Published: January 18, 2008 11:41 pm            

Flashpoint: Daniels’ reform plan can bring lasting property tax relief

Thirty-five years ago this month I took office as Indiana’s governor and immediately set to work with the General Assembly to deliver property tax relief that was “visible, lasting and substantial.”

The situation then was not dissimilar to the position Indiana finds itself in today. Then, as now, rapidly rising property taxes were affecting the ability of Hoosiers to own and make improvements to their homes. Then, as now, schools and local units of government were in need of tight controls on their spending.

In 1973, working with a bipartisan group of legislators, and Lt. Governor Bob Orr who broke several crucial tie votes in the Senate, we delivered on property tax relief. Hoosiers saw their property tax bills go down by 20 percent or more and the more equitable tax structure made it possible for more Hoosiers to own their own homes.

Now, years later, property taxes are again at the forefront of issues facing. Gov. Mitch Daniels’ comprehensive plan to cut property taxes immediately and cap residential property permanently at one percent of assessed value is the best solution on the table and legislators should work with the governor to enact his proposals.

Gov. Daniels’ plan guarantees every homeowner a major property tax cut. In fact, through tight spending restraints and by returning an appropriate portion of the state’s budget surplus to taxpayers, Daniels’ plan contains almost two dollars of tax relief for every one dollar of new revenue.

While cutting property taxes is as important today as it was to our 1973 effort, Daniels’ plan to cap property taxes at 1 percent of a home’s assessed value and make that cap permanent by a constitutional amendment is necessary to avoid future attempts by the legislature to increase spending.

Equally important to the Daniels plan are the spending restraints that will limit the ability of local governments to increase property taxes.

For more than 25 years, the property tax reform measures we instituted in 1973 worked and worked well. Our 1973 plan contained spending controls, but through the years, legislative tinkering loosened the reins. By the time I left office in 1981 the General Assembly had already created 18 different exceptions to the spending controls we put in place. In my final address to the legislature, I warned that continuing this trend could lead to a property tax disaster. My warning went unheeded.

We find ourselves in this position again today, not from insufficient revenues, but because local spending in recent years has grown exponentially.

It is not enough for the legislature to provide some form of temporary property tax relief. Property tax relief must be permanent and must contain the critical spending controls put forward by Governor Daniels.

The governor’s plan calls for the Tax and Capital Control Board in each county to review and approve the budgets of all taxing units in the county, ensuring that taxing units limit county spending to within the rate of income growth.

He also wants to institute new taxpayer protections that would prevent total local spending from growing faster than a county’s personal income growth, over a six-year period, unless approved by taxpayers in a referendum. Daniels also wants to replace the remonstrance process with a public referendum on significant local projects.

These strict spending control measures are necessary to control rising property taxes and to ensure Hoosier tax dollars are being spent wisely.

I see an opportunity today for Mitch Daniels and our elected senators and representatives to finish the job we started in 1973 by providing real and permanent property tax relief to Hoosiers with strong safeguards to prevent future spending increases.

Our effort in 1973 was not without criticism or compromise. Then, as now, property tax reform requires a vigorous legislative debate. Our effort was successful because legislators from both political parties came together and did what they believed was in the long term best interests of Hoosiers. With leadership from Gov. Daniels, that environment exists again today. The public is engaged and the time for action is now.

— Otis Bowen, M.D.

Former Indiana governor

Bremen

        

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