In the summer of 2007, homeowner protests over enormous tax bills inspired Gov. Mitch Daniels to order every Marion County property reassessed. He suspected that most businesses were undervalued, and thus paid unfairly low property taxes. He also successfully pushed state lawmakers to approve tax caps and now wants to amend the state constitution to make them permanent.
Legislators spent much of the 2008 General Assembly approving the caps, which will limit property taxes to 1 percent of a home's assessment, 2 percent of a rental property's, and 3 percent of a business's assessment. Because the caps, which phase in beginning this year, will dramatically cut the main source of revenue for local governments, the state took over some expenses. But local governments still fear the caps will result in revenue shortfalls that will force drastic cuts in service.
There are already ominous signs. The reassessment of business property raised the total value of commercial property in the county by nearly $5 billion, causing more than one in four business owners to immediately appeal their assessments. It could take years to process the nearly 5,800 cases still outstanding. But the 11 percent of appeals completed so far have already lowered many business property values below their pre-reassessment levels.
As 2008 closed, legislators prepared to debate whether to approve a constitutional amendment that would make the tax caps permanent. The Legislature must approve a proposed constitutional amendment twice, then it must win approval from voters in a election