Indiana Senate panel OKs property tax bills

INDIANAPOLIS - Indiana lawmakers continued to move on property tax remedies at a fever pitch Thursday.

A bill that would amend the state constitution so that property taxes no longer pay for school operating costs gained the approval of a state Senate committee.

Four bills concerning property taxes easily cleared the Senate Appropriations Committee on Thursday, as senators dealing with disgruntled taxpayers in an election year continue to move quickly on tax-restructuring legislation.

Those four, along with several other related bills, are now slated for consideration by the full Senate.

Senate Bill 1, a key piece of Gov. Mitch Daniels' property tax plan, would completely shift the burden of school operating costs to the state. The state already pays 85 percent of education costs, with the remaining 15 percent covered by local property taxes. It also moves the child-welfare costs to the state.

Action to raise revenue to replace that 15 percent of school funding must come from the Indiana House because all revenue-raising legislation must originate there.

Part of the governor's property tax plan in that chamber, House Bill 1001, includes a 1-cent sales tax increase from 6 percent to 7 percent to partially make up the revenue difference. The constitutional amendment would make the school funding switch permanent.

The finality of an amendment, said state Sen. Luke Kenley, R-Noblesville, would bring "a lot of comfort to property taxpayers."

State Sen. Lindel Hume, D-Princeton, is a co-author of both bills.

"I'm hopeful there will be a number more of the ideas that members have that will also have the opportunity to come to the full Senate," Hume said.

The only "no" vote on both school-funding bills came from state Sen. Tim Skinner, D-Terre Haute, who said he couldn't vote for the bill without knowing how the state would replace that lost property tax revenue. Other lawmakers said they also share his worries.

"The problem we have right now is that there's no (replacement) funding for the school general fund levy ... there's no funding," said state Sen. Bob Deig, D-Mount Vernon. Deig voted for each of the four bills in the appropriations committee Thursday.

'It's a good start'

"We have to work hard to find some state funding to take the place of that property tax money," Deig said. "It is a good start, but there are many, many concerns still."

Lobbyists for the state's teachers, school superintendents and school boards also voiced their opposition to the bill, saying they'd need assurances that the General Assembly would replace money lost, rather than allowing the bill to simply chop 15 percent from their budgets.

"It's one of those 'show us the money' kind of things," said Gail Zeheralis, the Indiana State Teachers Association's public education policy coordinator.

Education lobbyists painted pictures of schools becoming broke as economic downturns mean less state money - but appropriations committee chairman Sen. Robert Meeks, R-LaGrange, shot back: "Why is it so sanctimonious that education continue to be funded at this high level" if families are already facing the squeeze of a tough economy, he said.

Meeks added that he didn't think there was any member of the General Assembly in either party who didn't understand the importance of replacing school funding if the property tax revenues would be eliminated.

The panel unanimously passed two other property tax bills Thursday: