2008 Property Tax Legislation Testimonies

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Listed next are the testimonies made by Watchdog Indiana at 24 public hearings to 5 Indiana General Assembly committees on 9 bills and 3 resolutions related to 2008 property tax reform.

House Joint Resolution 1
Circuit Breaker

TESTIMONY #20 - January 23, 2008 - House Ways and Means Committee

The "uniform and equal" clause in Article 10 Section 1 of the Indiana Constitution is the root of all property tax evil.

Most Hoosier working families for many years approved of, or at least accepted, a property tax system where older homes were assessed lower than newer homes. The lower assessments on the older homes were rationalized by the assertion that older homes cost more to maintain. Since a large number of older home occupants are retired or have lower incomes, the application of the property tax system was generally deemed to be fair.

Some who felt they were losers under the broadly accepted property tax system successfully took legal action using the "uniform and equal" clause to create the market trending mess that we have today. Now we have special interests signaling their intention to abuse homeowners further by using the "uniform and equal" clause to overturn the meaningful property tax reform proposed by the governor.

Please refer to the proposed constitutional amendment in your handout. The archaic requirement for a uniform and equal rate of property assessment and taxation is eliminated. The "uniform and equal" clause does nothing more than ensure hefty legal fees for the lawyer surrogates of those special interests intent on thwarting legitimate attempts at property tax reform. If the General Assembly deems it necessary, it can pass legislation to ensure a just valuation for property taxation.

The Indiana Constitution should give the General Assembly the same degree of freedom to manage the property tax as it does to manage the income tax. Section 1 (a) of the proposed constitutional amendment in your handout is patterned after the existing Constitution Article 10 Section 8, which gives the General Assembly authority to impose income taxes however it sees fit.

Section 1 (a) of the proposed constitutional amendment gives the General Assembly the option to both eliminate and impose property taxes. No state has completely eliminated property taxes. Therefore, all the unintended consequences from the elimination of property taxes cannot be identified. The General Assembly needs the option to reimpose property taxes if unintended consequences from property tax elimination make it necessary to do so.

Some say a constitutional amendment that allows the General Assembly to eliminate property taxes is unnecessary because it is impractical to eliminate property taxes. The fallacy of this position is exposed when one analyzes the income tax rate equivalent spent by individual income tax payers to pay their property tax bills. The Jeff Thompson Property Tax Reform Plan described in your handout shows that it is indeed practical and possible to use mandatory variable local income taxes to eliminate the property tax for homeowners and small businesses.

Of course, there is the possibility the General Assembly will not be wise enough to implement the Thompson Plan or another equally effective property tax elimination plan. Therefore, to ensure enduring homeowner property tax relief, a provision that permanently caps any homeowner property tax at one percent of assessed value is included in Section 1 (b) of the proposed constitutional amendment in your handout.

A one percent homeowner property tax cap is needed to end the legacy of failure where (1) Hoosier working families suffer permanent tax increases for temporary property tax relief and (2) property tax caps disappear.

The one percent cap makes meaningful those property tax relief provisions such as circuit breaker credit increases, an additional homestead standard deduction, an additional 2008 homestead credit, elimination of homestead and property tax replacement credits, and elimination of property tax levies. Without the one percent cap, the homeowner property tax relief efforts currently being considered would be Taxpayer UNfriendly.

In conclusion:

The archaic requirement for a uniform and equal rate of property assessment and taxation must be removed from the Indiana Constitution.

The General Assembly must have the authority to both eliminate and impose property taxes.

The foundation for genuine homeowner property tax relief is a constitutional provision that permanently caps any homeowner property tax at one percent of assessed value. The one percent cap would let Hoosier working families know the maximum property tax they will have to pay on their homes and provide reassurance that property taxes will be less likely to become an unaffordable burden. A legislator who supports the one percent cap is part of the solution; otherwise the legislator is part of the problem.

STATUS: House Joint Resolution 1 was passed out of the House Ways and Means Committee by a 22-1 vote on January 24.

House Bill 1001
Property Tax Relief

TESTIMONY #1 - December 3, 2007 - House Ways and Means Committee

Mr. Chairman, members of the committee, thank you for this opportunity to express my opinions regarding House Bill 1001.

My name is Aaron Smith. I created and maintain the Watchdog Indiana web site. Watchdog Indiana focuses on the state and local tax burden of Hoosier working families. Watchdog Indiana provides a rating for each General Assembly legislator based solely on votes that affect the state and local tax burden. Information related to results-oriented, compassionate, and fiscally conservative state and local government is sent periodically via E-mail Updates to 10,865 Hoosiers.

Mr. Chairman, I have a handout that accompanies my remarks. May I distribute it at this time?

Some provisions in HB 1001 are taxpayer friendly, some can be taxpayer friendly, and one is taxpayer UNfriendly. The taxpayer friendly provisions will be addressed first.

The maximum property tax levy limit in HB 1001 is taxpayer friendly. It is appropriate for the budget, rate and levy increase of any county’s taxing unit to be limited to the six-year average increase in personal income within that county. Government spending limits based on local conditions are an improvement over the current limits based on statewide nonfarm personal income. Of course, it is usually best when per capita government spending is more in line with inflation increases than income increases.

HB 1001 moves the review and certification of property tax budgets, rates and levies from the Department of Local Government Finance to the local county level. This taxpayer friendly approach can be improved. The review and certification duties should be conducted by the existing county council instead of a new county board of tax and capital projects review. In fact, all county tax board duties in current legislation should be moved to the county council and the county tax boards eliminated. It is appropriate that the county council be the last resort for fiscal review within a county. County tax boards are little more than an unneeded level of government bureaucracy.

The HB 1001 referendum requirements are taxpayer friendly.

The referendum requirement before a taxing unit can exceed the maximum property tax levy limit is excellent. Any opposition to referendum in favor of less restrictive political maneuvering defies the principle that voting best reflects the combined wisdom of a community.

HB 1001 requires a referendum on bond issues and lease agreements that will cost a taxing unit an amount equal to at least the lesser of 1%of a taxing unit’s total net assessed value or $10 million. I reside in the city of Lebanon, which has a total net assessed value of more than $652 million and a population a little more than 15,000. One percent of $652 million equates to a debt issue of more than $6.5 million, which is a reasonable referendum trigger for Lebanon. However, the referendum trigger requirement should be changed from a basis of total net assessed value to a basis of per capita population. A referendum trigger of $400 per capita would equate to a $6 million debt issue in Lebanon. Using a referendum trigger of $400 per capita would allow a referendum on any qualifying debt issue, whether paid for by a property tax levy or an income tax levy.

Elected county and township assessors are eliminated by HB 1001 and replaced by a county assessor appointed by the county council. Turning assessment over to professionals chosen for their resumes, rather than politicians chosen for their connections, is a taxpayer friendly decision that can be expected to make assessment more efficient and consistent.

