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Sunday, December 07, 2008

Ind. Law - Even more on "Approving a proposed constitutional amendment that would put limits on property-tax bills, so it can be put on the ballot for ratification in 2010"

Updating earlier ILB entries on the proposed constitutional amendment to top property taxes (the most recent ILB entry, from Nov. 30th, is here), Niki Kelly of the Fort Wayne Journal Gazette has a lengthy, informative article today that looks at the current tax cap proposal, but does so in the context of a history of the 1851 document and the changes made to it over the years. Don't miss it. The report begins:

The 1851 Indiana Constitution goes on public display in its simple but sophisticated elm case Thursday – Statehood Day – and remains there until the 2009 legislative session concludes in April.

The document has been altered – through amendment or repeal – about 100 times in more than 150 years.

Lawmakers file dozens of proposed constitutional amendments every year such as protecting the right to hunt and defining marriage. But largely because of a lengthy process and Hoosiers’ generally conservative nature, most fail.

When legislators return Jan. 7, there will be at least one more key battle to amend the timeless document by placing property tax caps into the language.

“As wise as the framers were, they could not anticipate changes in time, and they were also constrained by the morals of the time,” said David Orentlicher, a professor at the Indiana University School of Law in Indianapolis. “We need to be able to evolve. The amendment process is an important check in our system of checks and balances.”

And after decades of legislators “fixing” the property tax system only to see it backslide years later, supporters of permanent property tax caps want those caps enshrined in the Indiana Constitution.

“It’s crucial that we put them in, and I think we need to move decisively,” said Senate President Pro Tem David Long, R-Fort Wayne. “I think the enemies of property tax reform want to scuttle it, and their goal is to stretch it out as long as they can.”

This year legislators put into state law a system that limits property tax bills to a certain percentage of the property’s assessed value.

Homeowners’ property tax bills were limited to 2 percent of their assessed value this year; 1.5 percent in 2009; and 1 percent in 2010.

There is a similar phase-in for rental and commercial properties, ultimately ending at 2 percent and 3 percent, respectively, in 2010.

These caps will save taxpayers more than $650 million in 2010, but that is also money schools and local governments won’t receive to fund services.

The next step other than placing the caps into law is to put them in the Constitution. Long said this is needed for two reasons: to head off a possible lawsuit alleging the caps violate the Indiana Constitution’s requirement of a general and uniform property tax system; and to limit the ability of future lawmakers from changing the caps.

“It prevents future legislatures from knuckling under the pressures that inevitably will be brought to bear from local government,” Long said, noting that the 1973 property tax overhaul slowly eroded over time because of exceptions and changes to the law brought about by local government complaints.

Lawmakers took the first step in the amendment process – passing a joint resolution in the 2008 legislative session to add the caps to the Indiana Constitution.

But according to the Constitution, the resolution must be passed again by a separately elected General Assembly. This can happen in either 2009 or 2010. Hoosiers would then get to vote on the change in 2010.

Since it wouldn’t delay the process to wait until the 2010 legislative session, Democrats are moving cautiously. They hope to see the effect of the caps in 2009 and early 2010 before voting on the resolution a second time.

“As a general rule, putting limiting numbers in a Constitution can be very dangerous in the long run. It’s high risk,” said Rep. Win Moses, D-Fort Wayne. “It is my very strong opinion that we need to let the effects percolate.”

Using specific numbers in the Constitution caused a problem involving the Indiana Supreme Court. The court used to have direct appeal jurisdiction over any prison sentence longer than 50 years.

In 1995, legislators increased the base sentence for murder to 55 years, sending dozens more cases directly to the Supreme Court for review. As a result, in 2000 voters chose to amend the Indiana Constitution to remove the provision about sentences in excess of 50 years.

“The Constitution is what the people adopt,” said Jon Laramore, an Indianapolis attorney and constitutional scholar who used to teach a course about the Indiana Constitution. “If they choose to adopt something specific that is fine. But in the case of very specific proposals we need to be very careful because we are locked into those – not forever – but at least for several years.”

But Gov. Mitch Daniels doesn’t buy the argument, using strong language last week to point out that Democrats passed the resolution in 2008, an election year.

“Every taxpayer ought to worry about a double-cross,” he said. “The legislature should simply live up to what it did just a few months ago and take the second step.”

If lawmakers do pass the resolution, the decision will be in the public’s hands in November 2010. In recent years most amendments sent to the public have passed.

Posted by Marcia Oddi on December 7, 2008 11:21 AM
Posted to Indiana Law