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Revamping the state's tax system and determining how much of those revenues to spend on education will be the top issues during the upcoming session of the Indiana General Assembly, according to local statehouse representatives.
"For those of us in this area, we still see the main issue being property taxes and how they are coupled with education," said state Sen. Kent Adams (R-Bremen).
Adams said the need to do away with the inventory tax for state businesses will also be a main topic of debate, as the General Assembly puts together the state's biennial budget.
"The last four years, property taxes have increased 40 percent," Adams said. "We feel this (relying on property taxes to fund education) is getting out of control.
"We're also one of three or four states that still have an inventory tax. By eliminating that tax, it would pay for itself by attracting more businesses to the state," Adams added.
It's the amount of taxes paid by the business sector that could make any consensus on restructuring the tax system hard to obtain.
"I doubt the Democrats will favor changing the property tax system too much, because 60 percent of the property taxes are paid by businesses and they don't want to reduce taxes on businesses," said Rep. David Wolkins (R-Winona Lake).
Adams and Wolkins, as well as Sen. Robert Meeks, (R-LaGrange) said they all favor returning some of the state's $2 billion budget surplus to the taxpayers after ensuring education and the state's fire and police pension fund obligations.
"Everyone thinks we have a $2 billion surplus, but that's not entirely accurate," Meeks said. "After the state's debt is accounted for, as well as the property tax replacement credit and the pension liability, there is only a $350 million positive cash flow position."
Any decision on property taxes will rest heavily on a pending ruling by the Indiana Supreme Court on the constitutionality of Indiana's property tax system, Adams said.
"If the Supreme Court rules for the market value measure as mandated instead of the 'true-tax' basis for taxes is more appropriate, we'll have to recalculate how that will affect the state's revenues," Adams said.
Education will be the primary benefactor of any tax restructuring, according to the state senators and representatives.
In terms of education, full-day kindergarten and textbook rental fees will top the list of issues addressed by the legislature. According to Adams, 53 percent of the property taxes collected in the state and 56 percent of the state's budget go to education.
"Full-day kindergarten is going to be a tough sell," Adams said. "We haven't seen any evidence that after the fourth grade, kindergarten kids do any better than non-kindergarten kids," he said.
The costs of full-day kindergarten has been estimated at between $200-$300 million, he added.
Wolkins said some form of funding for all-day kindergarten will be agreed upon, but local school districts will have the option on whether they participate of not.
"I think there will probably be funding in the neighborhood of $80 to $100 million for full-day kindergarten," he said
All representatives expect the legislature to work in a bipartisan manner, while the debate may be spirited.
"I talked to the governor yesterday (Wednesday), and he told me that he thinks we can do good things this session if we can just get together and put our partisan differences aside," Meeks said. "I couldn't agree more."