That great political scientist, Groucho Marx, once observed that "Politics is the art of looking for trouble, finding it everywhere, diagnosing it incorrectly and applying the wrong remedies." When it comes to wrong property tax remedies, Indiana’s general assemblies and governors have a considerable track record.

Tax increases that were supposed to provide homeowner property tax relief have become permanent while the promised tax relief has disappeared. Hoosier working families were mislead into believing the December 1, 2002, sales tax increase from 5% to 6% would be used to lower homeowner property taxes. But the real truth is that a promised 16.3% homeowner property tax reduction has become a decrease of just 2.4% in only four years. Also, Hoosier working families who own their home in 42 counties had their individual income taxes increased in lieu of 4.3% property tax increases from the 2007 inventory tax shift. Furthermore, legislation already in place would result in a Pay 2009 homeowner property tax increase of 13.7%.

The state’s one attempt at residential property tax caps was a miserable failure. With much fanfare in the election year of 2006, a property tax cap was passed on all forms of residential property equal to 2% of the gross assessed value beginning in 2007 for Lake County and 2008 for all other counties. The 2% cap, which would have reduced revenues for local taxing units and school corporations in affected counties, was to apply to all other real and personal property beginning with taxes payable in 2010. However, a number of unpublicized provisions were passed this year to just about eliminate the 2% cap. Cap relief will decrease from $162 million to $4.4 million in 2008, from $162 million to $9.5 million in 2009, and from $575 million to $100.6 million in 2010.

If there is no amendment to Indiana’s Constitution, HB 1001 will continue the legacy of failure where Hoosier working families suffer permanent tax increases for temporary property tax relief and property tax caps disappear. The taxpayer friendly constitutional amendment in Senate Joint Resolution Number 1 is necessary for enduring property tax relief. SJR 1 makes meaningful the HB 1001 provisions for circuit breaker credit increases, an additional homestead standard deduction, an additional 2008 homestead credit, elimination of homestead and property tax replacement credits, and elimination of property tax levies. Without the passage of SJR 1, HB 1001 is taxpayer UNfriendly.

SJR 1 can be improved. Article 10 Section 1 of Indiana’s Constitution, which relates to property taxation, should be amended to mirror Article 10 Section 8, which allows income taxation, as follows:

"The General Assembly may levy and collect a tax upon property, from whatever source derived, at such rates, in such manner, and with such exemptions as may be prescribed by law. If the General Assembly does levy a tax upon the tangible property, including curtilage, used as a principal place of residence by an owner of the property, individual who is buying the tangible property under a contract, or individual who has a beneficial interest in the owner of the tangible property, the General Assembly shall, by law, exempt the tangible property from tax liability that exceeds one percent (1%) of the assessed value of the property that is the basis for the determination of property taxes."

This SJR 1 improvement removes the constitutional requirement for a uniform and equal rate of property assessment and taxation. This archaic requirement unfairly thwarts legitimate attempts at property tax elimination or relief. The General Assembly can still pass legislation to ensure a just valuation for property taxation.

The HB 1001 sales tax increase is taxpayer UNfriendly.

The sales tax is regressive, because the share of income it takes to pay the sales tax goes up as incomes go down. Larry DeBoer, Purdue Agricultural Economics Professor, researched the last statewide sales tax increase five years ago. He found that a Hoosier working family of four with a $50,000 income pays 2.6% a year in sales taxes. The percent of family income spent on sales taxes goes up to 3.8% for a family of four with a $25,000 income.

Some consider the sales tax to be a consumption tax that is considered a fair tax. The Fair Tax, which has been in the news a lot lately, is a consumption tax scheme that provides a monthly universal "prebate" to ensure that each family can consume tax free at or beyond the poverty level. Unlike the sales tax, the Fair Tax is meant to be progressive in application. The sales tax is regressive and imposes a disproportionate burden on lower income working families.

The HB 1001 sales tax increase should be replaced with an income tax increase. Instead of increasing the statewide sales tax from 6% to 7%, the same revenue should be raised by increasing the statewide individual income tax rate from 3.4% to 4.1%. The renters deduction should be increased from $2,500 to $3,000.

Luke 12:48 reads "From everyone who has been given much, much will be required; and to whom they entrusted much, of him they will ask all the more." Indiana’s individual income tax is consistent with this biblical message because it is a flat tax based on the ability to pay – those who earn more are required to assume a larger share of the tax burden. When contrasted with the regressive sales tax, the virtue of the Indiana individual income tax is evident.

I recently received an E-mail in response to my support of using variable local income taxes to eliminate the property taxes paid by individual income tax payers. The E-mail sender wrote:

"Absolutely absurd! I have lived frugally and saved a little from my taxed income and retired comfortably to a downsized home and keep utility bills low, etc. As a result, my retirement income is relatively high with pension, interest, investments, and social security. Now you are going to propose RAISING my tax with some ‘sympathy’ argument for deadbeat, SUV-driving, 80-degree-houses-in-the-winter, mortgages-way-over-their-heads, credit-card-to-the-max, multiple-picture-phones, gadget-loving, divorced nihilists? I don't think so."

When first considered, the E-mail sender might seem to present a legitimate point of view. However, when one reviews the reality of our property tax relief, the comments have a mean-spirited edge. Sales tax revenue currently provides most of the property tax replacement and homestead credits enjoyed by the E-mail sender. The E-mail sender readily accepts this property tax relief even though some of it is provided by retirees, low-income families, renters, and small business owners who bear a disproportionate share of the sales tax burden. Some Hoosiers need to appreciate how the income tax can be used to provide their own property tax relief to the point where they have the ability to pay.

The appropriateness of an individual income tax increase instead of a sales tax increase is more apparent when you consider that the average Hoosier working family today spends 4.1% of its paycheck on property tax. This 4.1% is in addition to the current statewide income tax rate of 3.4%. Please refer to the handout that you received earlier to see on how I compute the average income tax rate equivalent that is required for individual income tax payers in each county to pay their property tax.

Increasing the statewide individual income tax rate would, in effect, eliminate the property tax levies in HB 1001 by just using 0.7% of the 4.1% that working families already spend on property tax. Thanks to one of your own on this committee, State Representative Jeff Thompson, the Legislative Services Agency is preparing the legal language necessary for Hoosier working families to use the remainder of the income they already spend on property taxes to eliminate their property tax burden entirely.

Furthermore, everyone already recognizes that HB 1001 property tax caps will make local income tax increases necessary. HB 1001 includes a provision where a county can impose a local option individual income tax rate up to 1% for revenue replacement. It is not right for the General Assembly to increase the regressive sales tax at the same time it allows an increase in the one tax based on the ability to pay.

In summary:

The maximum property tax levy limit is taxpayer friendly.

The taxpayer friendly local review and certification of property tax budgets, rates and levies should be conducted by the existing county council instead of a new county board of tax and capital projects review.

