Our Senate tax plan — increasing immediate, direct relief to $870 million and implementing property tax cuts, permanent caps and government spending controls — is finally law! This historic tax overhaul should “hit home” with most Hoosier homeowners who are expected to see a nearly 27-percent average decrease in property taxes in 2008 and approximately 38 percent by 2010.
•Cuts in Property Taxes: House Enrolled Act 1001 removes $1 billion in school and local government costs from the backs of property taxpayers — including farmers and businesses — while maintaining local control of our schools.
•Caps on Property Taxes: We phase in by 2010 a 1 percent property tax cap on owner-occupied homes, 2 percent on other residential and agricultural properties and 3 percent on businesses. Only local taxpayers — not government — can exceed these “circuit breakers.” Because schools have no other substantial revenue, our plan sets aside $120 million to help them live within the caps and $400 million for economic “rainy days.” The phase-in allows time for local government officials to identify and implement new efficiencies. Distressed local governments can appeal to the state for help.
•Controls on Government Spending: All taxes result from government spending. Property taxes are determined, collected and spent at the local level. Unfortunately, statewide figures show local levies have outpaced inflation by more than two to one. HEA 1001 requires voter referenda on major school and government construction projects. Petition-remonstrance procedures remain in effect for smaller construction projects. The bill closes loopholes used by locals to increase property taxes and provides greater scrutiny of local budgets.
•Constitutional Guarantee: Historically, whenever we’ve raised other taxes to reduce property taxes, the reductions were temporary. Property taxes returned to previous levels, while other increased taxes remained. To prevent this “creep” in the future, our plan includes an amendment to Indiana’s Constitution making the 1-2-3 caps permanent. This constitutional amendment will require passage again in 2009 or 2010 by a separately elected legislature, then approval by Indiana voters.
Sen. David Long (R-Fort Wayne) is President Pro-Tem of the Indiana Senate. He serves District 16, which includes portions of Fort Wayne.
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