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STATEHOUSE DISPATCH: Broad support but long odds for property tax reform

February 13, 2006

The rubber is starting to meet the road in the Indiana General Assembly as the calendar turns past the midway point, and House bills move to the Senate (and vice versa, although that half of the equation is decidedly less intriguing).

Some senators are not happy with the House's sending them at least one key measure, House Bill 1001, that is less a work in progress than a utopian statement of sorts about future tax policy.

While lawmakers last year broadly hinted that the local government flexibility and fiscal toolbox measure was a bit too much for them to bite off when it was drafted near the end of the session, many believed a summer study committee would examine the issues in depth and lawmakers would be primed to pass a package this year.

That didn't happen in the House of Representatives, where members didn't see fit to deal with the Hometown Matters package assembled by the bipartisan membership of the Indiana Association of Cities & Towns, and passed a property tax relief package that included eliminating the property tax altogether. Thus the House left the heavy lifting-the matter of replacing the billions in lost tax revenue-to the adults in the Senate.

The measure now has a half-life of about 10 more days in the Senate before Senate Tax & Fiscal Policy Committee Chairman Luke Kenley, R-Noblesville, pulls the plug.

Even as Republican Gov. Mitch Daniels and Democratic Mayor Bart Peterson joined with mayors of both political stripes Feb. 7 to push for the Hometown Matters plan and property tax relief, Kenley's committee was hearing from opponents, and he was skeptical about the measure's success.

A frustrated Kenley seems to be happy only with the dog-tax elimination in HB 1001, and he needs some kind of affirmative signal that whatever local revenueraising package senators might assemble would meet with House approval before his colleagues are likely to put their respective necks on the chopping block.

He also understands that his draft eight-step plan to permanently reduce property taxes-including a statewide sales tax on services-isn't likely to meet with success across the rotunda.

Daniels promises to put his clout behind the concept, but it may be too little, too late for local governments.

"Some things really should be beyond partisanship and that includes reform and restructuring of local government," Daniels said. He also noted the irony of members of his own party resisting the effort to move more responsibility and accountability down to the local level.

However, he is also preoccupied by his need to muscle through Major Moves, and he might not be able to go to the well again this session for a measure the House has already effectively sidestepped.

There remains a major disconnect between the governor and Hoosiers across the state on the road issue. The foundation was not laid well enough or long enough in advance, and lawmakers are concerned about paying the price at the polls. Even supporters concede the haste with which the program has been advanced hasn't been helpful in building public-or legislative-support.

There have been significant internecine legislative concerns raised about how certain highway projects seem to have been committed or accelerated to gain votes for Major Moves. There are also bipartisan questions from northwest Indiana about why the proposed northeast Indiana regional development authority will not require local matching shares while governments in The Region will have to ante up multimillion-dollar sums to share in the largesse.

In northern Indiana, where local residents and governments feel a strong ownership interest in the Indiana Toll Road, concerns have been raised about why so much money from the lease deal would be directed south-with much of it to Marion County. You can imagine how that "Indianapolis wins again" sentiment is taking hold up north/ Expect senators to make some revisions to the Major Moves package.

One of the key remaining issues is telecommunications deregulation. But the fact remains that this is both a short session and an election year, and that could mean even this issue faces trouble unless backers settle on a version acceptable to a broad enough range of lawmakers.

And that, in a nutshell, is also what we face on virtually every issue still alive over the next four weeks.



Feigenbaum publishes Indiana Legislative Insight. His column appears weekly while the Indiana General Assembly is in session. He can be reached by e-mail at edf@ingrouponline.com.
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