The HB 1001 referendum requirements are taxpayer friendly. However, the referendum trigger for bond issues and lease agreements should be $400 per capita to allow a referendum on any qualifying debt issue, whether paid for by a property tax levy or an income tax levy.

Replacing county and township assessors with a county assessor appointed by the county council is taxpayer friendly.

Passing the constitutional amendment in SJR 1 is necessary for HB 1001 to be taxpayer friendly and end the legacy of property tax relief failure. However, SJR 1 should be improved to give the General Assembly the unquestioned authority to eliminate property taxes.

The taxpayer UNfriendly statewide sales tax increase from 6% to 7% should be replaced by taxpayer friendly increases in (1) the statewide individual income tax rate from 3.4% to 4.1% and (2) the renters deduction from $2,500 to $3,000.

Thank you again for this opportunity to express my opinions regarding House Bill 1001. Are there any questions?

TESTIMONY #21 - February 5, 2008 - Senate Tax and Fiscal Policy Committee

The amended governor's property tax relief plan in HB 1001 was passed out of the Indiana House on January 24 by a vote of 93-1. The only vote against HB 1001 was cast by State Representative Craig Fry, who called the legislation "garbage."

There is only one thing that would keep HB 1001 from being the same old, same old "garbage" – a constitutional amendment that permanently caps any homeowner property tax at 1% of assessed value.

The one percent cap makes meaningful those property tax relief provisions such as circuit breaker credit increases, a homestead supplemental deduction, and selected property tax levies elimination paid for by a sales tax increase, a local option income tax increase, and the elimination of homestead and property tax replacement credits. Without the one percent cap, the homeowner property tax relief efforts in HB 1001 would be Taxpayer UNfriendly.

However, there is a problem. The House Republican leadership has decided to appease the Indiana Manufacturers Association, the Indiana Chamber of Commerce, and Eric Miller with their back door efforts to defeat the constitutional amendment for a one percent homeowner property tax cap. The uncertain passage of the one percent cap amendment makes the business-as-usual HB 1001 unacceptable.

The shortcomings of HB 1001 are also evident when one reads the following letter to the Lebanon Reporter that was recently published under the heading "Taxed-out:"

"To the editor:

We are senior citizens on a fixed retirement income. We tried to plan for our retirement. We paid off our mortgage and cars, saved and worked hard for many years.

Now I am 72 and still work part-time. Social Security each year takes more deductions for Medicaid. My retirement plan has more deductions for the health insurance and prescriptions. We now have a lower retirement income coming in than a few years ago.

But the gas company added $50 to last month's bill for "delivery." Delivery is through a pipe in the ground that has been there for years. If we eat out (rarely), they add a "Lucas Oil Stadium" tax and "Boone County tax" to our bill.

Our federal, state and county taxes have all gone up - but not our income. Our property tax went up 300 percent this year.

Now, we get a $15 per month storm drain bill. That is $180 a year on a senior's fixed income. It is the last straw. We have always had to budget. Local, state and federal governments need to budget also, not add more taxes or bills.

At 72, I still work a part-time job for some gas money and because I enjoy going to auctions or sales a few times a month.

If my health gets worse s I age I will not even be able to do that. We cannot work overtime for extra money, or a second job, at our age. Plus, our cost of living for groceries, gas, doctors, prescriptions, etc., have all gone up."

Signed: Bill Owen, Lebanon

HB 1001 does little for Mr. Owen. His property taxes have already increased 300 percent, and he deserves more than modest relief from his already inflated property tax bill.

Mr. Owen deserves serious consideration of the new ideas in House Bill 1338, the Jeff Thompson Property Tax Reform Plan. HB 1338 would eliminate Mr. Owen’s property tax payments in return for variable local income tax payments. A comparison of HB 1001 with HB 1338 reveals why the Thompson Plan is so appealing.

HB 1001 is a Rube Goldberg contraption that is 935 pages long. HB 1338 is only 68 pages of new problem-solving approaches.

HB 1001 uses the 1%-2%-3% property tax caps approach that will result in considerable revenue shortfalls for local taxing units in some counties. HB 1338 uses variable local income taxes to ELIMINATE homeowner, small business, and farm property taxes while replacing local revenue dollar-for-dollar. The income that Hoosier working families now spend to pay their property tax is used to eliminate their property tax. Income tax, unlike property tax, is based on the ability to pay. For most families, their mortgage payments will decrease by the same amount their local income tax will increase.

Under HB 1001, the state assumes some school and child welfare levies in return for eliminating the state-paid homestead and property tax replacement credits. HB 1338 retains local control over the school and child welfare levies while using the eliminated state-paid homestead and property tax replacement credits to reduce the statewide individual income tax rate from 3.4% to 1.7%.

HB 1001 increases the regressive statewide sales tax from 6% to 7% on April 1, 2008, while HB 1338 does not. Largely because HB 1338 does not increase the sales tax, the 2008 property tax relief provided by HB 1338 is 700 million dollars less than HB 1001. However, this is a small price for Hoosier working families to pay in return for the elimination of their property taxes beginning in 2009. Also, current state law already has in place an additional 300 million dollars of 2008 property tax relief from slot machine licensing fees and wagering taxes.

Both HB 1001 and HB 1338 use referendums and spending limits to control local government spending. However, HB 1338 does not exempt any school capital project from referendum approval.

Both HB 1001 and HB 1338 protect renters from unfair tax increases.

Included in your information packet is an annotated Question and Answer description that makes it easy to analyze HB 1338.

It has been said: "the man whose head you cannot get a new idea into is usually the same man whose head you cannot get an old idea out of."

I believe that new ideas are important. They inform the head and inspire the heart.

For the sake of 72-year-old Bill Owen and his wife, I implore you to set aside the old ideas in House Bill 1001 and spend twenty minutes of your public service time being inspired by the new ideas in House Bill 1338. Your problem-solving arsenal will be strengthened and all Hoosier working families will benefit.

Thank you again for this opportunity to express my opinions regarding House Bill 1001. If it is appropriate, I welcome any questions?

STATUS: HB 1001 was passed without amendment out of the House Ways and Means Committee by a 24-1 vote on January 17. HB 1001 was amended 27 times on the House floor on January 22. The amended HB 1001 was passed out of the House by a 93-1 vote on January 24.

Senate Joint Resolution 1
Constitutional Amendment for Circuit Breakers and Other Property Tax Matters

TESTIMONY #2 - December 4, 2007 - Senate Tax and Fiscal Policy Committee

The taxpayer friendly constitutional amendment in Senate Joint Resolution Number 1 is necessary for enduring property tax relief. Without SJR 1, the legacy of failure will continue where (1) Hoosier working families suffer permanent tax increases for temporary property tax relief and (2) property tax caps disappear.

