By Eric Bradner, Evansville Courier & Press
INDIANAPOLIS - A state Senate committee has approved a measure to write property tax caps into Indiana's constitution.
The Senate Tax and Fiscal Policy Committee, which is chaired by Republican Sen. Brandt Hershman of Wheatfield, voted late Tuesday afternoon to send the amendment to the full Senate for a vote.
State lawmakers in 2008 voted to phase in property tax caps of 1 percent for homes, 2 percent for farms and rental property and 3 percent for businesses. According to estimates by the Legislative Services Agency, the General Assembly's non-partisan research arm, those caps would save property taxpayers - and cost local governments - $465 million in 2010 and $488 million in 2011.
Lawmakers also voted in 2008 to amend those caps into Indiana's constitution. To complete that process, the amendment needs to be passed by both the House and the Senate this year and approved by voters in a November 2010 statewide referendum.
Discussion Tuesday foreshadowed a vigorous floor debate that will come after the General Assembly starts its 2010 legislative session on Jan. 5.
"This cap is being sold to the public as a tax savings, and I don't believe that to be the case," said Sen. Tim Skinner, D-Terre Haute.
He pointed out that to pay for the constitutional property tax caps, Indiana raised its sales tax from 6 to 7 cents on the dollar. He said state lawmakers are encouraging local governments to pass tax increases, as well.
"I don't see this as an advantage to middle- and low-income taxpayers," he said. "This is merely a tax shift, and I'm still uncertain at this time who the beneficiaries are. ... We need not rush to make this a permanent decision."
Skinner's concerns were echoed by Sen. John Broden, D-South Bend, who said that those who own expensive homes benefit most from the caps.
"When you look at the amount of property tax relief that goes to the people who own these modest homes, they get very small relief on the dollar," he said.
Broden said he is concerned that teachers, firefighters and small business owners are "paying a higher sales tax, a higher local-option income tax to pay for somebody else's property taxes."
Sen. Connie Sipes, D-New Albany, voted to pass the amendment Tuesday but said she shared concerns expressed by other Democrats and might change her mind when it comes to the Senate floor.
"I don't think we've educated the public as well as we need to," she said.
Sen. Jim Buck, R-Kokomo, said home ownership has always been part of the American dream.
"It used to be they would own in free and clear. But over the years, we have become tenants of the government. If we don't pay it, government takes it away," he said. "This is one step toward being assured that the cost of owning property, no matter the property, cannot go beyond a certain value of their home."
The amendment is expected to easily pass the Senate, which Republicans control, 33-17. Its fate is less certain in the House, where Democrats hold a 52-48 majority.
The House Ways and Means Committee held a hearing on the amendment Monday. The panel's chairman, Rep. Bill Crawford, D-Indianapolis, said members would vote next week on whether to send the measure to the full House for consideration.