Joint Statement on Property Taxes from Governor, Senate President Pro Tem and Speaker of the House

Statement

We have been in regular discussion about additional ways to help Hoosier property taxpayers. Although we have identified several points of agreement and are making good progress, we have not reached agreement on a specific plan at this time. We will continue to work hard in seeking a bipartisan solution.

We are in complete agreement that immediate, lasting property tax relief can only be accomplished in partnership with local governments. The state is already providing a record amount of $2.3 billion in local government and school spending subsidies (i.e., direct property tax relief) this year. In addition, locally-elected leaders are best equipped to make decisions regarding the proper mix of local taxation and determine the best way to target relief to homeowners, rental property owners, farmers and small businesses.

We applaud elected officials who have aggressively used tools previously provided by the General Assembly to reduce the reliance on property taxes. For example, 43 counties took action before this year to protect homeowners from the shift associated with the inventory tax elimination. As a result, property tax increases generally have been much lower in these communities.

In the past legislative session, county and city leaders asked the state for more tools to reduce their reliance on property taxes. We responded with a law (HEA 1478) that allows counties to create a new income tax that directly cuts property taxes dollar for dollar. We are pleased to see that seven counties already have implemented this option this year. Hoosiers living in these counties will begin seeing significant property tax relief beginning in 2008. Under HEA 1478, homeowners' property tax bills can be cut on average by 60 percent in a county that adopts a 1.0 percent local option income tax and by an average of 30 percent in a county that uses a 0.5 percent income tax option.

But seven out of 92 counties are clearly not enough. Local government has been given an unprecedented opportunity to cut property taxes in record amounts, and it must act today. Counties have until October 1 to implement these property tax cuts. We are encouraging all Hoosier citizens to contact their city and county councils and urge them to begin the process to cut their property taxes now.

The state's resources are not unlimited, and we must be prudent in how we allocate any additional short-term relief. As we move forward, we must carefully consider the degree to which local governments have themselves exercised initiative to cut Hoosiers' property taxes.

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