SJR 1 makes meaningful those property tax relief provisions such as circuit breaker credit increases, an additional homestead standard deduction, an additional 2008 homestead credit, elimination of homestead and property tax replacement credits, and elimination of property tax levies. Without the passage of SJR 1, the property tax relief efforts currently being considered would be taxpayer UNfriendly.

ARTICLE 10

Finance

Section 1. The General Assembly may levy and collect a tax upon property, from whatever source derived, at such rates, in such manner, and with such exemptions as may be prescribed by law. If the General Assembly does levy a tax upon the tangible property, including curtilage, used as a principal place of residence by an owner of the property, individual who is buying the tangible property under a contract, or individual who has a beneficial interest in the owner of the tangible property, the General Assembly shall, by law, exempt the tangible property from tax liability that exceeds one percent (1%) of the assessed value of the property that is the basis for the determination of property taxes.

This SJR 1 improvement removes the constitutional requirement for a uniform and equal rate of property assessment and taxation. Without this archaic requirement, the General Assembly is free not only to provide property tax relief, but to also eliminate property taxes.

In conclusion, passing the constitutional amendment in SJR 1 is necessary to implement the taxpayer friendly provisions needed to end the legacy of property tax relief failure. However, SJR 1 should be improved to give the General Assembly the unquestioned authority to eliminate property taxes.

TESTIMONY #22 - February 11, 2008 - House Ways and Means Committee

On November 8, 1932, the Indiana Constitution was amended to allow the imposition of an income tax. This amendment is Article 10 Section 8 of the Constitution and consists of the following 31 words: The general assembly may levy and collect a tax upon income, from whatever source derived, at such rates, in such manner, and with such exemptions as may be prescribed by law.

Article 10 Section 1 of the Indiana Constitution, which mandates the imposition of a property tax, was part of the 1851 Constitution and has been amended twice, on November 8, 1966, and November 2, 2004. SJR 1 as passed by the Senate on January 29 again amends the 157-year-old Article 10 Section 1 so that it will total a whopping 453 words.

THERE IS NO DOUBT that if Indiana were to impose a property tax for the first time today, the enabling constitutional amendment would consist of the following simple 31 words: The general assembly MAY levy and collect a tax upon property, from whatever source derived, at such rates, in such manner, and with such exemptions as may be prescribed by law. This rational constitutional amendment gives the General Assembly the same degree of freedom to manage the property tax as it does to manage the income tax. The General Assembly would have the option to impose or eliminate, any or all, property taxes.

Most importantly, the rational property tax amendment eliminates the archaic 157-year-old requirement for a uniform and equal rate of property assessment and taxation. The "uniform and equal" clause in Article 10 Section 1 is the root of all property tax evil. In fact, the "uniform and equal" clause probably renders SJR 1 UNconstitutional. There is little doubt the well-funded triumvirate of the Indiana Manufacturers Association, the Indiana Chamber of Commerce, and Eric Miller have lawyer surrogates preparing "uniform and equal" legal obstructions to the governor’s property tax relief plan.

I challenge any and every member of this committee to formally propose the rational property tax amendment for discussion IN THIS COMMITTEE.

Now, having offered this challenge, I know that not one of you has the political will to propose a constitutional amendment that treats property tax rationally. Therefore, I will limit the remainder of my comments to SJR 1 as written.

The SJR 1 provision that permanently caps any homeowner property tax at one percent of gross assessed value is needed to end the legacy of failure where (1) Hoosier working families suffer permanent tax increases for temporary property tax relief and (2) property tax caps disappear.

At this time, I wish to address some comments to the Republican members of this committee.

This document is titled "CUT NOW. CAP FOREVER. IMMEDIATE Relief. PERMANENT Reform. 2008 House Republican Standards for Success." Item 3 reads "Permanent 1% of Assessed Valuation Homestead Cap. Actions: Cap homeowner’s property taxes at no more than 1% of their home’s assessed value through the adoption of a constitutional amendment. House Republicans believe no Hoosier homeowner should pay more than 1% of their home’s value in property taxes. A vital component of this reform includes the constitutional permanency of this cap. This provision will provide $215 million in savings to homeowners beginning in 2009."

Needless to say, I was dismayed when twelve House Republicans offered seventeen floor amendments on January 30 to House Joint Resolution 1 that had nothing whatsoever to do with supporting a constitutional amendment for a one percent homeowner property tax cap. I trust no such marriage definition, state spending growth limit, total property tax elimination, homeowner property tax elimination, rental property cap lowering amendments will be made in the future to cause Senate Joint Resolution 1 to be withdrawn.

I know that some House members on January 30 did not know the Senate Republican leadership announced on January 22 that they decided in caucus to not support homeowner property tax elimination this year. Therefore, it is not appropriate for us property-tax-eliminating proponents to interfere with the one percent constitutional cap. We can still work to have the Jeff Thompson Property Tax Reform Plan language in House Bill 1338 included in this session’s property tax legislation. Your information packet contains the information necessary for you to understand the Thompson Plan.

Last Friday I listened to various school officials bemoan the fact that they have driven the property tax gravy train off the track. There was one thing missing amongst all the dire predictions of school funding shortfalls caused by property tax caps – where was the with spreadsheet showing the local option income tax rates authorized by HB 1001 to replace the school revenue lost from application of the property tax caps?

There are those who fear that a local income tax increase is the kiss of political death because of the recent Indianapolis mayoral election. They mistakenly believe that local revenue shortfalls from the one percent cap cannot be made up by local income tax increases.

Local income tax increases WILL be supported to provide essential services if there is a permanent one percent cap to prevent burdensome property tax increases like those in Indianapolis. Taxes based on the ability to pay will always be preferred by informed Hoosiers. In fact, when it is universally known that the average Hoosier working family today spends about 4.1 percent of its paycheck on property tax, support will grow for homeowner property tax elimination using the household income already spent on property taxes. Again, I refer you to the Thompson Plan in your information packet. The Thompson Plan imposes mandatory variable local income taxes to eliminate homeowner, small business, and farm property taxes. The replacement revenue problem for schools and local governments is solved.

Next, I want to address the ridiculous notion that the Article 10 Section 1 constitutional amendment in SJR 1 is unconstitutional because it conflicts with Article 8 Section 1. Article 8 Section 1 states that it shall be the duty of the GENERAL ASSEMBLY to provide a general and uniform system of common schools equally open to all. Article 10 Section 1 state that the GENERAL ASSEMBLY shall provide taxation of all property. The GENERAL ASSEMBLY is the governmental body charged with school and property tax responsibilities. Suit can be brought against the GENERAL ASSEMBLY on constitutional grounds if it fails to meet its responsibilities.

