By Bridget Levitz, Truth Staff
ELKHART -- When it comes to property tax reform, Elkhart County is tired of hearing more of the same. On Thursday, county officials offered the state something new.
County commissioners and County Council President John Letherman sent a plan to state legislators calling for a statewide tax increase as a means to lower property taxes.
Taxpayers, said County Commissioner Mike Yoder, must be willing to accept a trade-off -- lower property taxes in exchange for higher taxes somewhere else.
Elkhart County wants Indiana to rethink what it funds by property taxes -- namely welfare and schools.
"We're suggesting a whole new mix," Yoder said. "We're suggesting school general funds and welfare be paid by a statewide tax rather than property tax."
Just taking those two off the property tax roll, said Yoder, would easily lower property taxes by 30, 40 and sometimes 50 percent.
"Our hope is to at least offer the suggestion to our legislators that the property tax debate be reframed from the current discussion -- which is the same as all past debates -- into one of true (property) tax reform in Indiana," Yoder said.
The county chose welfare and school general funds because they are primarily state controlled. Welfare is a state-run program and much of a school's general fund is driven by state mandates, Yoder said.
"The Indiana Constitution says the state is responsible for education," he added.
Under the commissioners' suggestion, the state would take over all welfare expenditures and distribution of tax dollars for the school's would be worked out at the state level.
"This idea we're presenting will not likely sit well with most school superintendents," Yoder said.
The main problem, he said, is while property taxes are relatively stable from year to year -- what's collected in sales and income taxes varies. If the state would adopt the plan, a method to stabilize those tax revenues over time would need to be developed.
The plan, however, isn't an answer to Gov. Mitch Daniels' offer to allow Indiana counties raise local income taxes as a means to reduce property taxes. Counties must decide whether to raise income taxes by Oct. 1.
"At the county level we're obligated to go forward with looking at the local income tax option here," Yoder said. "Nothing we're proposing can be done overnight."
While the state is the county's first audience in reviewing the plan, the community is the second.
"Without the community support this idea goes nowhere," Yoder said.
The county is encouraging residents to contact their state legislators if they support the plan.
The county's tax reform plan comes as Gov. Mitch Daniels ordered properties to be reassessed in Marion County, and considers reassessment orders in other counties including Elkhart, Gibson, Delaware and Jefferson.
In Elkhart County, the average real estate tax bill jumped about 24 percent from last year, according to figures from the Elkhart County Auditor's office. Factoring out commercial, industrial and rental housing properties, bills for owner-occupied homes went up 28 percent.
Daniels has also given his Blue Ribbon Commission on Local Government Reform the task of finding ways to streamline local government and its costs.
Among other things, Daniels wants to know whether township and county assessors should be abolished and instead be managed by the state. The question is not too far off from one Elkhart County is asking itself.
Some taxpayers would like the county to do away with township offices, Yoder said.
"Taxpayers assume if we do away with townships there will be a huge savings on property taxes -- that's not the case," Yoder said.
The county wouldn't be reducing its workload but simply requiring the county to handle duties now covered by the townships. Many township employees would likely be transferred to the county, he said.
"It may not mean savings at all," Yoder said. "We could go through the whole debate to find only a 2 or 3 percent reduction. And then we've taken away a local office."
Across Elkhart County, townships make up anywhere from 0.29 percent (Harrison Township in Wakarusa) to 12.69 percent (Middlebury Township) of a total property tax bill. Cities, towns and school corporations continue to take up the largest chunk of property taxes.
The Associated Press contributed to this story.