By Bryan Corbin, Evansville Courier & Press
INDIANAPOLIS - Although House and Senate leadership reached agreement on a property tax relief package Thursday to cap residential property taxes and increase the sales tax, some rank-and-file lawmakers were expressing uncertainty and skepticism about the compromise plan.
As of late Thursday night, few lawmakers had even seen the official wording of the property tax deal that was negotiated behind closed doors by House Speaker Patrick Bauer, D-South Bend, and Senate Tax Chairman Luke Kenley, R-Noblesville.
"I haven't made up my mind. They always wait to the last minute to give you the analysis so they can push people to vote," said Sen. Vaneta Becker, R-Evansville.
"I just want to be as informed as possible. I want to be able to explain it."
Midnight Friday is the Legislature's deadline to adjourn for the year, and if lawmakers do not pass a property tax relief package by then, Gov. Mitch Daniels has said he will call them back into special session.
State Rep. Dave Crooks, D-Washington, complained Thursday night that he had received only "verbal talking points" and no breakdown of how the tax circuit breakers would affect schools in his district. He said he needed more data before voting on the relief plan.
"This could be the most important bill of my 12-year career, and my point is, if the facts aren't clear, a 'no' vote is the safest vote," Crooks said. "I don't want to be in a special session as much as anyone.
"I fear this is a one-year gimmick to help the governor get re-elected, and I'm not going to participate."
Later on Thursday night, legislative staff began the task of printing the 600-page bill for each of the nearly 150 lawmakers.
The basic details of the deal reached by Senate Republicans and House Democrats are as follows:
Caps on property taxes would be phased in over two years, eventually reaching 1 percent of assessed value for homes, 2 percent for rentals and 3 percent for business property. House Bill 1001 would create the caps immediately by statute, while a related piece of legislation, SJR 1, would amend the state constitution to make them harder to undo.
Residential property tax bills would be reduced by an additional 31 percent over the pre-rebate 2007 bills, through an increased homestead credit.
The 6 percent state sales tax would increase to 7 percent starting April 1.
To offset the loss of revenue when property taxes are capped, schools statewide would receive a total $120 million.
The state would take over several levies now paid wholly or partially by local property taxes, including school operating costs, child welfare costs, juvenile justice, and pre-1977 police and fire pensions, among other things.
Counties would face an annual decision whether to increase local option income taxes to cover shortfalls in funding from capped property taxes.
The duties of most of the state's 1,008 township-level assessors would be transferred to the 92 county assessors. The 44 largest townships would not lose their assessors immediately, but would have to conduct local referendums in November to decide whether to retain township assessors.
Local referendums would be required on some school construction projects but not others. Elementary and middle-school academic facilities of $10 million or more would be subject to referendum. So would high school academic facilities of $20 million or more. School projects that didn't meet those thresholds still would be subject to the current petition-drive remonstrance process.
Referendums would be required for nonschool public-construction projects, such as stadiums, if they cost $12 million or more or were 1 percent of the local assessed value.
Local units of government that wanted to appeal the new spending controls would have to do so through the Department of Local Government Finance.
The plan retains elements of the proposal Daniels announced Oct. 23, along with revisions offered by House and Senate Republicans last week, with modifications suggested by House Democrats.
"It's basically a compromise all the way through," Bauer said.
Earlier in the session, schools and local governments had complained that by limiting the amount of property tax revenue they could collect, the property tax caps or "circuit breakers" would have harmful budget impacts on them.
"We tried to make sure there was some safety, if you will, in the caps on schools, with $50 million (in relief funding) the first year and $70 million the second," Bauer said.
Based on what he heard, Crooks complained that the plan was "a shell game."
"I believe the average taxpayer is going to end up paying more for what little property tax savings they are going to realize," Crooks said, citing the higher sales tax and the new local-option income tax that many local governments might enact to cover shortfalls.
Becker said she was concerned that because the plan plows more homestead credit relief into the first year, 2009, than into the second year, 2010, Vanderburgh County property owners might see their taxes decrease the first year and then rebound the second.
"I just don't think people would appreciate seeing the fluctuation," she said.
Several lawmakers said the circuit-breaker caps would exempt Lake County and St. Joseph County in northern Indiana, both of which have been hit exceptionally hard by property tax increases and would face much larger revenue reductions in local governments and schools.
House Republican minority leader Brian Bosma said the agreement was on "all the elements, in concept," that his caucus had pushed for. "If we were writing the bill, it wouldn't be like this," he said. But it "meets the major standards for success," he said.
Two separate votes are expected in both the House and Senate - on the bulk of the property tax package, contained in House Bill 1001, and on the constitutional amendment, SJR 1.
Lawmakers were still in caucus meetings late Thursday and had not voted.