Daniels proposes property tax cap

Gov. Mitch Daniels announced a new property tax plan Tuesday that would offer tax relief for homeowners and renters.\n“A combination of circumstances have put people at risk of losing their homes,” Daniels said before the Governor’s Arts Awards on Thursday at the Musical Arts Center. “That’s just unacceptable.”\nThe plan calls for a cap on every homeowner’s property taxes, enforced spending limits and an end to inaccurate property assessments. But not everyone agrees the plan is the best route, saying the change will make it harder for schools to be built quickly and may hurt lower and middle income families. \nThe tax cap would be set at one percent of the value of a home, two percent of the value of a rental property and three percent of the value of a business property, Daniels said. Daniels also seeks to make the cap permanent by adding an amendment to the state constitution. \nDaniels also proposed a change in how the assessment system works. Currently, 1,110 people are elected with property assessment responsibilities. If implemented, only one assessor per county would be needed. \nHaving so many people with property assessment responsibilities led to some very inconsistent and unfair assessments, Daniels said.\nWith the decrease in property taxes brought in, local spending limits would be enforced. Daniels said counties will have to ensure they are not spending more money than they raise in tax revenue.\nDaniels said schools are spending twice as much as Hoosiers are bringing in tax revenue, mostly because no one at the local level was in charge of adding up the total spending. \n“Small wonder that the total is coming out too high,” Daniels said.\nFifteen percent of general school funds are currently paid for with property taxes, but under the new plan property taxes would not go directly to the schools. Because the state is assuming additional costs of the school general fund, the tuition support reserve fund is being increased from the current $316 million to $366 million, according to Daniel’s property tax plan summary. The additional $50 million will come from the state general fund balance, which currently has a surplus. \nAny referendum could cause delays for fast-growing areas that need to move quickly to build schools and then wouldn’t be able to, Ryan Guthrie, chief of staff for Congressman Baron Hill, D-9th, said.\nTravis Lowe, spokesman for gubernatorial candidate Jill Long Thompson, agreed the bill needs work. \n“We need to be cautious about removing local control from the schools,” Lowe said.\nThe money lost in the tax reduction would be supplemented by some of the state’s budget surplus and a one cent increase in the sales tax, which would generate approximately $928 million in 2009.\nLowe said Daniels’ plan would hurt lower- and middle-income citizens. \n“Lower- and middle-income Hoosiers spend a larger portion of their income on taxable goods,” Lowe said. “This sales tax increase would take away more money from people.”\nHowever, Thompson and Hill both agree that some property tax plan is needed, Lowe and Guthrie said.