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Biz interests expect tax issues to vex Legislature

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Increases in property and payroll taxes will be among the key business issues confronting the  General Assembly—again—when it convenes in January.

So it's little wonder those topics are among several the Indiana Chamber of Commerce are addressing Monday at its 2010 Legislative Preview, which runs from 11 a.m. to 1 p.m. at the Hilton Downtown Indianapolis.

Lawmakers meet Tuesday for Organizational Day, but they will not begin debating measures until the Legislature officially convenes for a short session beginning Jan. 5.

Although legislators addressed both property taxes and the business payroll taxes that underwrite unemployment insurance during past sessions, more work remains.

Take property tax caps, which the General Assembly approved in 2008. The caps, which limit property taxes to 1 percent of a home’s assessed value, 2 percent of a rental property’s value and 3 percent of a business’ assessment, will not become permanent until the Legislature approves a proposed constitutional amendment twice, in consecutive years. Lawmakers approved the amendment in 2008 but failed to do so again during the 2009 session, meaning the process starts over. Once that hurdle passes, the caps must win approval from voters in an election before they can become law.

The state chamber favors uniform property assessments and argues that the new formula would place too much of the burden on the business community while stymieing job creation, said Cameron Carter, the chamber’s vice president of small business and economic development.

“We agree that we need to protect property taxpayers, but we disagree with the ‘1-2-3 lock,’” he said. “We just don’t think it’s good for economic development or the prosperity of businesses.”

House Speaker Pat Bauer, D-South Bend, likely will allow a vote on the caps this session, since the measure would need to be passed again before advancing to the public, said Ed Feigenbaum, publisher of Indiana Legislative Insight.

Democrats favor tax caps but do not want them to become part of the Constitution because that would make it harder to change the property-tax formula later.

Both parties, however, likely will favor delaying the increase companies will pay in payroll taxes. Lawmakers this year raised the tax on employers effective Jan. 1 and made other changes to help keep the Unemployment Insurance Trust Fund solvent.

The state has borrowed about $1.1 billion so far from the federal government to keep the fund afloat, a figure expected to climb to $1.7 billion by year’s end. Back in 2000, the fund enjoyed a $1.6 billion surplus but has been depleted by rising unemployment rates.

But raising taxes on businesses at a time when the economy is struggling to gain traction might not make the best political sense. State legislative leaders already have acknowledged that they’re likely to support a bill to delay the tax hike by a year.

The state chamber prefers a two-year delay but certainly backs any postponement, Carter said.

In exchange for their support, Democrats likely will request something in return, such as tying any delay to a job-creation stimulus package, Feigenbaum said.
 
“There’s an opportunity for Democrats to take a little bit of a political advantage on this,” he said.
 
Also, the state chamber hopes to build upon local government reform measures recommended early this year by Indiana Supreme Court Chief Justice Randall Shepard and former Gov. Joe Kernan in their non-partisan Kernan-Shepard report. Gov. Mitch Daniels championed the changes, some of which resulted in legislation intended to save money by consolidating government functions.

Voters in Marion County, for example, approved consolidating property assessment, doing away with township assessors. Now, one county executive has responsibility for the assessment of all property in the county.

Feigenbaum expects Daniels to propose further consolidation, moving township oversight of fire protection to a county-wide board.

“It doesn’t sound like much,” he said, “but that sets the stage for leaving the township trustees and advisory board with [just] poor relief.”

Overall, Feigenbaum said, the next legislative agenda could be much fuller, particularly in a short session, than many might expect.

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  1. I took Bruce's comments to highlight a glaring issue when it comes to a state's image, and therefore its overall branding. An example is Michigan vs. Indiana. Michigan has done an excellent job of following through on its branding strategy around "Pure Michigan", even down to the detail of the rest stops. Since a state's branding is often targeted to visitors, it makes sense that rest stops, being that point of first impression, should be significant. It is clear that Indiana doesn't care as much about the impression it gives visitors even though our branding as the Crossroads of America does place importance on travel. Bruce's point is quite logical and accurate.

  2. I appreciated the article. I guess I have become so accustomed to making my "pit stops" at places where I can ALSO get gasoline and something hot to eat, that I hardly even notice public rest stops anymore. That said, I do concur with the rationale that our rest stops (if we are to have them at all) can and should be both fiscally-responsible AND designed to make a positive impression about our state.

  3. I don't know about the rest of you but I only stop at these places for one reason, and it's not to picnic. I move trucks for dealers and have been to rest areas in most all 48 lower states. Some of ours need upgrading no doubt. Many states rest areas are much worse than ours. In the rest area on I-70 just past Richmond truckers have to hike about a quarter of a mile. When I stop I;m generally in a bit of a hurry. Convenience,not beauty, is a primary concern.

  4. Community Hospital is the only system to not have layoffs? That is not true. Because I was one of the people who was laid off from East. And all of the LPN's have been laid off. Just because their layoffs were not announced or done all together does not mean people did not lose their jobs. They cherry-picked people from departments one by one. But you add them all up and it's several hundred. And East has had a dramatic drop I in patient beds from 800 to around 125. I know because I worked there for 30 years.

  5. I have obtained my 6 gallon badge for my donation of A Positive blood. I'm sorry to hear that my donation was nothing but a profit center for the Indiana Blood Center.

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