It is absurd to claim that the property tax caps in SJR 1 by themselves prove a constitutional failure. The GENERAL ASSEMBLY would fail only if it fails to provide replacement revenue necessitated by the property tax caps. HB 1001 provides the needed replacement revenue through the local option income tax. Therefore, there is absolutely NO evidence to support the allegation that simply passing the property tax caps in SJR 1 is unconstitutional.

As a final comment, the SJR 1 provision exempting property taxes imposed by referendum from constitutional caps makes sense.

In conclusion:

A rational constitutional amendment that eliminates the archaic requirement for a uniform and equal rate of property assessment and taxation is preferable to SJR 1.

The replacement revenue concerns of schools and local governments are solved by the local option income tax in HB 1001, thereby making SJR 1 constitutional.

The referendum exemption in SJR 1 makes sense.

The foundation for genuine homeowner property tax relief is a constitutional provision that permanently caps any homeowner property tax at one percent of gross assessed value. A legislator who supports the one percent cap is part of the solution; otherwise the legislator is part of the problem.

STATUS: SJR 1 was passed out of the Senate by a 41-7 vote on January 29.

Senate Joint Resolution 3
Constitutional Limits on School Property Tax Levies

TESTIMONY #4 - December 6, 2007 - Senate Appropriations Committee

SJR 3 is taxpayer friendly. Any constitutional amendment that permanently removes property tax levies is welcome.

There will be those who oppose SJR 3 because property tax is eliminated as a possible source of revenue for some school property tax levies. Specifically, some property tax relief opponents fear that it is not politically feasible to raise income taxes to cover budget shortfalls that might result from property tax caps. Their fear would be well-founded if it were business-as-usual.

Business-as-usual has resulted in the legacy of failure where Hoosier working families (1) suffer permanent tax increases for temporary property tax relief and (2) property tax caps disappear. The recent Indianapolis elections are proof that business-as-usual is also a recipe for reelection failure.

The good news is that it no longer has to be business-as-usual. The constitutional amendment for a one percent cap on homeowner property taxes would let Hoosier working families know the maximum property tax they will have to pay on their homes. The one percent cap would provide reassurance that property taxes will be less likely to become an unaffordable burden that could force them out of their homes.

By the way, it would surprise me if any elected official in this political environment seriously supports a property tax scheme that increases the one percent homeowner property tax cap to two percent. A two percent cap will be roundly and justifiably condemned as business-as-usual. The difference between a one percent cap and a two percent cap will cause many Hoosiers make difficult decisions between paying their property tax, not taking their medications, or eating nutritional meals.

A constitutionally-mandated one percent homeowner property tax cap would calm voter passions to the point where income tax increases to provide needed services would receive a fair hearing. School officials should focus on proving their services get results and stop opposing property tax relief.

Senate Joint Resolution 3 is taxpayer friendly and should be passed out of this committee.

TESTIMONY #15 - January 10,2008 - Senate Appropriations Committee

[An amendment was offered that more completely defines the school general operating levies that are constitutionally exempt from property taxation. The amendment also allows local school general operating property tax levies that are approved by local referendum.]

Watchdog Indiana supports local referenda as a means for localities to supplement the school general operating monies provided by the state. The referendum process is the best available means to benefit from the collective wisdom of citizens.

Watchdog Indiana recommends that the constitutional amendment be improved to also exempt school transportation levies from property taxation.

STATUS: The Senate Appropriations Committee adopted the SJR 3 amendment by consent on January 10. The amended SJR 3 was passed out of the Senate Appropriations Committee by a 9-1 vote on January 10.

Senate Joint Resolution 8
Prohibition Against Property Taxation

TESTIMONY #13 - January 8, 2008 - Senate Rules and Legislative Procedure Committee

The constitutional amendments in Senate Joint Resolution 8 are not prudent because they do not give the General Assembly the option to impose property taxes. No state has completely eliminated property taxes. Therefore, all the unintended consequences from the elimination of property taxes cannot be identified. The General Assembly needs the option to reimpose property taxes if unintended consequences from property tax elimination make it necessary to do so.

Listed next is an improved constitutional amendment that gives the General Assembly the option to both eliminate and impose property taxes. This improved amendment is patterned after the section of Indiana’s constitution that allows the General Assembly to impose income taxes.

ARTICLE 10

Finance

The improved constitutional amendment eliminates the archaic requirement for a uniform and equal rate of property assessment and taxation. The uniform and equal clause does nothing more than ensure hefty legal fees for the lawyer surrogates of those special interests intent on unfairly thwarting legitimate attempts at property tax elimination or relief. If the General Assembly deems it necessary, it can pass legislation to ensure a just valuation for property taxation.

The first spreadsheet at http://www.finplaneducation.net/property_tax_math.htm shows that the average Hoosier working family today spends about 4.3 percent of its paycheck on property tax. This 4.3 percent is in addition to the statewide income tax rate of 3.4 percent and local income tax rates.

Watchdog Indiana has developed a Plan for Genuine Homeowner Property Tax Relief that uses the household income already spent on property taxes to eliminate homeowner property taxes. Income taxes, unlike property taxes, are based on the ability to pay.

The Watchdog Indiana Plan, the legal language of which is undergoing revision by the Legislative Services Agency as Preliminary Draft 3914, imposes two mandatory variable local individual income taxes to replace the local property taxes paid by individual income tax payers. The second spreadsheet at http://www.finplaneducation.net/property_tax_math.htm lists the variable local individual income tax rate needed to replace the local property taxes.

The replaced local property tax revenue is the total property tax. Since property tax replacement credits and homestead credits are not deducted, they are eliminated in return for a decrease in the statewide individual income tax rate from 3.4 percent to 1.7 percent.

Included at the bottom of the web page http://www.finplaneducation.net/property_tax_math.htm is a comparison of what the average working family in each county already spends on property tax to the income tax that the family would pay under the Watchdog Indiana Plan. After factoring in the statewide individual income tax rate decrease, the income needed to eliminate the property tax is the same as the income needed to pay it.

Of course, there is the possibility the General Assembly will not be wise enough to implement the Watchdog Indiana Plan or another equally effective property tax elimination plan. Therefore, to ensure enduring homeowner property tax relief, a provision that permanently caps any homeowner property tax at one percent of assessed value is included in the improved constitutional amendment in item one of your information packet.

In conclusion:

The constitutional amendments in Senate Joint Resolution 8 are not prudent because they do not give the General Assembly the option to impose property taxes.

The Indiana Constitution must be amended to give the General Assembly the option to both eliminate and impose property taxes.

Senate Bill 1
Limits on School and Child Welfare Levies

TESTIMONY #5 - December 6, 2007 - Senate Appropriations Committee

Senate Bill 1 is best evaluated by comparing it to House Bill 1001.

HB 1001 terminates school transportation fund levies while SB 1 does not.

HB 1001 levy elimination begins with Pay 2009 property taxes, while SB 1 levy elimination does not begin until Pay 2010.

HB 1001 is more taxpayer friendly than SB 1. SB 1 should not be voted out of this committee.

