Kosciusko County officials are anxiously awaiting a state plan for taxes.
In January, Indiana legislators plan to hash out an agreement on statewide property tax reform. The outcome could have a significant effect on how local governments collect revenue for the services they provide.Last month, Gov. Mitch Daniels proposed a plan which would cut property taxes by about one-third. The plan includes capping residential property taxes at 1 percent, residential rental property at 2 percent and business property at 3 percent assessed value. Daniels' plan calls for the state to take responsibility for some school costs, including operating and transportation funds. To cover the state's costs in taking on the funds, Daniels suggests a 1-cent-per-dollar increase in the state sales tax.
Last week, a panel of legislators proposed a similar plan, which also included the 1-, 2- and 3-percent caps from Daniels' plan, but did not call for the state to take on local school costs. The legislative proposal aims to cut property taxes in half and relies heavily on increased local option income taxes to provide local governments the revenue lost in the property tax cuts.
Special interest group Advance America founder Eric Miller also has been touring the state promoting a plan to completely eliminate property taxes.
Kosciusko County Auditor Sue Ann Mitchell said by telephone Tuesday that tax plans that benefit other counties may not necessarily benefit this one.
"We're just unique to any other county in the state," Mitchell said.
She said the number of second homes in Kosciusko County, especially lakehouses owned by people who live outside the county, means reliance on an income tax would not be good for the county because a large number of people would get the benefit from government services they didn't help pay for.
"Trying to encourage the county to move to an income tax to offset property tax when we have so many people who don't live here but pay property tax here would hurt us," Mitchell said.
Mitchell said Daniels' proposal that the state take over some school costs would not address the main problem faced locally - cross-county school districts.
"I think they need to look at it more realistically," Mitchell said.
Ron Truex, county commissioners president, said he is concerned the state may be moving too fast on property tax reform.
"I think there's always room for improvement in any system," Truex said, "but, I don't think we should throw out an existing system hoping the new one's better. I think we should go slow enough to find out if we truly have an improvement over what we're getting rid of."
County Council President Harold Jones said he is concerned that a state plan may meet the needs of larger urban areas and cause more problems for others.
"I think we need to be careful," Jones said. "We don't want to do away with property tax in this county. We need to be sure that the state's formula doesn't take care of larger areas and leave us short."
The campaign to address property taxes began this year when changes in property assessment and trending caused caused increases as high as 200 percent for some property owners. Jones and Mitchell said the real solution to the problem lies in spending.
"I've had some time to think about it," said Mitchell. "We wanted the assessments to be fair. If market value fairly evaluates your property, but your taxes are too high, the problem isn't your evaluation process, the problem is you've got too many things you're trying to pay for with tax money."
"I think (the tax system) definitely needs some changes," said Jones. "I'm not sure if it needs the big sweeping changes we're talking about. We need to learn to live within our means more than in the past. We need to limit spending. We haven't done bad locally, but I think that's why Kosciusko County is in better shape than some of the others."
Earlier this year, state government gave local officials the OK to move toward raising local income taxes. So far, the Kosciusko County Council has not moved on the tax. Jones said he does not think it would be wise to enact another tax before it becomes clear what the state legislature will do.
"We need to be sure that what we do is necessary and needed, not just frivolously done," Jones said. "They keep coming out with new ideas. We need to wait and see where they settle before we change our structure."
At a town hall-style meeting in North Webster last week, District 22 State Rep. Bill Rupple said he expects the state legislature will agree on a plan within the first weeks of the new legislative session.
Jones said the sooner the better.
"I'm anxiously waiting for something to come out so we can put a finality on all this," he said. "People want to know where we're going."
