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Property tax caps stand good odds in the 2010 legislative session

December 19, 2009

It’s crunch time for property tax reform.

The upcoming General Assembly will be the last shot for legislators to ensconce in the state constitution caps on property taxes passed in 2008.

If the measure passes in 2010, it will go to voters in a November referendum and, if OK’d, straight into the state constitution.

The legislation would cap tax increases for homeowners at 1 percent above gross assessed value. Farms and rental property would be capped at increases of 2 percent above assessed value, and business and personal property, increases of no more than 3 percent.

If the measure fails this year, or if it’s altered, it won’t go to referendum, effectively killing it.

John Ketzenberger, president of the nonpartisan Indiana Fiscal Policy Institute, believes the odds of passage are better than even.

Watch how House Speaker Pat Bauer responds, Ketzenberger advised: “If he allows it to go to a vote this year, then he’s concerned about the electoral prospects for his caucus this fall.

“It’s a real barometer issue.”

The House Ways and Means Committee passed its bill Dec. 14 by a 21-3 margin, clearing the way for a debate on the full House floor.

Bill Waltz, vice president of taxation and public finance at the Indiana Chamber of Commerce, agreed that Bauer probably will allow a vote.

Berron

Pushing for the legislation are the Indiana Association of Realtors, along with groups representing apartment owners, building contractors and others tied to residential real estate.

Realtors CEO Karl Berron said business groups that don’t like the tiered system should think twice before pushing too hard against it.

Lawmakers since 2002 have gradually shifted taxation away from business to make the business climate more conducive to investment, he noted.

Now that the state is struggling to gather enough tax revenue to operate, business interests could find themselves in the crosshairs if legislators start looking for new sources of revenue.

“When you’re forced to raise more money, as an elected official, it’s generally easier to do it on nonvoters,” Berron said. “It’s better for the business community to be seen as part of the solution than part of the problem.”

Opponents include the Indiana Chamber of Commerce, Indiana Farm Bureau and other groups that contend it imposes unequal taxation.

The attempt to amend the constitution to cap property taxes isn’t the only financial issue on lawmakers’ plate.

Local government reform could get additional attention two years after Chief Justice Randall Shepard and former Gov. Joe Kernan unveiled a sweeping plan for streamlining township offices and other government functions.

Months after the report was released, the General Assembly approved legislation that wiped out nearly all township-level property assessments. Last year, however, the House rebuffed a number of recommendations passed by the Senate.

The Indiana Chamber of Commerce anticipates bills in the 2010 session targeting poor relief administered by townships. Still other recommendations likely to emerge in bills are moving municipal elections to even-numbered, non-presidential election years.

The recommendations have received broad support from business interests, but are opposed by groups representing local governments.

Indiana Manufacturers Association President Pat Kiely expects the General Assembly to experience another go-round on a contentious health insurance issue.

Health care providers for years have supported legislation that would allow consumers to direct their insurance companies to pay claims directly to health providers that had not contracted with the insurer.

Backers say they want to prevent confusion over whether benefit checks are sent directly to doctors, dentists and other providers. The measure also would help providers stay independent of insurers.

In prior sessions, the legislation has been dubbed the “HHGregg bill” due to patient’s unwittingly spending their insurance payouts on flat-screen televisions at the consumer goods company rather than paying their health providers.

The Manufacturers Association opposes so-called “assignment of benefits” because it interferes with contracts between insurers and the providers chosen by the insurers.•

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