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Voters expected to OK property-tax cap amendment

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There's little question about it — the public question asking voters whether the state constitution should include property-tax limits is nearly certain to pass.

A recent poll found that more than 60 percent of likely voters support the proposed constitutional amendment, and some of the measure's biggest opponents have given up the fight.

Indiana law already limits property tax bills to 1 percent of homes' assessed values, with 2-percent caps on farmland and rental property and 3-percent limits on business property. Putting those caps into the state constitution will make them much harder to undo — a feature both praised by supporters and decried by opponents of the caps.

Rep. Jeff Espich, R-Uniondale, is urging voters to approve the amendment, which lawmakers have worked since 2008 to get on Tuesday's ballot.

"In tough economic times like we are facing, taxpayers need more protection and they need stability," Espich said.

The caps saved taxpayers $478 million this year and are projected to save another $577 million next year, according to an October report from the nonpartisan Legislative Services Agency.

But not all homeowners benefit. Only about 11 percent of homesteads hit the property tax limits in 2010, the analysis said. Even with the caps in state law, property tax bills can increase for property owners whose bills fall below the caps and for those with increasing assessed values on their property.

Still, supporters say the constitutional caps would give homeowners added peace of mind and would prevent shocking increases like those seen in 2007. Property tax bills skyrocketed in much of the state that year because of new assessment rules and other factors, sending hordes of homeowners to the Statehouse demanding changes. The caps were approved in 2008, and the process of amending the constitution began the same year.

Karl Berron, president of the Hoosier Property Tax Reform Alliance and CEO of the Indiana Association of Realtors, said those thinking about making an investment in a home or a business like having predictable tax bills — not the wild fluctuations seen a few years ago.

"That becomes comforting to be able to have some sense of what your maximum liability will be," Berron said.

But opponents criticize the more permanent nature of constitutional caps, pointing out that it would take years to change the caps if unforeseen consequences arise in the future.

Some local government leaders aren't happy about the current consequences of the caps. The 2008 law raised the state sales tax from 6 percent to 7 percent to help pay for property tax relief, but local governments and school districts have faced millions of dollars in revenue losses from the caps. Cities around the state have blamed layoffs and other cost-cutting measures on reductions in property tax cash.

The Indiana Chamber of Commerce and Indiana Farm Bureau don't like the caps because they think it's unfair to treat commercial and residential property differently.

But those two groups aren't fighting the proposal, which they consider a sure thing to win approval.

"It's going to pass," said Chamber President Kevin Brinegar. "We've moved on."

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  • Hmpf
    People love to see rate caps, but I'd guess the vast majority voting FOR this will only see their tax burden increase because of it ... and through all kinds of odd fees.
  • Another victory for the rich
    Indiana already has an income tax so the only real fear for the upper-class is taxation on property. If the rich can package "caps" as a "protection" for normal people, they will have the equivalent of income for life when the property values cycle restarts.

    The real middle-class and working-class will gradually experience higher sales taxes and user fees to offset the state's lost income. And of course, these expenses are things that the rich can easily avoid (by shopping from their second homes instead of in Indiana).

    This campaign was a coup for marketing professionals and a stab in the back for the ignorant and uneducated in our state.
    • good point
      If the caps are a good idea today they will be a good idea tomorrow after everyone is given a chance to reconcile the affects. To rush into a constitutional change seems a bit rash.
      What the results will be are higher local taxes and increased user fees. Well maybe that is a better way to fund local government.
      So the next question is how to we reduce the amount of money that goes to the state.
    • just get them right
      I'm not a proponent of caps either on rates or assessments. The list of bad funding/taxing options to replace the lost revenue to local governments is pretty long. I don't believe for a minute that the locals will just live on less. Get ready to pay fees for things that you never thought of.
      • assessments
        If you cap assessments, you pretty much declare winners and losers in taxation as of some moment in time. The real problem with assessments is that to do them correctly, it costs way, way too much, and, because of what it costs, Indiana doesn't do them correctly. What might make sense is to base assessments on sales price (assuming it's an arms length sale) and using some sort of inflation/deflation factor for subsequent years. Since the average home sells once a decade, mistakes wouldn't last forever, which they do currently. If you added some sort of self-reporting system for major improvements another obvious benefit would be lowering the cost of assessing. Trending, done annually, is a multi-million dollar business in Indiana, and even though we capped the revenue, we certainly didn't cap the expense of assessment.
      • assessments
        If you cap assessments, you pretty much declare winners and losers in taxation as of some moment in time. The real problem with assessments is that to do them correctly, it costs way, way too much, and, because of what it costs, Indiana doesn't do them correctly. What might make sense is to base assessments on sales price (assuming it's an arms length sale) and using some sort of inflation/deflation factor for subsequent years. Since the average home sells once a decade, mistakes wouldn't last forever, which they do currently. If you added some sort of self-reporting system for major improvements another obvious benefit would be lowering the cost of assessing. Trending, done annually, is a multi-million dollar business in Indiana, and even though we capped the revenue, we certainly didn't cap the expense of assessment.
      • property-tax cap amendment
        The next task is to cap property assessments.

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