PRINTING CODE. Amendments: Whenever a section of the Indiana Constitution is being amended, the text of the existing provision will appear in this style type, additions will appear in this style type, and deletions will appear in ~~this~~ ~~style~~ ~~type.~~

SENATE ENROLLED JOINT
RESOLUTION No. 1

A JOINT RESOLUTION proposing an amendment to Article 10, Section 1 of the Constitution of the State of Indiana concerning taxation.

SOURCE: CON 10; (08)SJ0001.4.2. -->     SECTION 2. ARTICLE 10, SECTION 1 OF THE CONSTITUTION OF THE STATE OF INDIANA IS AMENDED TO READ AS FOLLOWS: Section 1. (a) Subject to this section, the General Assembly shall provide, by law, for a uniform and equal rate of property assessment and taxation and shall prescribe regulations to secure a just valuation for taxation of all property, both real and personal.
    (b) A provision of this section permitting the General Assembly to exempt property from taxation also permits the General Assembly to exercise its legislative power to enact property tax deductions and credits for the property. The General Assembly may impose reasonable filing requirements for an exemption, deduction, or credit.
     (c) The General Assembly may exempt from property taxation any property in any of the following classes:

        (1) Property being used for municipal, educational, literary, scientific, religious, or charitable purposes.
        (2) Tangible personal property other than property being held as an investment.
        (3) Intangible personal property.
        (4) Tangible ~~real~~ property, including curtilage, used as a principal place of residence by an:
            (A) owner of the property;
            (B) individual who is buying the tangible ~~real~~ property under a contract; or
            (C) individual who has a beneficial interest in the owner of the tangible ~~real~~ property.
    ~~(b)~~ (d) The General Assembly may exempt any motor vehicles, mobile homes (not otherwise exempt under this section), airplanes, boats, trailers, or similar property, provided that an excise tax in lieu of the property tax is substituted therefor.
     (e) This subsection applies to property taxes first due and payable in 2012 and thereafter. The following definitions apply to subsection (f):
        (1) "Other residential property" means tangible property (other than tangible property described in subsection (c)(4)) that is used for residential purposes.
        (2) "Agricultural land" means land devoted to agricultural use.
        (3) "Other real property" means real property that is not tangible property described in subsection (c)(4), is not other residential property, and is not agricultural land.
     (f) This subsection applies to property taxes first due and payable in 2012 and thereafter. The General Assembly shall, by law, limit a taxpayer's property tax liability as follows:
        (1) A taxpayer's property tax liability on tangible property described in subsection (c)(4) may not exceed one percent (1%) of the gross assessed value of the property that is the basis for the determination of property taxes.
        (2) A taxpayer's property tax liability on other residential property may not exceed two percent (2%) of the gross assessed value of the property that is the basis for the determination of property taxes.
        (3) A taxpayer's property tax liability on agricultural land may not exceed two percent (2%) of the gross assessed value of the land that is the basis for the determination of property taxes.
        (4) A taxpayer's property tax liability on other real property may not exceed three percent (3%) of the gross assessed value of the property that is the basis for the determination of property taxes.
        (5) A taxpayer's property tax liability on personal property (other than personal property that is tangible property described in subsection (c)(4) or personal property that is other residential property) within a particular taxing district may not exceed three percent (3%) of the gross assessed value of the taxpayer's personal property that is the basis for the determination of property taxes within the taxing district.
    (g) This subsection applies to property taxes first due and payable in 2012 and thereafter. Property taxes imposed after being approved by the voters in a referendum shall not be considered for purposes of calculating the limits to property tax liability under subsection (f).
     (h) As used in this subsection, "eligible county" means only a county for which the General Assembly determines in 2008 that limits to property tax liability as described in subsection (f) are expected to reduce in 2010 the aggregate property tax revenue that would otherwise be collected by all units of local government and school corporations in the county by at least twenty percent (20%). The General Assembly may, by law, provide that property taxes imposed in an eligible county to pay debt service or make lease payments for bonds or leases issued or entered into before July 1, 2008, shall not be considered for purposes of calculating the limits to property tax liability under subsection (f). Such a law may not apply after December 31, 2019.

The digest explanation of Senate Joint Resolution 1 (and House Joint Resolution 1) is listed next.

For property taxes first due and payable in 2012 and thereafter, requires the General Assembly to limit a taxpayer's property tax liability as follows: (1) A taxpayer's property tax liability on homestead property may not exceed 1% of the gross assessed value of the homestead property. (2) A taxpayer's property tax liability on other residential property (residential rentals, apartments, mobile home land, long term care facilities) may not exceed 2% of the gross assessed value of the other residential property. (3) A taxpayer's property tax liability on agricultural land may not exceed 2% of the gross assessed value of the property that is the basis for the determination of the agricultural land. (4) A taxpayer's property tax liability on other real property may not exceed 3% of the gross assessed value of the other real property. (5) A taxpayer's property tax liability on personal property may not exceed 3% of the gross assessed value of the taxpayer's personal property that is the basis for the determination of property taxes within a particular taxing district.

Specifies that property taxes imposed after being approved by the voters in a referendum shall not be considered for purposes of calculating the limits to property tax liability under these provisions.