Status: SB 1 passed out of the Senate Appropriations Committee by an 8-1 vote on January 10.

Senate Bill 12
Excessive Property Taxes Credit

TESTIMONY #3 - December 4, 2007 - Senate Tax and Fiscal Policy Committee

I have one question and a few comments.

First of all, the question. Will SB 12 allow taxing units to petition for relief from the application of the circuit breaker credit to the circuit breaker relief appeal board in calendar year 2010 and later?

[Your answer was SB 12 does not address the circuit breaker relief appeal board and taxing units can continue petitioning for relief in the future.]

Thank you for the answer to this question. Now I have some comments regarding the circuit breaker credit in SB 12.

The circuit breaker relief appeal board is a fox in the taxpayer henhouse.

The seven members of the board include the Director of the Office of Management and Budget or designee as chairperson, the Commissioner of the Department of Local Government Finance or designee, the Commissioner of the Department of Revenue or designee, the State Examiner of the State Board of Accounts or designee, a governor-appointed nominee of the Indiana Association of Cities and Towns, a governor-appointed nominee of the Association of Indiana Counties, and a governor-appointed nominee of the Indiana Association of School Superintendents.

Imagine this scenario. A county or two or more political subdivisions appear before the circuit breaker relief appeal board to request relief because the circuit breaker credit reduced their annual property tax collections by at least two percent. A citizen testifies that the relief should not be provided because the intent of the circuit breaker credit is to protect taxpayers from property tax increases caused by taxing units who refuse to live within their means. Who wins in this scenario? You know who wins. The bureaucrats and special interests on the circuit breaker relief appeal board will always favor the taxing units.

The circuit breaker relief appeal board is symptomatic of what is so bad about Indiana’s property tax system – it is always too cute by half. The circuit breaker relief appeal board should be eliminated. In fact, passage of the constitutional amendment in Senate Joint Resolution 1 will make the board unconstitutional.

My final comment is that SB 12 should be abandoned in favor of House Bill 1001, which implements the improved circuit breaker credit a year earlier.

In conclusion, eliminate the circuit breaker relief appeal board. Implement the improved circuit breaker credit in calendar year 2009 instead of calendar year 2010.

TESTIMONY #19 - January 22, 2008 - Senate Tax and Fiscal Policy Committee

Mr. Chairman, members of the committee, thank you for this opportunity to express my opinions regarding the amendment #2 to Senate Bill 12, otherwise known as the first special interest message delivery of the 2008 General Assembly session.

Mr. Chairman, I have an information packet that accompanies my remarks. May I distribute the packet at this time?

If you don't start at one percent, you won't end at one percent.

The scheme that phases in the governor's constitutionally mandated one percent cap is abhorrently Taxpayer UNfriendly.

A constitution amendment that permanently caps any homeowner property tax at one percent of assessed value is needed to end the legacy of failure where (1) Hoosier working families suffer permanent tax increases for temporary property tax relief and (2) property tax caps disappear.

Some who do not support a constitutional amendment for a one percent homeowner property tax cap are misreading recent political developments. For example, there are those who fear that a local income tax increase is the kiss of political death because of the recent Indianapolis mayoral election. They mistakenly believe that local revenue shortfalls from the one percent cap cannot be made up by local income tax increases.

Local income tax increases will be supported to provide essential services if there is a permanent one percent cap to prevent burdensome property tax increases like those in Indianapolis. Taxes based on the ability to pay will always be preferred by informed Hoosiers. In fact, when it is universally known that the average Hoosier working family today spends about 4.1 percent of its paycheck on property tax, support will grow for homeowner property tax elimination using the household income already spent on property taxes.

A description of the Jeff Thompson Property Tax Reform Plan is included in your information packet. The Thompson Plan imposes mandatory variable local income taxes to eliminate homeowner and small business property taxes. The replacement revenue problem for schools and local governments is solved.

A legislator who supports the one percent cap will be rewarded as a soaring eagle that is part of the solution; otherwise, the legislator will be left behind like a decaying carcass that is part of the problem.

STATUS: SB 12 Amendment # 2 passed by consent in the Senate Tax and Fiscal Policy Committee on January 22. The amended SB 12 passed out of the Senate Tax and Fiscal Policy Committee by a 10-0 vote on January 22.

Senate Bill 13
School Facility Construction and Alteration

TESTIMONY #18 - January 15, 2008 - Senate Tax and Fiscal Policy Committee

SB 13 is Taxpayer Friendly because a school board must decide whether to use standard plans from the Department of Education for the construction of a school building, athletic facility, or school administration building. Property tax savings can be expected from lower architect fees and suppression of the "Taj Mahal" inclination.

One needed SB 13 improvement involves the approval of nonstandard plans by county boards of tax and capital projects review. This and all other county tax board duties should be assigned to county councils and the county tax boards eliminated. County councils should be the last resort for fiscal review within counties. County tax boards are becoming more powerful than county councils and are an unneeded and unwise level of local government bureaucracy.

Senate Bill 14
Elimination of State Property Tax Levies

TESTIMONY #6 - December 6, 2007 - Senate Appropriations Committee

Senate Bill 14 is best evaluated by comparing it to House Bill 1001.

Both SB 14 and HB 1001 eliminate the statewide property taxes imposed for the State Forestry Fund, the State Fair, and the Department of Local Government Finance data base management. However, HB 1001 eliminates these levies starting with Pay 2009 property taxes while SB 14 does not eliminate the levies until 2010.

HB 1001 is more taxpayer friendly than SB 14. SB 14 should not be voted out of this committee.

Status: SB 14 passed out of the Senate Appropriations Committee by a 10-0 vote on January 10.

Senate Bill 15
Property Tax Credit and Deduction Filing Deadlines

TESTIMONY #7 - December 6, 2007 - Senate Appropriations Committee

Extending the property tax credit and deduction filing deadline from June 10 to September 30 appears to be taxpayer friendly. However, the deadline for county auditors to certify their net assessed values would have to be moved from August 1 to November 1 (which is not practical if the Department of Local Government Finance is to have enough time to get their job done). If the August 1 deadline is not moved forward, auditors would be put in the undesirable position of estimating deductions for their certifications.

Taxpayers might be served well by moving to June 10 the March 1 deadline for residence occupation to qualify for deductions the following calendar year. However, there might not be enough time for assessors to assess the value of new residences before their July 1 deadline for certification to the auditors.

The Association of Indiana Counties has affiliate organizations for county auditors and county assessors. Testimony should be solicited from the auditor and assessor organizations about how to best provide property tax service to Hoosier homeowners. Final Appropriations Committee actions on SB 15 should probably be postponed beyond January 10 to best utilize testimony from the auditor and assessor organizations.

