Panel: Raise local income taxes to offset property tax burden

By Virgin Mary Beth Schneider and Bill Ruthhart

A bipartizan legislative committee on Tuesday called for raising local income taxations to pay for place taxation relief, leading some local functionaries to fear the toughest political determinations are merely being shifted back to them.

Sen. Saint Luke Kenley, R-Noblesville, chairs the state Tax and Financing Policy Commission, whose suggestions were unanimous. - CHARLIE NYE / The Star

What's on the table Comparing Gov. Daniels' reform program and the state commission's proposals:Key concepts• DanielsCuts the norm homeowners' place taxation measure more than a third.Caps residential place taxations at 1 per centum of a home's assessed value, 2 percentage for rental places and 3 percentage for businesses.Increases the state gross gross sales taxation to 7 percentage from 6 percent.• CommissionCuts residential place taxations by 50 percentage and 25 percentage for rental properties.Calls for place taxation caps, but makes not stipulate what percentage of assessed value.Expands sales taxation to other services and/or additions it by less than 1 percent. Calls on counties to increase the local option income taxation to pay for place taxation relief.School impact• DanielsState takes over school operational support and transportation system system costs.New edifice undertakings subject to elector referendums.• CommissionState takes over operational funding, but not transportation costs.Schools would not be required to throw referendums on projects.Constitutionally speaking• DanielsPlaces specific place taxation caps into the state fundamental law for homes, rental places and businesses.• CommissionCalls for constitutional caps, but makes not stipulate amounts.

"A batch of county functionaries state that if (the state) desires to increase the income tax, then the state should just make it and not look for counties to make it," said Saint David Bottorff, executive manager director of the Association of Hoosier State Counties.

Bottorff said local functionaries are well aware that Capital Of Indiana Mayor Baronet Peterson was voted out of business office last hebdomad in portion because he pushed to raise local income taxes.This new plan, which the state Tax and Financing Policy Committee voted 5-0 to urge to the legislature, would cut homeowners' place taxation measures in one-half — and lease place and 2nd places by about 25 per centum — beginning with the place taxation measures owed in 2008.Under the plan, counties would be either mandated or given inducements to increase their local option income taxations by, in most cases, between 0.6 and 0.7.percentage points.In Marion County, the county's income taxation — currently 1.65 percentage — likely would necessitate to be raised by 0.8 to 0.9 percentage points in order to supply the 50-percent cut in place taxes.And to raise the $771 million needful to pay for the state assuming the cost of kid social welfare and schools' general funds, the committee recommended raising the state gross sales taxation by less than a penny and/or expanding it to services not covered by the tax. Sen. Saint Luke Kenley, the Noblesville Republican who is president of the commission, called the recommendations "a route map for the General Assembly."The committee said place taxations pay for local services and that local authorities should take some of the duty for those disbursals by raising income taxes.The commission's proposal travels additional than a program unveiled by Gov. Mitch Daniels in October. He called for cutting homeowners' place taxations by a third, paid for by a 1-percentage point addition in Indiana's 6 percentage gross sales tax.Other key differences: Daniels' program called for the riddance of all township and county tax assessors and for electors to O.K. of major edifice undertakings in a referendum; the committee called for retaining one elected county tax assessor who must ran into minimal educational standards, and for no referendums.Daniels praised the committee program in a statement released by his office. "It closely parallels my taxation alleviation program and back ups all of its cardinal principles," he said.Daniels' program and the commission's program phone call for the state fundamental law to be amended to crest place taxations to maintain them from rising again in the future.Daniels was specific, calling for homeowners' measures to be no more than than 1 percentage of their homes' assessed valuation, with rental place at 2 percentage and concerns at 3 percent. The committee was deliberately vague, saying that volition demand to be hammered out by the legislature."Some people privately were not certain it's a good thought to set (caps) into the constitution," Kenley said. Pat Kiely, president of the Hoosier State Manufacturers Association, said the commission's program "has some pretty large unreciprocated questions." Business, though, also have concerns about Daniels' proposal, particularly because business's place taxations are capped at a higher degree than homeowners'.The committee started meeting on a taxation program after a state-ordered reappraisal led to higher place taxation measures across the state. It heard 35 hours of public testimony over eight meetings. The proposal, said state Rep. Peggy Welch, D-Bloomington, showed: "We did hear. We did listen."