Major property tax relief plan offers mixed blessing

By Brigid Curtis Ayer

Indiana lawmakers reached a property tax relief agreement on March 14 which delivers a mixed blessing of property tax relief to homeowners, help for seniors and tax credits for lower income families, but opponents question the plan’s impact on local governments and schools.

While property tax and immigration reform were among the top priorities of the Indiana Catholic Conference, the ICC followed these issues with an eye on how the proposals might hurt lower income or immigrant families and children, and how these reforms would affect the common good of all Hoosier families.

The property tax relief plan contained in the conference committee report on House Bill 1001 received bipartisan support, and passed the House 82-7 and the Senate 41-6.

Rep. Jeff Espich (R-Uniondale), one of the chief negotiators of the proposal, called the bill “a solution to one of the toughest issues we’ve ever dealt with in the General Assembly.”

Rep. Espich said the bill gives tax relief and tools for local communities to deal with the tax caps. He called the plan “taxpayer friendly” and “community friendly.”

Rep. Brian Bosma (R-Indianapolis), House minority leader, called the plan “the strongest property tax relief measure in two generations.”

Rep. Russell Stillwell (D-Boonville), summed up the proposal this way: “There is pain and there is gain for Hoosiers across the state.”

He then asked, “Is there more pain or more gain?”

Rep. David Orentlicher (D-Indianapolis), raised concerns about the impact to his local school district, which would be losing money due to lower enrollments.

Rep. Vernon Smith (D-Gary), praised many aspects of the proposal, but said, “It lacks equity.”

And Rep. Smith said he has a “great concern” for the $10 million cut to the Gary schools.

Rep. Dennis Avery (D-Evansville), said the plan was “not fair,” and said he would be voting “no.”

Rep. William Crawford (D-Indianapolis), chairman of the House Ways and Means Committee and also chief negotiator of the plan, outlined the many pluses of the bill.

“We don’t have perfection, but we do have property tax reform,” he said.

The three provisions that the ICC supported to help low income families included increasing the state earned income tax credit (EITC), increasing the renter’s deduction, and helping the elderly on fixed incomes, which were added to the final property tax relief plan.

Rep. John Day (D-Indianapolis), a longtime advocate for raising the earned income tax credit, said, “The beauty of the EITC is it rewards working people.

“President Reagan called the earned income tax credit the best anti-poverty, pro-family program he’d ever seen, and I agree,” he added.

The state earned income tax credit will increase from the current 6 percent to 9 percent. The increase in the sales tax from 6 percent to 7 percent has a disproportional effect on the poor, some lawmakers said.

“Lower income families pay more in sales tax than do higher income families,” Rep. Day said. “For example, a family with an income of $20,000 will pay twice as much in sales tax as a family earning $60,000. There is an issue of tax fairness here for lower to moderate income families.

“On the other hand, the earned income tax credit is gold. It’s fair,” Rep. Day said. “Talk about family values; this is the way to go.”

Seniors on fixed, lower incomes also benefit. Homeowners age 65 or older with an income of $30,000 for an individual or $40,000 for a couple, with a home at an assessed value of $160,000 or less, will have a more stringent property tax cap.

In addition to the 1 percent cap on their home’s assessed value, their property taxes would not increase more than 2 percent per year.

Glenn Tebbe, Indiana Catholic Conference executive director, who serves as official spokesman on public policy matters for Indiana’s bishops, said, “In the areas of property tax relief and immigration reform, we tried to accomplish a ‘do no harm’ policy.

“We wanted to make sure lower income families were not forgotten in the equation of providing property tax relief to homeowners and that some of their needs would be addressed,” Tebbe said. “On immigration reform, we did not want the state to enact an immigration policy which would harm those of the immigrant community—legal or illegal.”

The property tax relief plan contained in the conference committee report of House Bill 1001 has been sent to Gov. Mitch Daniels, who is expected to sign the bill into law.

(Brigid Curtis Ayer is a correspondent for The Criterion.) †