EDITORIAL: Property tax caps should be permanent

The Times of Northwest Indiana

One of the most fierce battles in the Indiana General Assembly is the struggle to lock in the property tax caps with a constitutional amendment. It's worth the effort.

If the Indiana General Assembly approves the tax caps this year or next, it will be up to the voters to decide in 2010 whether to approve a constitutional amendment that would lock those caps in place.

Senate Joint Resolution 1, which passed out of the Senate Tax and Fiscal Policy Committee on Tuesday and is now before the full Senate, would accomplish that.

The debate over the tax caps is split along party lines, with Republicans led by Gov. Mitch Daniels generally favoring the tax caps and Democrats led by House Speaker Pat Bauer generally skittish about them. Republicans tend to want the Legislature to vote this year so taxpayers can be reassured in a frightening economy. Democrats, also frightened by the economy, typically want another year of data before committing to permanent reductions.

The lawmakers know how overburdened some property owners were. That's why they enacted the tax caps in the first place.

When they go fully into effect next year, they will cap property taxes at 1 percent of the property's value for homeowners, 2 percent for landlords and 3 percent for businesses. Lake and St. Joseph counties are exceptions to this rule; they are phasing in the tax breaks because of high government debt that needs to be repaid.

Optimists see the value of adding these tax caps to the Indiana Constitution for a variety of reasons. One, of course, is to lock in the tax breaks. Another is to pre-empt any constitutional challenges to the tax breaks on the grounds that they are unfair, giving homeowners bigger breaks than landlords and businesses.

Pessimists fear local governments might need the ability to increase property taxes at some point to meet an emergency need.

And that's precisely why pragmatists want the tax caps put in the Constitution. Don't allow the taxes to rise much, and the spending won't increase to the point where Hoosiers are as burdened as before.

The Indiana General Assembly must approve Senate Joint Resolution 1 or its House counterpart, House Joint Resolution 11. Reassure property owners that these tax caps are permanent, not a gimmick.