By Sen. Dennis Kruse
Jeopardy! – that popular game show on television – could offer the following as an interesting question on Indiana government: The biggest beneficiary of property taxes is: a. state government b. local schools c. county government ... The answer? “What are local schools.”
In fact, state government only accounts for 0.1 percent of all property taxes collected. Since property taxes are putting Hoosiers in greater financial “jeopardy” than ever before, I was pleased to support another important aspect of property tax reform during this legislative session – formation of a County Board of Tax and Capital Projects Review.
More than one county in this state has seen simultaneous government building projects wreak havoc on property tax rates. When a new library and a new high school, for example, are approved and built at the same time (as was done in a portion of Henry County a few years ago), the result can bring added burden to property taxpayers.
Library boards and school boards like these usually have valid reasons and good intentions. But they typically don’t talk to each other about building plans and may fail to realize the accumulated impact their new facilities will have on tax rates.
This new board would be made up of representatives from both county and city governments, schools, and citizens at large. Its job would be to keep an eye on the overall picture of building projects. It would be able to approve, stagger or reject simultaneous government projects that might overwhelm property taxpayers.
Some could argue the new board might have too much power and prevent meaningful infrastructure improvement from being made. I think, however, this new provision brings property tax issues where they’ve always belonged – at the local level.
Did you know that while solving the property tax problem has rested largely with state legislators, state government only receives 0.1 percent of property taxes collected? Most homeowners are surprised by that statistic. Statewide figures show schools account for 48.3 percent of property taxes collected, with county governments next at 21.1 percent, then cities and towns next at 18.4 percent.
So, if a new school facility is initiated, it truly is a local, not a state issue. Local people, not State Senators or Representatives, know best whether it is needed and how it should be built.
If this new board rejected a building proposal, the local government executive or school board superintendent could initiate a petition/remonstrance procedure to override the board’s rejection. This would bring the issue – and ensuing debate – before the public in a very open way. Afterwards, no one could complain about being blindsided with big property tax increases.
Other pieces of this new property tax picture include maintaining the two percent circuit breaker for homeowners – a guarantee from lawmakers to Indiana residents that property taxes should not be higher than two percent of assessed value on owner-occupied homes. A three percent “circuit breaker” would go into effect for business properties, because businesses would not be required to pay proposed Local Option Income Taxes or LOITs (discussed in last week’s Kruse Report).
Some people may think we have too many boards and review panels. Sometimes, they’re right. But in this case, I believe the County Board of Tax and Capital Projects Review is a good idea. Every community wants good government facilities, but if those facilities would make it impossible for people to pay their property taxes, maybe they shouldn’t be built at the present time.
So, I hope these past two Kruse Reports have given you a sense of optimism about our long struggle with property tax reform. The Indiana Senate will continue to work on this issue. I believe more long-term, bipartisan solutions are not far away. These solutions will provide effective government while protecting homeowners.
Please contact me at State Senator Dennis Kruse, Indiana Senate, 200 W. Washington Street, Indianapolis, IN 46204 or call 1-800-382-9467, or send e-mail to S14@in.gov.
