Lawson, Michael discuss tax caps in Putnam County

Friday, October 30, 2009

GREENCASTLE -- State Senator Connie Lawson and State Representative Nancy Michael spoke to a room of about 25 people about property tax caps and what they mean at TZ Thursday evening.

Aaron Smith, creator of the Watchdog Indiana Organization, introduced the two legislators.

"You need to have the facts to decide for yourself," said Smith.

Senate Joint Resolution 1, if passed by the House this year, will go before the public in a referendum vote.

Lawson opened with a five-minute introduction of SJR 1. She discussed how the state got to where it is today.

"We got here from decreased reliance on property taxes, immediate, significant property tax reduction and reduced reliance on property taxes," said Lawson.

Lawson told the room she believed the current system is an antiquated system of general revenue.

Michael told them she couldn't say how she was going to vote because she hadn't formed her opinion yet.

"I'm looking at the effect on homeowners, business owners and agriculture," she said noting that much of her service area is rural and agricultural.

Here are some of the facts about property tax caps in Indiana. Also known as circuit breakers, the caps are designed to limit property tax bills for homes, farms and businesses to a fixed percentage of a property's assessed valuation.

Initially enacted on a limited basis to address concerns about unchecked property tax growth in certain areas of the state, the caps became a critical part of the bipartisan property tax reform program passed by the Legislature in 2008.

Lawmakers chose a two-part approach in enacting these caps: putting them into state law, and then locking them into place in the Indiana Constitution.

Many people don't realize that property tax caps are already in state law (Indiana Code 6-1.1-20.6-7 and 7.5).

In 2009, they limit a homeowner's bill to 1.5 percent of assessed valuation, rental and farm property to 2.5 percent and businesses to 3.5 percent.

In 2010, the caps will lower to 1 percent for homes, 2 percent for farms and rental units and 3 percent for businesses.

To put the caps into the state Constitution first requires passage of a joint resolution by two separately elected Indiana General Assemblies. Once passed by the Legislature, the people of Indiana get their chance to consider the question through a statewide referendum. If approved in that vote, the provision would go into the Constitution.

In 2008, lawmakers took the first step, passing a joint resolution that would set the constitutional caps at the 1-2-3 levels. In order to complete our end of the process, we must pass a similar joint resolution either this year or in the 2010 session. Citizens then would vote on the question in the November 2010 general election.

Since the caps are still being phased into place, we still do not have a clear, complete picture of how they will affect our ability to provide all of the programs and services that taxpayers expect from their local governments.

Another year means more data and a better-informed decision.

If the resolution passes this year, the people of Indiana won't vote on it until November 2010. If the Assembly waits until the 2010 session to act, the referendum vote still won't take place until November 2010.

Michael and Lawson answered questions and listened to comments from the sparse audience.

Greencastle Community Schools Superintendent Bob Green brought up the problem with tax bills going out late, causing delays for schools and libraries in collecting their monies.

"We end up having to borrow money and that ends up costing tax payers," said Green

Lawson told him that 80 percent of the state's counties were ahead of where they were last year.

"Unfortunately, Putnam County is not in that 80 percent," she added.

Another member of the audience asked how shortfalls were going to be addressed.

"Are you going to raise sales tax? If housing goes down, schools go up or stay the same, how are you going to cover the shortfall?" he said.

"The State has to figure it out. Decide what is acceptable, how much we can stomach. It is a blend of income, sales and property taxes," said Michael.

Lawson reiterated throughout the evening the importance of getting away from relying on property taxes.

"We need to be able to pay as we go based on the ability to pay," she said.

At the end of the evening, Smith asked the room to give their opinion on the tax caps by applauding.

Those not in favor of tax caps applauded loudly showing they did not want them.

Those in favor of the caps were asked to applaud. There was none.

"You have a voice in this. Go to the County government meetings and make your voice heard," commented Theresa Glen.

For more information about SJR 1, contact your state or county representatives and voice your opinion about the tax caps.

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  • I get so confused, now people want property taxes to be increased?

    -- Posted by hoosierpete on Fri, Oct 30, 2009, at 1:12 PM
  • 25 people in an audience does not constitute a majority of the taxpayers. Besides, it was probably a "stacked" crowd

    -- Posted by albert on Fri, Oct 30, 2009, at 2:50 PM
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