By Jon Seidel, Post-Tribune
jseidel@post-trib.com
INDIANAPOLIS - A Senate panel led by Sen. Brandt Hershman of Monticello approved a House bill Tuesday that will lead the state's property tax caps into the Indiana constitution.
The tax and fiscal policy committee was not expected to be much of a hurdle for the bill, a priority of Gov. Mitch Daniels and state Republicans. It passed with a vote of 8-2 with Democrat Sens. John Broden of South Bend and Timothy Skinner of Terre Haute voting against.
Sen. Lonnie Randolph, D-East Chicago, attended the hearing but was absent for the vote.
The legislation now moves on to the Senate floor for a second reading Thursday, Hershman said, after its passage by the House on Monday. The Senate's version of the bill, which is identical, is set for a third reading later today.
One version of the bill must pass in both chambers to put a referendum before Hoosier voters in November. The tax caps limit property tax bills to 1 percent of assessed value for homeowners, 2 percent for landlords and 3 percent for commercial properties, and they are already in effect. Placing them in the constitution will make them harder to repeal.
Sen. Luke Kenley, R-Noblesville, opened the nearly two-hour hearing with his testimony, saying local governments depending on property taxes for more than 80 percent of their revenue need to find a more broad base of income.
Some questions from Democrats on the panel revolved around the ability of communities with low assessment values to survive under the caps. Kenley pointed to the local option income tax as a method of survival.
Lake County is the only county in the state to refuse to adopt a local option income tax. Its largest city, Gary, is the only taxing unit in the state to petition for relief from those caps this year.
"In some of those communities they have refused to have a local option income tax at any time," Kenley said. "In fact, in one county in this state we don't have a local option income tax, and it's the very county where we have a very low assessment base."