Provides that in the case of a county for which the General Assembly determines in 2008 that limits to property tax liability are expected to reduce in 2010 the aggregate property tax revenue that would otherwise be collected by all units and school corporations in the county by at least 20%, the General Assembly may provide that property taxes imposed in the county to pay debt service or make lease payments for bonds or leases issued or entered into before July 1, 2008, shall not be considered for purposes of calculating the limits to property tax liability. Specifies that such a law may not apply after December 31, 2019.

Permits the General Assembly to exempt a mobile home used as a homestead to the same extent as real property.

Specifies that an exemption may be granted in the form of a deduction or credit.

Specifies that the general assembly may impose reasonable filing requirements to obtain an exemption, deduction, or credit.

The preceding SJR 1 digest explanation needs some clarification regarding the constitutional homeowner property tax cap amendment.

For property taxes first due and payable in 2012, 90 of Indiana's 92 counties will have a homeowner property tax cap that is 1% of the gross assessed value. Until 2020, existing debt service prior to July 1, 2008, is exempted from the 1% homeowner gross assessed value cap in Lake and St. Joseph counties ONLY. The effect of these two existing debt service exemptions is analyzed next.

LAKE COUNTY SJR 1 EFFECT: If the median-priced home in Lake County is the same as the median-priced home in Indiana, the median-priced home in Lake County is $104,833. The pay 2006 average net homestead property tax rate in Lake County is $2.9281 per $100 of assessed value. Therefore, the typical Lake County working family currently has a $3,069 property tax burden ($2.9281 multiplied by 1,048.33). The Lake County existing debt service averages 30% of total property taxes. Thus, the typical Lake County working family now pays $921 for existing debt service ($3,069 multiplied by 0.3). If the Lake County working family lived in any other county (besides St. Joseph County), their 1% property tax cap would lower their property tax burden from $3,069 to $1,048 ($104,833 multiplied by 0.01). However, because the working family lives in Lake County, their after-cap property tax burden will be $1,969 ($1,048 plus $921) instead of $1,048 - an 88% increase.

ST. JOSEPH COUNTY SJR 1 EFFECT: If the median-priced home in St. Joseph County is the same as the median-priced home in Indiana, the median-priced home in St. Joseph County is $104,833. The pay 2006 average net homestead property tax rate in St. Joseph County is $2.3105 per $100 of assessed value. Therefore, the typical St. Joseph County working family currently has a $2,422 property tax burden ($2.3105 multiplied by 1,048.33). The St. Joseph County existing debt service averages 22.5% of total property taxes. Thus, the typical St. Joseph County working family now pays $545 for existing debt service ($2,422 multiplied by 0.225). If the St. Joseph County working family lived in any other county (besides Lake County), their 1% property tax cap would lower their property tax burden from $2,422 to $1,048 ($104,833 multiplied by 0.01). However, because the working family lives in St. Joseph County, their after-cap property tax burden will be $1,593 ($1,048 plus $545) instead of $1,048 - a 52% increase.

What it all boils down to is that the constitutional homeowner property tax cap amendment for 90 counties is 1% of the gross assessed value while the caps for Lake and St. Joseph counties are 1.88% and 1.52% respectively. The caps for Lake and St. Joseph counties will become 1% in 2020.

Even though the beginning homeowner property tax caps are more in Lake and St. Joseph counties, the caps will result in a 2010 property tax reduction of 36% for the typical Lake County working family and a 34% reduction for the typical St. Joseph County working family.

The preceding SJR 1 digest explanation needs some clarification regarding the exemption that may be granted in the form of a deduction or credit.

Part (b) of the SJR 1 amendment to Article 10 Section 1 of the Indiana Constitution reads:

(b) A provision of this section permitting the General Assembly to exempt property from taxation also permits the General Assembly to exercise its legislative power to enact property tax deductions and credits for the property. The General Assembly may impose reasonable filing requirements for an exemption, deduction, or credit.

Parts (c) and (d) of the constitutional amendment list what classes of property the General Assembly is permitted to exempt from taxation:

(c) The General Assembly may exempt from property taxation any property in any of the following classes:
     (1) Property being used for municipal, educational, literary, scientific, religious, or charitable purposes.
     (2) Tangible personal property other than property being held as an investment.
     (3) Intangible personal property.
     (4) Tangible ~~real~~ property, including curtilage, used as a principal place of residence by an:
          (A) owner of the property;
          (B) individual who is buying the tangible ~~real~~ property under a contract; or
          (C) individual who has a beneficial interest in the owner of the tangible ~~real~~ property.
~~(b)~~ (d) The General Assembly may exempt any motor vehicles, mobile homes (not otherwise exempt under this section), airplanes, boats, trailers, or similar property, provided that an excise tax in lieu of the property tax is substituted therefor.

Because part (c) (2) permits the General Assembly to exempt from taxation tangible personal property other than property being held as an investment, the constitutional amendment permits the General Assembly to enact property tax deductions and credits for most tangible personal property including manufacturing equipment, construction equipment, and farm equipment. The constitutional amendment gives the business and farm communities new possibilities for property tax reduction.

Because part (c) (4) permits the General Assembly to exempt principal places of residence from taxation, the following homeowner property tax deductions become constitutional: $45,000 homestead standard, 35% supplemental standard, mortgage, 65 or over, blind or disabled, partially disabled veteran - service connected, disabled veteran, rehabilitation, solar energy, wind-powered devices, hydro-electric power device, geothermal energy.