BY PATRICK GUINANE, Times of Northwest Indiana
pguinane@nwitimes.com
INDIANAPOLIS | Tax relief rhetoric succumbed to financial reality Tuesday, with a Senate panel banishing a $3 billion push to repeal homeowner property taxes and another committee softening tax caps that threaten to bankrupt city and school budgets in East Chicago, Gary and Hammond.
The Senate Rules Committee voted 12-0 Tuesday evening to send an effort to abolish homeowner taxes to a summer study commission, effectively shunning the costly proposition for the remainder of the legislative session.
"My will and the will of my (legislative) caucus is not to stuff this anywhere, but to get this right," said Senate President David Long, R-Fort Wayne.
Earlier in the day, the Senate Tax and Fiscal Policy Committee voted 10-0 to give local government another year to take on the full brunt of spending cuts that will be forced by the tax caps Gov. Mitch Daniels has proposed.
The Republican governor wants to limit bills to 1 percent of assessed value for homeowners, 2 percent for landlords and 3 percent for businesses. That would cost local government in Lake County an estimated $252 million next year, with city and school budgets in East Chicago, Gary and Hammond facing cuts of at least 29 percent.
"Since they are totally reliant on property taxes, except for gambling revenues, (Lake County taxing units) have a very severe problem," said Sen. Luke Kenley, R-Noblesville.
The committee went along with Kenley's plan to raise the caps to 1.5 percent next year for homeowners and 2.5 percent for landlords and make businesses wait until 2010 for relief, which would lower the cumulative Lake County budget cuts to $193 million. The caps for homeowners and rental property caps would revert to 1 percent and 2 percent, respectively, in 2010, but some lawmakers warned the phase-in won't be popular with taxpayers.
"It just doesn't seem right, after we gave (homeowners) our word," said Sen. Frank Mrvan, D-Hammond. "I think there's going to be a lot of disappointment and a lot of complaints that (they're) not going to get the 1 percent."
The tax panel also voted 7-3 to advance a measure pushing school districts to use cookie-cutter construction blueprints, a move aimed at lowering school construction costs. The full Senate later voted 31-16 to require voter referendums on most local capital projects, including jails, libraries and schools.
Legislation to take $1.1 billion in school and welfare costs off property taxes, which would require a 1 percentage point state sales tax hike, also cleared the Senate 48-0. And yet another taxpayer-minded measure, this one to tighten controls on tax increment financing districts, advanced to the House on a 47-0 vote.