The details
How the legislative tax relief blueprint proposed Tuesday squares up with the plan Gov. Mitch Daniels released last month.
IMPACT
Daniels: 33 percent cut in homeowner property taxes
Lawmakers: Cut homeowner taxes in half; reduce rental property taxes 25 percent
TAX HIKES
SALES
Daniels: Penny sale tax hike, to 7 percent
Lawmakers: Increase sales tax up to a penny, with a smaller hike possible if tax is broadened to services such as haircuts, attorney fees
INCOME
Daniels: None
Lawmakers: County income taxes to fund property tax relief. Average rate would be about 0.6 percent, but rate would be more than 1 percent in Lake County.
CIRCUIT BREAKER
Daniels: Constitutionally cap tax bills at 1 percent of assessed value for homeowners, 2 percent for rental properties and 3 percent for businesses
Lawmakers: Support idea but not sure where to set caps, which force local governments to cut spending
ASSESSMENT
Daniels: Get rid of all 1,100 elected assessors -- have each county appoint one assessor
Lawmakers: Eliminate township assessors -- keep one elected assessor per county
CONSTRUCTION
Daniels: Let voters decide via referendum whether costly school and local government projects go forward
Lawmakers: Imposed unspecified caps on local debt -- have Indiana Finance Authority review local proposals
COST SHIFTS
Daniels: Have state government assume $3.2 billion in local school and welfare costs
Lawmakers: Have state pick up about $2.6 billion of those costs, but not $500 million in school transportation expenses
OTHER
Daniels: Impose strict caps on local spending to be overseen by county-level control boards
Lawmakers: Put tighter controls on tax increment financing districts and property tax abatements -- allow schools to review and comment on TIFs and abatements
HOMESTEAD CREDITS
Daniels: Boost tax breaks for owner-occupied homes 35 percent
Lawmakers: Increase homestead breaks 30 percent
INDIANAPOLIS | Homeowners would see their property tax bills cut in half but would pay higher income and sales taxes under a plan legislative fiscal leaders presented Tuesday.
The solution offered by the Commission on State Tax and Financing Policy piggybacks on many of the recommendations Gov. Mitch Daniels made last month. But the commission, which spent the past five months hearing from beleaguered homeowners, decided to go beyond the 33 percent property tax cut promised by the governor.
"I think, after the testimony that we heard -- the 35 hours that we had -- we needed to give as much as we possibly could to alleviate that," said state Sen. Robert Meeks, R-LaGrange.
Like Daniels' plan, the legislative package would include a sales tax hike of up to a penny, to 7 percent, with the state using the $900 million in new money to help take $2.6 billion in local school and child welfare costs of the backs of homeowners.
To move beyond the relief offered by the governor -- and give a 25 percent tax cut to rental properties -- lawmakers would encourage, or perhaps require, every county to pass an income tax dedicated solely to property tax relief.
The new tax would be about 0.6 percent in most counties. But legislative staff say it would take an income tax of more than 1 percent to halve homeowner bills in property tax-heavy Lake County. An exact figure wasn't immediately available.
Lawmakers last spring tried to force Lake County to adopt a 1 percent income tax for property tax relief, but the County Council so far has instead opted to endure poison-pill budget freezes included in legislation.
State Sen. Luke Kenley, the Noblesville Republican who leads the tax commission, said he hasn't decided whether lawmakers would force Lake County to impose a combined income tax of more than 2 percent, or just the new tax pitched Tuesday.
"I guess I want (Lake County officials) to come in and talk to me again," he said.
Either way, legislative heavyweights have made it clear the income tax mandate isn't going away.
"If they don't pass the income tax they can't increase the (property tax) levies," said state Sen. Frank Mrvan, D-Hammond. "And it's not going to be for a year. As you can see here (today), they're going to make it for a long, long time."
Daniels released a statement congratulating the commission on "an excellent report" that "closely parallels my tax relief plan."
The legislative package omits Daniels' push to let voters decide the fate of expensive construction projects via referendum, and it doesn't take a position on the strict spending caps he wants imposed on local government.
The legislative plan would do away with the township assessors but retain elected county assessors. The governor wants to ax all elected assessors and have every county council appoint one assessor.
The tax commission supports Daniels' plan to write property tax caps into the Indiana Constitution, but lawmakers say they don't yet know where to set the caps. The governor wants to forever limit tax bills to 1 percent of assessed value for homeowners, 2 percent for rental properties and 3 percent for businesses.
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