INDIANAPOLIS - Leaders of the state's largest teachers union are arguing that some legislative proposals to reduce property tax bills could hurt school funding.
Property taxes make up about 15 percent of the school general fund, which covers costs such as instructional programs and teacher salaries. The other 85 percent is paid for by the state. Gov. Mitch Daniels and a legislative study commission have proposed plans in which the state would assume the remaining 15 percent of the fund, reducing the burden on property taxpayers.
But the Indiana State Teachers Association, which has some 50,000 members, said Tuesday that property taxes provide a more stable form of revenue than those derived from income taxes and sales taxes, which can shrink in times of economic problems. "It gives us a buffer when there are downturns," teachers union President Nate Schnellenberger said.
Instead of paying for the 15 percent of the general fund, the teachers union said, the state could pick up the tab for half of two other school funds - the capital projects fund used for building and repairing school facilities and the debt service fund that pays for construction loans.
That still would lead to property tax relief, since those funds are paid for by property taxes, said Dan Clark, deputy director of the teachers union.
Republican Sen. Luke Kenley of Noblesville, chairman of the legislative commission that studied property taxes, said the teachers union's proposal was worth considering. But he noted that if the state takes over only a portion of a school fund - instead of the entire 100 percent - it could leave the door open for property tax increases later. "If you take over an entire levy, that can never grow again," Kenley said.
The governor's and Kenley's tax proposals both include requirements for voter approval through referendums for local government and school construction projects.
But the teachers union worries that wealthy school districts would be more likely to support building projects such as updated classrooms or science labs, while poor districts would suffer because voters wouldn't support such expenses.
"The proposal for referendums would only widen that gap," Schnellenberger said.
The teachers union suggested holding referendum votes for "auxiliary" school construction projects while keeping the current signature-collection remonstrance system in place for "learning facilities."
The teachers union said basic football fields and gymnasiums, as well as classrooms, science labs and libraries, should count as "learning facilities," since students attend classes there, while more extravagant facilities, as well as administration buildings, could count as "auxiliary facilities."
Under the proposal, the state Department of Local Government Finance would decide the distinction.
"The parts of those facilities used by students for instruction clearly is a 'learning facility.' We're not opposed to communities having these larger facilities," Clark said.
"We're saying that's the part of the construction that clearly is a local property-tax decision. We're fully supportive of schools and communities working together to fund those extra facilities."
The Democratic speaker of the Indiana House, Patrick Bauer, said he hopes the teachers union will continue to work with lawmakers on the issue and testify at property tax hearings scheduled around the state.
"When teachers speak, people listen," Bauer, D-South Bend, said.
The Evansville hearing will take place at 10 a.m. Dec. 10 at Carter Hall at the University of Southern Indiana.
The teachers union is the latest of several Statehouse lobbying organizations to unveil various property-tax relief ideas for legislators to consider.
Property-tax reform will be the dominant issue of the 2008 session. So far, the only two plans introduced as legislation that are scheduled for hearings, however, are the governor's plan and Kenley's plan.
In a related development, a Republican senator has introduced a bill that was one of the Kenley panel's recommendations: to create standardized school construction plans.
Sen. Brandt Hershman, R-Wheatfield, introduced Senate Bill 13 to curb exorbitant architectural costs in school construction projects by allowing school boards to choose among a common set of state-approved building blueprints.
"I understand the logic behind having a common set of blueprints to use and I think that would save money, and in many cases that would be reasonable," Schnellenberger said in reaction to the bill. But local geography might determine the building to be constructed, he said.