By John Byrne, Post-Tribune staff writer
Amid the stew of proposals in the General Assembly's "Year of the Tax," legislators from Northwest Indiana are considering trying to change a controversial law that has driven down property taxes for big industry in recent years.
House Bill 1858 has been a point of contention ever since it took effect in 2004.
Some officials are now questioning its usefulness, especially in the context of massive overhauls to the state's tax system being proposed by Gov. Mitch Daniels and legislative leaders.
The law has given huge property tax breaks to big industry by allowing the steel mills and BP Whiting Refinery to claim much of their equipment was obsolete and essentially worthless.
The bill's critics have pointed to HB 1858 as a major culprit in shifting the tax burden off of industry and onto homeowners.
But BP spokesman Tom Keilman said the bill has spurred massive investment by the company in its Whiting Refinery.
It also convinced BP to stop fighting in Indiana Tax Court for even greater reductions in its taxes, Keilman said.
"When 1858 was passed, we agreed to pay higher property taxes than we had been arguing for previously," Keilman said. "We have increased our employment base from roughly 1,300 to between 1,600 and 1,700 people."
Keilman pointed out BP also has pledged to build a massive new facility in Whiting to process crude oil from sand.
"That decision is not final," Keilman said, adding that any changes to Indiana property tax code could influence BP's decision on whether to proceed with the "oil sands" project.
Rep. Earl Harris, D-East Chicago, helped draft HB 1858 in 2003.
He acknowledged that "circumstances have changed" since then and said legislators can't afford to ignore any possibilities for lowering property taxes for homeowners.
"We have to see how well 1858 would work, in light of the governor's proposal to set a 3 percent property tax cap for industry," Harris said. "At this point, everything is on the table. I think we could see a major shift in the tax structure overall, so we can't overlook anything."
Sen. Earline Rogers, D-Gary, said members of Northwest Indiana's legislative delegation talked recently about endorsing a bill during the 2008 session to change the bill.
"We discussed whether there was something we could get behind as a group, in terms of amending some of the provisions of 1858," Rogers said, emphasizing talks on the subject were preliminary.
"We talked about the realities of the steel industry and the oil industry at the time the bill was passed, and how things have changed since then," Rogers said.
Lake County Commissioner Roosevelt Allen has argued repeatedly of late that House Bill 1858 does not take into account the relatively robust bottom lines BP and the steel companies have enjoyed in recent years.
"When this was passed by the legislature, these companies were in trouble," Allen said. "Now they're seeing huge profits."