County homeowners could be in for a small windfall if the General Assembly accepts a plan by Gov. Frank O'Bannon.

The governor proposed a tax cut and reform plan Monday that would permanently remove welfare costs from local property taxes. Other provisions would raise the personal income tax exemption an additional $500 for individuals to $1,500 per adult, a 35 percent reduction in the inventory tax over the next four years; and restrict local tax levy increases to 4 to 8 percent per year rather than the current 5 to 10 percent.

"This cut is good for homeowners, for farmers and for business," O'Bannon said in announcing the plan. "It would eliminate three major property levies that will not be able to grow back and become a burden again. And we can fully fund it with state revenues on an ongoing basis. This is permanent property tax relief."

For Kosciusko County, removing welfare costs from the property tax levy would save taxpayers $970,704 per year based on current assessed values.

"The total welfare tax rate for the county is $0.1205 per $100 of assessed value," Charlene Knispel, county auditor, said. "The total assessed value for the county is $805,563,237."

State Senator Kent Adams (R-Bremen) said the governor's proposal is a good start, but more needs to be done in bringing about permanent relief for state taxpayers. He disputes the proposals will result in a permanent reduction in property taxes, as the governor claims. Rather, taxes may actually rise due to the governor's spending requests and the necessary changes in the way property values are assessed in the state.

"We (Senate Republicans) just feel that now is an excellent opportunity for real, permanent tax cuts, and this just isn't going all the way. It's a good start, but we need more," he said.

Adams asserts that because of the recent Indiana Supreme Court decision finding the way property is assessed is unconstitutional, most homeowners' taxes will actually rise, even with the governor's proposed reforms.

"We're looking at no one's property taxes going down because of what the Supreme Court ruled on property tax assessment," he said. "We've heard the decision will actually force property taxes up 15 percent."

The pressure to raise taxes will also be increased if the governor's spending plan is adopted unchanged, according to Adams.

"He (O'Bannon) wants to increase the state budget over 5 percent when inflation is at 2 percent," he said. "There's some real hard line decisions that are going to be made in this long session. If this (the governor's plan) holds, no one is going to see any real reduction in property taxes."

Adams said Republicans will also push for an elimination, not a simple reduction in the state's business inventory tax, making it easier for the state to compete with other midwest states in attracting business development and the jobs that brings.

"We've talked about eliminating the inventory tax altogether, because that would pay for itself through attracting more businesses to the state," he said.

Other reforms contained in O'Bannon's proposal include increasing assessors' skill through continued training, testing and certification; moving to annual real property assessments by 2006; assessing major industrial property at the state level; placing appeals of personal property tax abatement decisions at the local level; and directing the Indiana Department of Revenue to collect data on all categories of business income. [[In-content Ad]]