Constitutional tax caps clear Indiana Senate

BY PATRICK GUINANE, Times of Northwest Indiana 
pguinane@nwitimes.com

INDIANAPOLIS | The Indiana Senate voted 40-7 Friday morning to begin the three-year process of writing property-tax caps into the Indiana Constitution.

The measure, which would take effect in 2012, would cement Gov. Mitch Daniels' push to limit tax bills to 1 percent of assessed value for homeowners, 2 percent for landlords and 3 percent for business owners.

But it also would exempt existing debt amassed by local government and schools in Lake and St. Joseph counties from the caps until 2020. The move will lessen resulting 2010 budget losses to those government units from the previously projected $235 million to $154 million, according to new estimates released Friday.

State Sen. Luke Kenley, R-Noblesville, stressed that the special treatment for the two counties hardest hit by the caps won't leave homeowners in a lurch.

"The average (homeowner cap in Lake County) is 1.2 percent. The average is 1.2 percent. The average is 1.2 percent," Kenley said, repeating himself for emphasis.

For the other 90 counties, including Porter, homeowner tax bills would be capped at 1.5 percent next year and 1 percent in 2010. Local government and schools in Porter County stand to lose $1.4 million to all three of the caps next year and $9.6 million in 2010. But some of that will be made up by a pool of $70 million set aside to partially offset $159 million in statewide school losses projected for 2010.

State Sen. Karen Tallian, D-Odgen Dunes, told colleagues the clunky caps language, which includes the Lake and St. Joseph counties debt carve outs, is not worthy of the Indiana Constitution.

"These are not the elegant, simple and concise words that belong in the constitution," Tallian said. "This is micromanagement of a tax plan that may or may not work."

Tallian was the lone Northwest Indiana senator to vote against the proposed constitutional amendment. The House is expected to consider the measure before adjourning Friday.

To amend the constitution, the measure must pass the General Assembly again next year or in 2010 and then be ratified by voters in November 2010. Both the House and Senate must approve legislation to enact the bulk of the property tax restructuring plan. They are expected to do so before a midnight adjournment deadline.