Indiana Senate Turns Focus To Local Bugets With Tax Caps

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(STATEHOUSE) - Negotiators on a property-tax relief bill have turned their attention to how to cushion the blow for local governments worried about the tax dollars they’ll lose.

By 2010, a proposed one-percent circuit breaker would wipe out more than half-a-billion dollars in property taxes. But Senate Tax and Fiscal Policy Chairman Luke Kenley says 70% of that is in Marion, Lake and Saint Joe counties.

With a boost from local income taxes, everyone else would have to cut just six-tenths of a percent. For the hardest hit areas, a seven-member board appointed by the governor could unscrew the cap enough to cover debt payments. The distressed unit appeal board would work with local governments to find efficiencies or other ways to bring spending down.

Uniondale Representative Jeff Espich is floating the possibility of referenda to let cities or counties break the caps with voters' blessing. Schools can already go that route.

Bloomington Representative Peggy Welch says the bottom line remains the effect on taxpayers, but says legislators can't just ignore the effect on local government. She notes those same taxpayers will be quick to blame legislators if tax changes cripple city services.

The Senate version of the bill already includes a flat $50 million a year for schools to ease the impact of the property tax caps.

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