INDIANAPOLIS --- Both Democratic and Republican leaders of the Indiana House were all smiles Thursday after they passed a modified version of Gov. Mitch Daniels' property-tax plan. The governor has said it has the potential to cut residential property taxes by about one-third.
But a showdown is looming over a part of the bill that calls for voter referendums on public-construction projects.
House Republicans wanted voters to decide all such projects, but Democrats pushed through changes that excluded school instructional facilities such as classrooms and laboratories.
Now the massive House version of the Daniels tax plan, House Bill 1001, goes to the state Senate.
Minutes after the House voted 93-1 Thursday to pass the modified Daniels plan, House Republican minority leader Brian Bosma said the dispute over what to include in referendums will be "the most dramatic part of the discussion" during House-Senate negotiations on the legislation. The Legislature has a March 14 adjournment deadline.
In a statement, Daniels praised lawmakers for the near-unanimous vote.
As introduced, the governor's plan would cap property taxes on homesteads at 1 percent of assessed value, and cap them at 2 percent for rentals and 3 percent for businesses; impose strict spending controls on local governments; require referendums on public-construction projects; have the state absorb all school-operating and child-welfare costs; increase the 6 percent sales tax to 7 percent; and transfer the duties of township assessors to county assessors.
Late Tuesday night, however, House Democrats pushed through several changes to the Daniels plan, House Bill 1001. Their changes would:
Increase the earned-income tax credit from 6 percent to 9 percent for low-income Hoosiers.
Double the renter's deduction from $2,500 to $5,000.
Freeze property taxes at 2008 levels for seniors 65 and older whose homes assessed at $200,000 or less and whose individual incomes are below $35,000 (or $50,000 for a couple).
Cap property taxes on agricultural land at 2 percent of assessed value instead of the original 3 percent.
Create a new graduated supplemental standard deduction, so owners of more modest homes would receive greater relief proportionally than the wealthy would.