Tiger Realty's Real Estate News

The Senate Tax and Fiscal Policy Committee voted 9-0 to send Gov. Mitch Daniels' property tax relief plan to the full Senate with some significant changes according to the Star's Mary Beth Schneider. The most significant change takes away a lot of the tax relief the underlying bill afforded taxpayers. That provision authorizes counties to increase the local option income tax 0.5% to make up for lost property tax revenues caused by the capping of property taxes. Marion County just increased its local option income tax by 65% last year from 1% to 1.65% without providing any property tax relief. Marion County couldn't afford to raise its income tax any higher because it is already the highest in the state. That will only encourage more people to move to the suburban counties.

The good news for Marion County is that the Senate-passed plan calls for the state to pick up more local costs, including the cost of school debt service, juvenile incarceration, school pension debts and the pre-1977 police and fire pensions. The pick up of the police and fire pensions alone will save Marion County taxpayers abour $30 million a year. That would free up that much money from last year's local option income tax which was earmarked for the pension liability.

Another change the Senate made will really take the teeth out of a provision of the House plan which allowed county councils to control spending by other units of local government. County councils will only have authority to review and not approve all budgets for local taxing districts as the House version required.

The property tax relief promised by HB 1001 is very good news, but the end product is beginning to look more and more like a tax shift as opposed to real, overall tax relief. That should make the schools and local governments which have been lobbbying lawmakers hard these last few months at our expense happy, but I'm not so sure taxpayers will be all that pleased with the final product.

# posted by Jeff @ 12:18 PM