projects in more densely populated areas but still requiring significant additional tax burdens to residents of a particular township.
This legislation is a result of recommendations made by the Commission on State Tax and Financing Policy which met throughout the fall to study ways to reform Indiana’s broken property tax system. Dillon introduced the bill to the Indiana General Assembly on Organization Day.
The average annual increase of school and local debt was about 9.5 percent per year from 2000 to 2006, according to Indiana’s Legislative Services Agency. Dillon called this rapid increase in growth alarming and believes Senate Bill 18 should help control that growth. Dillon and Kenley are considering adding a provision on debt ceilings to the bill to further help prevent increases in debt.
“Indiana built schools 27 percent larger and 46 percent more expensive than the national average,” Dillon said. “Debt payment is a large portion of property taxes and we need a tax system that’s both fair to taxpayers and preserves local government’s decision making authority.”
Dillon’s bill is part of a package introduced by the Senate Republican Caucus to provide significant and permanent property tax relief for Hoosiers. Dillon said Senate proposals include tightening controls on issuing and retiring debt, providing increased public scrutiny of costly government projects and reforming Indiana’s overlapping layers of local government.
For a high resolution of Sen. Dillon please go to http://www.in.gov/S17/s17.gif and for a high resolution photo of Sen. Kenley please go to http://www.in.gov/S20/s20.gif
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Sen. Dillon represents Senate District 17, which includes, Allen, Grant, Huntington, Kosciusko, Wabash and Whitley counties. Kenley represents Senate District 20, which include,s Hamilton, Grant, Madison and Tipton counties.
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