NORTH WEBSTER - The Indiana legislature likely will develop a property tax reform plan that combines elements of plans proposed by Gov. Mitch Daniels and a legislative commission, according to local State Representatives Dave Wolkins and Bill Ruppel.
Wolkins and Ruppel discussed the state's tax dilemma Wednesday with a group of county residents at a town hall meeting at the North Webster Community Center.Tuesday, a panel of state legislators voted on a plan that would cut property taxes by 50 percent next year. Last month, Daniels presented his own plan which would cut property taxes by about one-third. The plans both include 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 costs currently paid locally, including school operating and transportation funds and care for abused, neglected and delinquent children. To cover the state's new costs, Daniels suggests a 1-cent increase in the state sales tax.
The legislative plan proposes that the state take over some of the same costs as Daniels' plan with the exception of the school transportation fund. The legislative plan also relies on increased local option income taxes to help provide the 50-percent property tax decrease. Under the legislative plan, a home valued at $100,000 in a district with an average tax rate would pay $598 in property taxes as opposed to $1,230 currently.
Both plans would require an amendment of the state constitution, which currently requires all tax rates to be equal for all property. Ruppel said he will file a bill Nov. 20 to remove Article 10 Section 1 from the constitution to allow for the caps specified in both proposed property tax plans.
Both Wolkins and Ruppel said they prefer eliminating property taxes altogether. However, if enough support cannot be found to repeal property taxes, the representatives said they favor the governor's plan over the legislative plan.
Wolkins said the legislative plan would not be good for Kosciusko County. "It's main revenue source is the local option income tax," he said.
Wolkins said, with a 1-percent cap on all residential property, Kosciusko County would lose a large amount of revenue because of the large number of second homes and lakehouses owned by people living outside the county. To replace that revenue, the county would be forced to significantly raise income taxes.
"Everyone's savings would be paid for by the people here," Wolkins said.
Turkey Creek Township Assessor Patty Gammiere attended Wednesday's meeting and asked the representatives how much savings the property tax plans really represent.
"With an increase in income tax or increase in sales tax, isn't that going to cut into our savings?" she said. "Actually, we're not saving a whole lot."
"This is going to be a tax shift," Ruppel said. He said the only way to reduce the amount of tax revenue collected is to cut public services and decrease government spending.
"Everybody wants lower property tax and lower income tax. Tell us what you're willing to give up that we can take off the tax rate," he said.
Several questioned whether the tax shift away from property taxes would shift too much of the burden onto the working poor. Wolkins said it might be necessary to create exceptions to ensure that doesn't happen.
Both property tax proposals call for the elimination of elected assessors to be replaced with one county assessor. The governor's plan calls for the centralized position to be appointed, and the legislative proposal calls for an elected position.
Kosciusko County Councilwoman Charlene Knispel said she is opposed to eliminating the elected township assessors.
"This is taking away local control and I don't like that," Knispel said.
Gammiere said eliminating the local officials will not be popular with area residents.
"The people I deal with in my office don't want to go to Warsaw to talk about their homestead credit and assessments," she said.
The next state legislative session is scheduled to begin Jan. 7. Ruppel said the property tax issue is at the top of the agenda.
