Tax caps thrill homeowners, assessments chill businesses

Soaring property taxes were arguably Indiana’s biggest problem in 2007. In 2008, the Legislature approved property tax caps
as a solution. But because the caps haven’t been implemented, debate is still raging over the consequences the caps will have
for local governments and whether they should be made permanent.

In the summer of 2007, homeowner protests over enormous tax bills inspired Gov. Mitch Daniels to order every Marion County
property reassessed. He suspected that most businesses were undervalued, and thus paid unfairly low property taxes. He also
successfully pushed state lawmakers to approve tax caps and now wants to amend the state constitution to make them permanent.

Legislators spent much of the 2008 General Assembly approving the caps, which will limit property taxes to 1 percent of a
home’s assessment, 2 percent of a rental property’s, and 3 percent of a business’s assessment. Because the caps, which phase
in beginning this year, will dramatically cut the main source of revenue for local governments, the state took over some expenses.
But local governments still fear the caps will result in revenue shortfalls that will force drastic cuts in service.

There are already ominous signs. The reassessment of business property raised the total value of commercial property in the
county by nearly $5 billion, causing more than one in four business owners to immediately appeal their assessments. It could
take years to process the nearly
5,800 cases still outstanding. But the 11 percent of appeals completed so far have already lowered many business property
values below their pre-reassessment levels.

As 2008 closed, legislators prepared to debate whether to approve a constitutional amendment that would make the tax caps
permanent. The Legislature must approve a proposed constitutional amendment twice, then it must win approval from voters in
a election