Indiana tax cap amendment advances in Senate committee

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

INDIANAPOLIS | The Statehouse race to place new property tax caps in the Indiana Constitution left the starting line Tuesday, but a potential roadblock lies ahead.

Republicans on the Senate Tax and Fiscal Policy Committee muscled ahead a measure that would set up a 2010 referendum allowing voters to decide whether to cement the tax caps in the state charter. The proposal advanced to full Senate on 8-4 party-line vote despite calls for caution from Democrats and local government lobbyists.

"We don't even have to act this session on it," said Sen. John Broden, D-South Bend. "If we enact it this session, the voters still can't vote until 2010."

The caps, which next year will begin limiting property tax bill to 1 percent of a property's assessed value for homeowners, 2 percent for rental property and 3 percent for homeowners, were added to state law last year.

But Republicans, including Gov. Mitch Daniels, want them added to the constitution, where they would be protected from future Legislatures or a legal challenge. The state constitution currently does not allow separate classes of property to be taxed at unequal rates.

The proposed constitutional amendment should have little trouble clearing the Senate, where Republicans outnumber Democrats 33-17. But Democratic House leaders want to wait at least another year to see if local government across the state can withstand an estimated $400 million in annual revenue losses triggered by the caps.

A identical tax cap amendment is pending in the House Rules Committee, but Chairman Phil GiaQuinta, D-Fort Wayne, said Thursday he does not know whether he will give the measure a hearing.