By Mike Lewis, Times-Mail
mikel@tmnews.com
Businesses are finding some things to like - and some things to worry about - in Gov. Mitch Daniels' property tax reform plan.
Daniels unveiled the plan in a speech Oct. 23. Lt. Gov. Becky Skillman, who manages the administration's legislative agenda, says property tax reform will be the governor's No. 1 issue when the General Assembly convenes Jan. 8.
The proposal focuses on homeowners, but it also would have direct impact on Hoosier businesses. Daniels' plan calls for tighter local controls on spending, an increase in the state sales tax to 7 percent and a constitutional cap on property taxes. It would eliminate elected assessors and create a position for a single professional assessor in each county, appointed by the county council.
The plan also calls for the state to pick up the entire tab for welfare costs and public schools' operating and transportation budgets.
Two days after Daniels announced the proposal, Skillman contrasted the governor's first legislative agenda, which included 69 bills addressing a range of issues, with plans for this session.
"We have significantly reduced our agenda for the next legislative session," she said. "This (property tax reform) is our agenda."
Bill Waltz said that agenda might be a mixed bag for Hoosier businesses.
"There's good mixed with bad," he said.
Waltz is director of taxation and public finance for the Indiana Chamber of Commerce. And he said businesses should be happy that Daniels is addressing some deep-seated issues in the property tax system.
On the positive side, he pointed to the plan for reducing the number of assessors, from the current 1,008 to 92. That move would not only save money, he said, but would improve the quality and the consistency of property assessments.
Businesses also should be pleased with the governor's proposal to limit local government spending. Daniels is proposing that local government spending could not grow faster than a county's average personal income growth over a six-year period. It allows one out - taxpayers could OK a larger increase through a referendum.
And the plan gives the tax board in each county authority to review and approve spending plans for all taxing units.
"It makes the whole system a little more transparent," Waltz said.
On the other side of the ledger sheet, Waltz said, "there are those things in this plan that do cause us a lot of pause."
Businesses are pausing longest over what Waltz sees as a classification of property for tax purposes. Now Indiana law calls for fair and equitable assessments. The Daniels' plan would place different caps on homeowner property (1 percent of assessed value); rental property (2 percent of assessed value) and business property (3 percent of assessed value). Agricultural land would be assessed according to the current formula.
"It treats property differently even though they are valued the same," Waltz said.
The chamber also is pausing over what it sees as a new 35 percent credit for homeowners. That is on top of the $45,000 homestead exemption.
Despite tax abatements for businesses, Indiana already tilts property tax breaks to homeowners, Waltz said. Business and industrial property make up 37 percent of the state's total assessed valuation, he said, but they account for 50 percent of the property tax revenue.
"The homestead deductions are about seven times more than the abatements," Waltz said.
While some nod to homeowners is appropriate, Waltz said, the governor's plan "creates a huge additional shift."
"Farmers and business people are going to pick up the brunt of that shift."
Daniels plan also would raise the sales tax by 1 percent. Waltz said that, across the state, that would have less of an impact on businesses than the other two items.
The sales tax might trouble some businesses on some of the state's borders, he said.