TESTIMONY #16 - January 10, 2008 - Senate Appropriations Committee

SB 15 Amendment #5 is taxpayer friendly because it extends the property tax credit and deduction filing deadline from June 10 to October 1 without increasing the 2% maximum amount of assessed value a taxing unit can reduce its Department of Local Government Finance certification to offset any reduced property tax collections from late filings.

Lasting and meaningful property tax reform is like an apple that the General Assembly must eat in nibbles to digest properly. SB 15 is one such nibble.

Status: The Senate Appropriations Committee adopted Amendment #5 by consent on January 10. SB 15 was passed out of the Senate Appropriations Committee by a 10-0 vote on January 10.

Senate Bill 16
Property Tax Assessing Duties

TESTIMONY #14 - January 9, 2008 - Senate Local Government and Elections Committee

The elimination of elected township assessors is taxpayer friendly. Comments made by two current township assessors during this committee’s December 12 public hearing were of particular interest.

One township assessor testified that "nothing teaches you how to set up an office from scratch." The other township assessor stated that "ten different appraisers can give ten different answers." These comments support the point of view that county-wide consolidation can be expected to make assessment more efficient and consistent.

The SB 16 provisions regarding assessor certification are taxpayer friendly.

SB 16 should be improved to eliminate elected county assessors the same as elected township assessors. It would be taxpayer friendly to have all assessment duties performed by professionals chosen for their resumes, rather than politicians chosen for their connections.

I reside in Boone County. My current county assessor is a veteran member of the controlling political party who completed the maximum eight-year term as county clerk and hopped over to the assessor’s office. My county’s property reassessment has not been completed on time supposedly because the prior elected county assessor left such a mess the reassessment could not be completed promptly.

County assessors should be assessment professionals and not political professionals. As included in House Bill 1001, there should be an appointed county assessor where county commissioners nominate three candidates and the county council makes the appointment. The appointed county assessor should serve at the pleasure of the county council.

In conclusion:

The elimination of elected township assessors is taxpayer friendly.

The SB 16 provisions regarding assessor certification are taxpayer friendly.

SB 16 should be improved to eliminate elected county assessors the same as elected township assessors.

Status: SB 16 passed out of the Senate Local Government and Elections Committee by a 5-4 vote on January 9.

Senate Bill 17
Redevelopment Commissions and Tax Increment Financing

TESTIMONY # 10 - December 18, 2007 - Senate Tax and Fiscal Policy Committee

Redevelopment commissions and tax increment financing always help developers while infrequently improving the life of Hoosier working families. The creation of TIFs often result in urban, suburban, or retail sprawl and their accompanying school, fire district and other tax and utility burdens. The jobs created are usually low-pay and low-benefit. TIFs are improperly placed in natural high-growth areas where developers should pay their own way.

SB 17 includes sixteen provisions that limit the operation of redevelopment commissions. Most of these provisions are taxpayer friendly. The most meaningful restriction is including taxes dedicated for a TIF allocation area in the definition of "property taxes" for purposes of the petition and remonstrance process. Another welcome restriction prohibits enlargement of an economic development area unless the original area does not generate sufficient revenue for the project.

In conclusion, the taxpayer friendly provisions in SB 17 should be implemented without amendment by those legislators who cater to developer desires at the expense of Hoosier working families.

TESTIMONY #12 - January 8, 2008 - Senate Tax and Fiscal Policy Committee

Watchdog Indiana opposes Amendment #9 to Senate Bill 17.

One provision of Amendment #9 effectively eliminates petition and remonstrance for Tax Increment Financing bonds. Petition and remonstrance is needed to check the power of developers and their elected cronies to unfairly use TIF districts for developer profit at the expense of working families.

TESTIMONY #23 - February 13, 2008 - House Ways and Means Committee

The important Taxpayer Friendly provisions of SB 17 include those listed next.

(1) The transfer of decision-making authority from the redevelopment commission to the legislative or fiscal body of the city, town, or county for TIF tax abatements, enterprise zone investment deductions, bonds issuance, eminent domain use, federal grants application, and TIF-funded PTRC payments.

(2) The appointment of a school board member to serve as a nonvoting advisor to each redevelopment commission.

(3) The appointment of county redevelopment commission members by both the county executive and the county fiscal body.

(4) The prohibition against enlarging an economic development area unless the original area does not generate sufficient revenue to meet the financial obligations of the project.

(5) The requirement that a redevelopment commission must annually notify the county auditor and the county or municipal fiscal body of the amount of assessed value that may be reallocated from the commission to other taxing units.

(6) The provision that a TIF allocation area resolution must include an expiration date that may not exceed 25 years.

(7) The requirement that new TIF bonds must mature within 25 years instead of 50 years.

(8) The provision that TIF funds may only be used for local public improvements physically located in, or physically connected to, the allocation area.

Redevelopment commissions and tax increment financing always help developers while infrequently providing full-benefit jobs that pay a living wage to Hoosier working families. The creation of TIFs often result in urban, suburban, or retail sprawl and their accompanying school, fire district and other tax and utility burdens. TIFs are improperly placed in natural high-growth areas where developers should pay their own way.

The Taxpayer Friendly provisions of SB 17 help swing the pendulum away from developer enrichment towards Hoosier working family benefit. One important improvement in SB 17 is needed.

The way SB 17 is currently written, TIF bonds are for all practical purposes NOT subject to petition and remonstrance. Petition and remonstrance is needed to check the power of developers and their local elected cronies to unfairly use TIF districts for developer profit at the expense of Hoosier working families.

Please refer to the suggested amendment that follows. If you replace the words in RED with the words in GREEN, petition and remonstrance would be allowed for those TIF bonds where the TIF allocation area does NOT have employers identified who will provide at least 25 permanent full-time-equivalent jobs within three years. Petition and remonstrance should be allowed for those speculative TIF bonds that do not promise jobs for Hoosier working families.

