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Monday, October 24, 2005

Ind. Gov't. - "Cap on property tax relief a major state policy shift "

"Property tax-relief cap lifted: Homeowners could see major increases in bills" is the headline to an AP story today by Mike Smith, published today in the Fort Wayne Journal Gazette and several other state papers. It begins:

INDIANAPOLIS – A new cap on state property tax relief could save Indiana’s government hundreds of millions of dollars, but thousands of homeowners and businesses could pay the price.

The cap is a major shift in a policy that has saved property owners billions over the past three decades, and some analysts and lawmakers say it will place the burden for spending increases by local governments squarely on property taxpayers’ shoulders. * * *

The [new, higher] cap comes just three years after lawmakers raised the sales tax to help soften the blow of a court-ordered change in property tax assessments, which caused many tax bills to skyrocket. Many predict the cap could help contribute to double-digit percentage increases in local property taxes over the next two to three years.

Otis “Doc” Bowen made state-backed property tax relief his top pledge in his successful run for governor in 1972 because property taxes had more than doubled in the past decade.

Legislation passed in 1973 raised the sales tax from 2 percent to 4 percent and dedicated the extra revenue to property tax cuts. It also included limits on how high property taxes could be raised. * * *

Larry DeBoer, a Purdue University economist and property tax analyst for the legislature, said the cap will save the state about $436 million in property tax relief over the next two years. Property owners will pay instead.

House and Senate Democrats say it will help fuel major increases in property taxes over the next two years.

Rep. Jeff Espich of Uniondale, the top fiscal leader for House Republicans, counters that taxpayers won’t be affected if local governments hold spending growth to 80 percent of what it has been historically.

Many school and local government officials say that’s impossible and note they have suffered the same hard times that have befallen the state’s finances.

Tomorrow: "Property tax bills are going up, and the tax-relief cap is only one reason."

Posted by Marcia Oddi on October 24, 2005 06:40 AM
Posted to Indiana Government