FOR IMMEDIATE RELEASE
Hershman: Senate passes historic property tax reform
Bill provides millions in immediate relief;
Puts cuts, permanent caps and government spending controls in place
(STATEHOUSE) – State Sen. Brandt Hershman (R-Wheatfield) joined Senate colleagues today in passing historic property tax reforms under which most Hoosiers could see an average 27 percent decrease in their property taxes in 2008 and an approximately 38 percent decrease by 2010.
“Today is a historic and important day for all Hoosiers,” Hershman said. “Significant, permanent property tax reform in Indiana is long overdue. The reform package passed today will bring our tax code into the 21st Century and protect Hoosier taxpayers.”
Hershman, co-author of House Bill 1001 and Senate conferee, said property taxes can be decreased further if counties adopt a Local Option Income Tax. If a county adopts a 1 percent LOIT and applies 50% of that revenue to homesteads and 50 percent as broad based property tax relief to all taxpayer groups, the average reduction in homeowner’s tax bills by 2010 would be 53 percent, he said.
Components of House Enrolled Act 1001 include:
Cuts in Property Taxes: House Enrolled Act 1001 removes $1 billion in school and local government costs from the backs of property taxpayers — including farmers and businesses — while maintaining local control of schools.
Caps on Property Taxes: A 1 percent property tax cap on owner-occupied homes, 2 percent on other residential and agricultural properties and 3 percent on businesses will be phased in by 2010. Only local taxpayers — not politicians — can exceed these “circuit breakers” through a voter referendum. Because schools have no other substantial revenue, HEA 1001 sets aside $120 million to help them live within the caps and $400 million for economic “rainy days.” The phase-in allows time for local government officials to identify and implement new efficiencies. Distressed local governments can appeal to the state for help.
Controls on Government Spending: All taxes result from government spending. Property taxes are determined, collected and spent at the local level. Statewide figures show local levies have outpaced inflation by more than two to one. To control local government spending, HEA 1001 requires voter approval by referenda of all major government construction projects. It closes loopholes used by locals to increase property taxes and establishes stricter guidelines for school construction. Further, it provides county-level scrutiny of budgets.
Constitutional Guarantee: Historically, whenever other taxes have been raised to reduce property taxes, the reductions were temporary. Property taxes returned to previous levels, while other increased taxes remained. To prevent this “creep” in the future, HEA 1001 includes an amendment to Indiana’s Constitution making the 1-2-3 caps permanent. This constitutional amendment will require passage again in 2009 or 2010 by a separately elected legislature, then approval by Indiana voters.
Little Red Schoolhouse: Schools must adhere to stricter guidelines for planning and construction and state-approved school designs will be maintained in a state design bank or repository. Hershman helped craft the language in this section on House Bill 1001 and said construction costs of schools are higher in Indiana than many other states.
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Hershman represents Senate District 7, which includes Carroll, Clinton, Howard, Jasper, Tippecanoe and White counties. |
