Kernan aims to provide property tax relief to Lake Co. residents

INDIANAPOLIS -- Democratic Gov. Joe Kernan is standing behind his plan to provide property tax relief to some homeowners, mostly in Lake County, despite an analysis by a nonpartisan agency that suggests it may not be legal.\n"We wouldn't have moved forward with this if we didn't think we had the legal authority to do it," said Jonathan Swain, Kernan's press secretary.\nThe Kernan plan, authorized July 26, allowed the state to advance about $20 million overall to counties so they could offer a "circuit breaker" to homeowners whose payable 2003 tax bills were more than 2 percent of their homes' assessed value.\nCounties could provide the relief through credits on 2004 bills or through refunds and would have to pay back the state money over five years with interest.\nThe analysis by the nonpartisan Legislative Services Agency sought by Rep. Jeff Espich, R-Uniondale, said it was reasonable to ask the Property Tax Replacement Board, which rubber-stamped Kernan's proposal, to provide "additional legal justification" for some provisions. The provisions in question include one giving relief to some homeowners but not others.\nThe analysis also questioned the authority of counties to carry out such a plan by offering a so-called "circuit breaker."\n"The existence of a detailed legislative scheme governing property tax exemptions, deductions and credits strongly suggests that no general power has been granted to counties to fashion a homestead credit similar to the one proposed in the Governor's 2 percent Circuit Breaker Plan," the analysis said.\nIt was prepared by an attorney for the Legislative Services Agency, the nonpartisan research arm of the General Assembly, and dated Aug. 2. Espich said he shared it with reporters Monday because the legality and other aspects of the plan had bothered him for some time.\nEspich said from the start that Kernan -- a Democrat seeking a full term this year -- was trying to shore up support in Lake County, a Democratic stronghold. Of about 35,000 homeowners who would be eligible for the tax credits, more than 31,000 live in Lake County.\nHe said the LSA analysis confirmed his suspicions that the plan probably was not legal.\nThe analysis did not definitively say that the administration lacked authority to carry out the plan. But it said the General Assembly had not specifically spelled out such authority, either.\nAbsent that, it questioned provisions giving additional relief to some homeowners but not others; making the credits contingent upon local government approval; and structuring the credits as a repayable advance. It also said tax laws did "not justify" imposition of a county option circuit breaker.\nEspich said the analysis was the "best legal advice I can get from an independent source."\n"We get a pretty good idea of what the law does and does not permit," he said.\nKernan has said that data -- not politics -- was behind the proposal. Many Lake County homeowners were hit with huge tax increases because of court-ordered changes in assessments and other factors, including spending increases by local governments.\nKernan spokesman Jonathan Swain said Lake County must pay back any additional property tax relief provided by the state, and the plan was legal.\nRep. Charlie Brown, D-Gary, said the plan provided "desperately needed relief" to many homeowners hit hardest by higher tax bills, and he accused Espich of trying to politicize it.\n"It's strictly political, instead of looking at these people who are suffering," Brown said.