| A LETTER TO THE EDITOR/GUEST COLUMN FOR IMMEDIATE RELEASE
Progress is being made on property tax solutions
It doesn’t matter what county you’re in or what public meeting you attend. Chances are any discussion of the most important state issues will eventually gravitate toward property taxes. It has troubled most of us for many years now.
As both a citizen and legislator, I have thought about and worked on this issue for many months. I’m pleased to tell you that finally this year the Senate teamed with the House of Representatives to make significant strides on this dilemma. The plan will decrease property taxes now and could reduce dependence upon them in the future. We would like to take this opportunity to explain the main points of this new legislation.
But first, we need to understand what property taxes do. Simply put, they provide funds for local services. The state receives only 0.1 percent of your property tax bill. Latest statewide figures show schools account for 48.3 percent of property taxes; county governments, 21.1 percent; cities and towns, 18.4 percent; other local government functions, 4.8 percent; libraries, 4 percent; township governments, 3.2 percent; tax increment financing (local economic development) 0.2 percent; and state government 0.1 percent. These are state averages. You can check your tax bill to see particular percentage figures for your township.
Some feel government spends too much. Clearly, elected officials at all levels should strive for greater efficiency and effectiveness. We can all do better. However, compared to the other 50 states Indiana state and local governments combined was ranked 41st in per capita spending by Governing Magazine.
Local governments can increase their operating levies by a growth quotient which takes into account growth in income and population. Last year, it was 3.8 percent. This year’s legislation will allow local governments to use income tax to fund further increases in their growth quotient and levy up to an additional 1 percent income tax for direct property tax replacement. A levy of the entire 1 percent would result in a 23.5 percent reduction on average and prevent the growth of operating levies from increasing the property tax in the future. Furthermore, data shows if counties apply the entire 1 percent for homeowners property tax relief and use income tax to replace operating levy growth, it could reduce taxes for homeowners by an average of 54 percent.
Building projects and their financing costs are not included in the growth quotient. We heard testimony that a significant part of the increase in property taxes over the last five years was related to this type of expense. Therefore, this legislation will set up a County Board of Tax and Capital Projects Review that will approve or reject civil or school projects over $7 million. The composition of this board will vary depending upon the makeup of the county. It will include certain government officials but also involve two local residents without direct ties to local government who are elected by the voters. To override a veto of a project, the governmental unit requesting a building project would need to take the issue directly to the people through the petition/remonstrance process.
Since property tax is paid one year after it is assessed, any income tax solution would not affect this year’s bills. Therefore, the legislature added $300 million for property tax relief this year and still another $250 million to help offset property taxes payable in 2008 – $2.65 billion of relief in all. For the May payment a check will be mailed. The fall payment will simply be reduced to reflect this added relief. This property tax relief represents about 20 percent of the state budget
I think this legislation presents sensible solutions. Since property tax is used primarily at the local level it seems logical to allow local people and local elected officials to have more options where they can obtain their revenue. This is a complicated issue to explain in a single newspaper column, so feel free to contact us at 1-800-382-9467 (Senate) or 1-800-382-9841 (House).
Sen. Gary Dillon (R-Columbia City)
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