Indiana Gov. Mike Pence said Tuesday he’s open to proposals to “fully replace” the revenue that local governments might lose under a Senate plan to cut the personal property tax for thousands of businesses across Indiana.
Pence also said in a prepared statement that he wants to avoid shifting tax burdens to homeowners and other property owners under the plan.
That means the state would have to spend as much $54.4 million annually to make up the lost revenue, according to the nonpartisan Legislative Services Agency. But the governor did not say what source of money he would use to replace the revenue.
Pence issued his statement after meeting for nearly an hour with mayors from around the state and said the money “would ensure that any reform of this tax does not unduly burden local governments or shift the cost of this tax onto hardworking Hoosiers.”
Evansville Mayor Lloyd Winnecke said that would end his and other mayors’ opposition to the Senate bill, which has passed the Senate and is under consideration in the House. He called the governor’s move “great news for communities all across Indiana.”
SB 1 eliminates the personal property tax for businesses with less than $25,000 worth of business equipment and supplies. That’s about 70 percent of Hoosier companies.
Those firms are expected to pay about $54.4 million in personal property taxes in 2016. Of that, nearly $23 million would be shifted to other taxpayers. The remaining $31.5 million would be losses for cities, counties, schools, libraries and other local governments.
However, Pence said he also supports House Bill 1001, another tax bill that would let counties choose to eliminate the personal property tax on new equipment purchases. Pence did not say he would support providing replacement money for that lost tax revenue.
The impact of that bill is harder to judge because it’s dependent on the actions of local officials and investments by businesses.
Pence said the combination of the bills “would make our communities and our state more attractive for the kind of investment that will create jobs for Hoosiers.”
“In the end, Hoosiers and our local communities will benefit as business grow and companies bring new jobs to our state,” he said.
But Winnecke said he and other local officials still have problems with HB 1001, which has passed the House and is under consideration in the Senate.
The mayors met with Pence following a news conference in which they urged lawmakers to “replace, don’t erase” the personal property tax.
Pence initially called for a complete elimination of the tax, which generates more than $1 billion for local governments. But he’s also said repeatedly he doesn’t want to “unduly burden” local communities.
On Tuesday, the bipartisan group of mayors said the governor had not offered any plans to replace the revenue for local governments. Indianapolis Mayor Greg Ballard called on the state to replace the revenue so local officials can continue to make their communities stronger.
“It is time to start focusing on building more attractive places to live,” Pence said. “Companies and people are choosing to locate in place with a high quality of life.”