SECTION 3. IC 6-1.1-20-1.6 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2008]: Sec. 1.6. (a) As used in this chapter, "property taxes" means a property tax rate or levy to pay debt service or to pay lease rentals. ~~but does not include~~ Except as provided in subsections (b) and (c), the term includes taxes allocated for an allocation area under IC 6-1.1-39-5, IC 8-22-3.5-9, IC 36-7-14-39, IC 36-7-15.1-26, or IC 36-7-15.1-53 to the extent that those taxes are used to pay debt service or lease rentals.
    (b) The term "property taxes" does not include taxes that:
        (1) are allocated for an allocation area under IC 6-1.1-39-5, IC 8-22-3.5-9, IC 36-7-14-39,
        IC 36-7-15.1-26, or IC 36-7-15.1-53; and
        (2) will be used to pay debt service or lease rentals on bonds or a lease:
            (A) issued or entered into before July 1, 2008;
            (B) issued or entered into after June 30, 2008, but authorized by a resolution adopted before
            July 1, 2008; or
            (C) issued or entered into after June 30, 2008, in order to:
                (i) fulfill the terms of agreements or pledges entered into before July 1, 2008, with the holders of bonds or other contractual obligations that were issued or entered into before July 1, 2008; or
                (ii) otherwise prevent an impairment of the rights or remedies of the holders of bonds or other contractual obligations that were issued or entered into before July 1, 2008.
    (c) The term "property taxes" does not include taxes that:
        (1) are allocated for an allocation area under IC 6-1.1-39-5, IC 8-22-3.5-9, IC 36-7-14-39,
        IC 36-7-15.1-26, or IC 36-7-15.1-53; and
        (2) will be used to pay debt service or lease rentals;
if, not later than fifteen (15) days after the adoption of the preliminary resolution to issue the bonds or enter into the lease for which the taxes will be used to pay debt service or lease rentals, the Indiana economic development corporation issues a finding stating that those taxes should not be considered property taxes for purposes of this chapter.
    (d) Before making a finding under subsection (c), the Indiana economic development corporation must consider whether the project or facility for which the debt service or lease rentals will be paid ~~will:~~
        ~~(1) lead to increased investment in Indiana;~~
        ~~(2) foster job creation or job retention in Indiana;~~
        ~~(3) have a positive impact on the political subdivision in which the project or facility is located or~~      ~~will be located; or~~
        ~~(4) otherwise benefit the people of Indiana by increasing opportunities for employment in Indiana and strengthening the economy of Indiana.~~
has affidavit(s) from prospective employer(s) within the project or facility that no less than a total of 25 permanent full-time-equivalent jobs are expected to be brought to the project or facility within three (3) years of the affidavit date(s).

In conclusion:

SB 17 as written has a number of Taxpayer Friendly provisions.

SB 17 should be amended to allow meaningful petition and remonstrance for TIF bonds.

STATUS: The Senate Tax and Fiscal Policy Committee passed Amendment #9 by consent on January 8. The amended SB 17 passed out of the Senate Tax and Fiscal Policy Committee by an 11-0 vote on January 8. SB 17 passed out of the Senate Tax by a 47-0 vote on January 22.

NOTE: The Senate Tax and Fiscal Policy Committee chairman asked Watchdog Indiana to offer a suggestion on how to improve the petition and remonstrance provisions of SB 17. On January 10, Watchdog Indiana delivered a suggestion to the chairman that would exempt TIF bonds from petition and remonstrance only if affidavit(s) were provided from prospective employer(s) within the TIF project or facility that no less than a total of 25 permanent full-time-equivalent jobs are expected to be brought to the project or facility within three years of the affidavit date(s).

Senate Bill 18
Limitations on Debt

TESTIMONY #9 - December 18, 2007 - Senate Tax and Fiscal Policy Committee

The debt limiting provisions of SB 18 appear to be taxpayer friendly.

One improvement should be made.

The duties of county boards of tax and capital projects review should be assigned to county councils and the county tax boards eliminated. It is appropriate that the county council be the last resort for fiscal review within a county. County tax boards are little more than an unneeded level of government bureaucracy.

TESTIMONY #11 - January 8, 2008 - Senate Tax and Fiscal Policy Committee

Watchdog Indiana is pleased to support Amendment # 17 to Senate Bill 18.

SB 18 #17 requires a referendum on all building projects that cost at least $7 million or total a half-percent of the assessed valuation in a governmental district (but not below $200,000). An exception is that a school district where enrollment has increased at least 4 percent can avoid a referendum if the county council agrees the project should go forward.

The collective wisdom of the voters should be sought through referendum for building projects that can significantly impact tax rates.

STATUS: SB 18 Amendment # 17 passed with a 7-5 vote in the Senate Tax and Fiscal Policy Committee on January 8. The amended SB 18, a Taxpayer Friendly bill with several debt limiting provisions, passed out of the Senate Tax and Fiscal Policy Committee by a 9-3 vote on January 8.

Senate Bill 19
Various Tax Matters

TESTIMONY #17 - January 15, 2008 - Senate Tax and Fiscal Policy Committee

A taxpayer friendly portion of SB 19 requires the Department of State Revenue and the Office of Management and Budget to develop reports and procedures to ensure that income taxes are accurately and properly distributed to each county. It is disturbing that amendment #1 deletes this reporting requirement. A quarterly reporting requirement should be included in SB 19.

The following bill requirements are taxpayer friendly to the extent they ensure proper and accurate county income tax distributions: (1) reporting the amount of local income tax each time an employer remits withheld income taxes, (2) designating the portion of estimated individual income tax returns allocated to state income tax and local income tax, (3) requesting that the payor of an individual distribution withhold both state income tax and local income tax.

A taxpayer UNfriendly portion of SB 19 requires wage withholding payments and estimated tax payments for nonresident aliens to be computed based on the application of not more than one personal exclusion. The Legislative Services Agency has presented no data to prove that nonresident aliens do not file a tax return or claim more exemptions than allowed. Therefore, it is not fair for the state to increase its revenue during the tax year at the expense of nonresident alien spendable income. The great majority of nonresident aliens are working families who fill jobs that help our economy prosper.

TESTIMONY #24 - February 20, 2008 - House Ways and Means Committee

The following requirements of SB 19 are taxpayer friendly to the extent they ensure prompt and accurate local income tax distributions: (1) reporting the amount of local income tax each time an employer remits withheld income taxes, (2) designating the portion of estimated individual income tax returns allocated to state income tax and local income tax, (3) requesting that the payor of an individual distribution withhold both state income tax and local income tax.

Particularly important is the SB 19 requirement that the Department of State Revenue and the Office of Management and Budget develop a quarterly report that summarizes the local income tax data that is obtained by the Department of Revenue under this bill’s provisions. The required availability of this quarterly report to county auditors will help make certain that local income taxes are accurately and promptly distributed to the affected local taxing units. This will become increasingly important as local taxing units increase their reliance on local income taxes.

STATUS: SB 19 Amendment # 1 passed by consent in the Senate Tax and Fiscal Policy Committee on January 15. The amended SB 19 passed out of the Senate Tax and Fiscal Policy Committee by a 10-0 vote on January 15.

Senate Bill 21
Additional 2007 Homestead Credit

TESTIMONY #8 - December 18, 2007 - Senate Tax and Fiscal Policy Committee

SB 21 is Taxpayer Friendly because, if a county issues Pay 2007 tax statements, revised tax statements, or reconciling tax statements after December 31, 2007, the county saves by not having to send rebate checks and written explanations.

Any future additional homestead credits should be applied to tax bills. With the franking privilege enjoyed by its members, it is not right for the General Assembly to impose a needless mailing expense on county governments in yet another attempt to curry political favor for the next election.

Status: SB 21 passed out of the Senate Tax and Fiscal Policy Committee by an 11-1 vote on January 8.

This page was last updated on 03/31/13 .