Business leaders balk at Indiana tax cap amendment

BY PATRICK GUINANE, Times of Northwest Indiana
pguinane@nwitimes.com

INDIANAPOLIS | Gov. Mitch Daniels faces an unlikely foe in his re-election drive to make permanent state property tax caps that are expected to soothe homeowners this election season.

The Indiana Chamber of Commerce, typically a reliable ally of the Republican governor, sent the gubernatorial contenders a letter this week, warning that it would be "extremely unwise" to add the homeowner-slanted caps to the Indiana Constitution.

"We're fine with caps, but we think they ought to be the same for all types of property owners," chamber President Kevin Brinegar said in an interview. "We were supportive when the caps were at 2 percent for all types of property owners."

Instead, legislators this spring heeded Daniels' call to limit property tax bills to 1 percent of assessed value for homeowners, 2 percent for landlords and 3 percent for businesses. When fully implemented in 2010, the law will ensure the owner of a $100,000 home pays no more than $1,000 in annual taxes while a business property of the same value could be billed up to $3,000.

But the uneven caps appear to clash with the state charter, which calls for a "uniform and equal rate of property assessment." Daniels has led the charge to let voters replace that clause of the constitution with an amendment authorizing the caps.

"I'm going to be traveling Indiana these next three months ... urging Hoosiers to ask their legislators, 'Please, let us vote,'" Daniels said earlier this month.

The caps amendment cleared the Indiana House and Senate by votes of 79-20 and 40-7 in March. But the measure must pass the newly elected General Assembly next year or in 2010 to put the caps question on a referendum ballot.

The chamber isn't alone in its concern about the tax caps, which are expected to sap about $180 million from local government budgets next year and $450 million in 2010.

"I also think you ought to give these particular caps an opportunity to perform over the next two or three years before amending the state's Constitution," Democratic gubernatorial candidate Jill Long Thompson said this week. "I'm very happy to say I'm in agreement with the chamber."