State fiscal leader calls for tax reform

INDIANAPOLIS -- Tuesday, the state Senate's top fiscal leader challenged lawmakers to "seize the moment" for overhauling Indiana's tax system this session.\nSenate Finance Chairman Larry Borst, R-Greenwood, presented more details of his tax-restructuring plan and said the General Assembly has its best opportunity in nearly 30 years to cut property taxes and promote lasting economic development.\n"Now is the time to do it when everyone is on the same page and the same wavelength," said Borst, who has spent nearly three decades helping shape Indiana's fiscal policy.\nBut not all Republicans who control the Senate share in Borst's call for tax restructuring this session. He detailed his plan at a news conference by himself, and opened his remarks by saying it was only his program.\n"In no way do I speak for the Republican caucus," Borst said.\nHe said the proposal would clear his committee Thursday, but he made no prediction about how it would fare before the full Senate. Republicans control the chamber 32-18.\nSenate President Pro Tem Robert Garton, R-Columbus, said last week he still believed tax restructuring should wait beyond this session, when more information about the effects of the unfolding reassessment will be known. Garton said he believed most Senate Republicans feel the same way.\nIn a twist from statements in recent years, Borst commended Democratic Gov. Frank O'Bannon for showing leadership in trying to restructure taxes, and he said lawmakers should capitalize on the momentum O'Bannon and some top lobbying forces are providing.\nBorst drew unusual praise from House Ways and Means Chairman B. Patrick Bauer, D-South Bend, who pushed a tax-restructuring and deficit-reduction package through the Democrat-controlled House last month.\nBauer noted that Borst's plan did nothing to shore up the state's budget deficit, and he said it gave more tax breaks to businesses than did the House plan. But he said Borst had shown leadership in trying to keep tax-restructuring alive.\n"I really appreciate the fact that he's approached this as something that has to be done now, and he's done it in-depth and he's done it with his usual skill of pulling many different elements together," Bauer said.\nBorst's plan would raise sales taxes from five percent to six percent and individual income taxes from 3.4 percent to 3.6 percent. Cigarette taxes would be increased by 39.5 cents per pack, and the riverboat casino admission tax would be raised.\nRevenue generated by those tax increases would be used to cut property taxes for homeowners. Instead of seeing big tax increases because of court-ordered changes in assessments next year, property taxes for homeowners statewide would drop an average of 25 percent, Borst said.\nPart of that would be accomplished by shifting $1.4 billion in school operating costs from local property tax rolls to the state. And residents would be allowed to deduct the first $25,000 in assessed value of their homes from the property tax.\nBusinesses would pay a new franchise tax and a new, 1.3- percent tax on their payroll, but $1.3 billion in property taxes on business inventory and equipment would effectively be eliminated.\nBorst said the plan was "pretty much" revenue-neutral, meaning it would cut as much in taxes as it raised. But he said none of the new tax revenue would be used to shore up the state's budget deficit.\nSen. Luke Kenley, R-Noblesville, said Monday he would vote for the plan in committee, but he did not know how it would fare on the Senate floor.\nKenley said Borst's plan was so comprehensive and "forward-thinking" it would take time for the public to digest it and believe the tax increases will be used entirely to cut other taxes.\n"So members of the Senate are going to be put on the spot of having to get out ahead of their constituency if they are going to be interested in doing this," Kenley said.\nBauer said he hoped Borst was able to get a plan through the Senate and that a final plan could be worked out in a House-Senate conference committee.