State house approves changes in initial tax plan

INDIANAPOLIS -- The Indiana House overwhelmingly approved pro-business changes to a Democrat-drafted tax-increase and tax-restructuring plan Wednesday, clearing the way for a vote on the overall bill Thursday.\nThe revised plan would cut property taxes and other taxes by about $1.8 billion over three years and raise about $3 billion in new tax revenue to shore up the state's budget deficit.\nMembers of the Indiana general assembly reconvened in the historic special session at the Statehouse on Monday to begin debating the overall bill addressing Indiana's $1 billion budget deficit and court-ordered property tax increases that will soon affect Hoosiers. If not averted, property tax increases could have a significant impact on IU students living off campus.\n"There is almost no doubt all renters will feel the pinch of property tax increases," said Rep. Mark Kruzan, D-Bloomington. "Because landlords will be hit with additional property taxes, they will understandably want to recoup their losses by increasing rent."\nSome students have expressed concern over the consequences of inaction from the General Assembly. \n"A lot of students are already under financial stress from tuition," junior Megan Miller said. "This can't help."\nIn the past, Indiana's system for determining property taxes was built on complex assessment requirements, which based taxation on a variety of factors, not including the land's market value. This system was deemed inequitable and unconstitutional in a 1998 Indiana Supreme Court decision, which may come into effect in the next year. Because the previous system held property taxes far beneath what is now required under the Court's ordered alterations, some property owners could end up facing tax increases of up to 33 percent.\nThe overall bill up for consideration by the assembly proposes solutions to the property tax situation, but Republican and Democratic lawmakers are divided over the its merits.\n"House Democrats are following the Governor's lead of raising the state sales tax one percent in order to reduce the impact of the court-mandated tax increase," Kruzan said.\nIn addition, Democrats have suggested tax breaks that might benefit student renters. \n"We are proposing to allow renters additional tax deductions to reduce their tax burden," Kruzan said.\nMeanwhile, house Republicans have suggested taxes on individual goods, and propose to take some of the heat off of landowners by expanding state income through gaming. Both parties claim that they will seek a bipartisan solution, but individual legislators remain reluctant to cross party lines in search of a remedy. Still, Kruzan remains optimistic. \n"We hope to achieve some kind of compromise in the remaining days of this special session," Kruzan said.\nIf a compromise is not found, Indiana's students could be among those hit by the legislature's inaction. \n"It seems that a lack of concern for education is a nationwide standard, so I guess they're just following the crowd," sophomore James Klaunig said.\nA possible outcome of continued gridlock may be another general assembly special session. If the legislature does not address the budget deficit and devise a method of diffusing tax hikes before the session ends on June 22, the issues will not disappear. Governor O'Bannon may resort to calling another session this summer in order to avert a fiscal crisis and to avoid aggravating landowners.\nThe consequences for students of the legislature's indecision over the budget crisis, which has caused tuition increases, and court-mandated property tax increases, is evident to Kruzan.\n"Student renters are essentially being hit with a double whammy. Their tuition is already going up, and now their rent may increase, as well."\nThe Associated Press contributed to this report.