Indiana Senate expected to pass property tax cap proposal, send issue to voters in November

Senate expected to pass property tax cap proposal

INDIANAPOLIS — State legislators were expected to give their final approval Tuesday to a proposal that could put property tax limits into Indiana’s constitution. Voters would have their say in November.

The state Senate was scheduled to vote Tuesday afternoon on a proposal that would send the issue to a voter referendum, the last phase in a process started after what many called a property tax crisis in 2007. Bills skyrocketed in much of the state that year because of new assessment rules and other factors, sending hordes of homeowners to the Statehouse demanding reform.

A state law passed in 2008 and fully implemented on Jan. 1 of this year limits property tax bills to 1 percent of homes’ assessed value, with 2 percent caps on rental property and 3 percent limits on business property. Both opponents and supporters say putting the caps into the constitution will make them harder to undo in the future.

Indianapolis resident Bruce Muller said he wants the caps in the constitution to help protect him from big, unexpected increases like he saw during the tax crisis, when his property tax bill jumped from a couple of thousand dollars a year to $7,000. Muller, whose home is assessed at more than $300,000, noted his tax bills may still increase with the caps if his assessed value goes up. But he said putting the limits in the constitution will prevent lawmakers from going back on their pledges to fix property tax problems.

“I don’t trust the politicians,” he said. “After all the brouhaha dies down, they could go back to their old ways.”

Many expect voters to overwhelmingly approve the proposal if they have a chance to vote on it. Sixty-four percent of Indiana residents surveyed in December by Ball State’s Bowen Center for Public Affairs favored the constitutional amendment.

But there are plenty of opponents.

The Indiana Chamber of Commerce and Indiana Farm Bureau oppose the caps because they think it’s unfair to treat commercial and residential property differently. Many mayors have opposed the caps, pointing out that money saved by taxpayers is less cash for city budgets.

The Chamber hasn’t yet decided whether it will launch a public campaign urging people to vote against the caps if the Senate approves the proposal Tuesday, Chamber President Kevin Brinegar said.

“We’ve got to decide whether there’s some reasonable chance or whether we’re just throwing resources down a rat hole,” he said.

Purdue University political science professor James McCann noted that off-year, low-turnout elections typically draw more committed voters who have already made up their minds.

“This issue is already going to be on their radar,” he said. “Anybody who has a lot of fire in the belly one way or another for this issue would already be activated.”

Greencastle Mayor Sue Murray worries that many voters will think they are simply voting for lower tax bills without understanding the full consequences of the caps. Cities around the state have blamed recent layoffs and other cost cutting measures on reductions in property tax money.

Murray said that because the tax caps were not fully implemented until Jan. 1, lawmakers and others have little data on their true affects. Putting those caps in the constitution will tie the hands of future lawmakers who might need to change Indiana’s tax structure more quickly than could be done with the years-long constitutional amendment process.

“It’s not just about the short term,” Murray said. “It’s about making a decision that’s wisest for future generations of Hoosiers.”