The state lawmakers in the house and senate approved a property tax reform bill Friday, 3/14/08. HB 1001 is the long discussed and significantly modified product of governor Mitch Daniels’ October 2007 property tax proposal (overview / details).
The passed bill retains the “one-two-three” percent caps on property that is residential and owner-occupied (1%), rental or agricultural (2%), and commercial (3%), but requires more than a few asterisks:
- It raises the state sales tax to 7%.
- The caps are phased in, so they won’t be fully effective until 2010.
- Two counties, St. Joseph and Lake, are partially exempt from the caps – taxes to cover payments on existing debt are not capped until 2020.
- Schools that can’t make ends meet under the caps can appeal the limits through voter referendums and governmental units that face 5+% shortfalls can appeal to a Distressed Unit Appeals Board.
- Counties have the option of raising local income taxes to offset declining revenue.
The full bill is lengthy and makes broad changes to the funding of schools, children’s residential psychiatric treatment, certain police and firefighter pensions, and other governmental expenses.
More about Indiana’s property tax reform under HB 1001:
- thorough digest and full text of the bill on the state of Indiana’s web-site
- article from the IndyStar on the passage of HB 1001, with quotes from many lawmakers
- article from the South Bend Tribune on property tax reform, with an estimate on South Bend Area tax amounts under HB 1001
- article from the Northwest Indiana Times on HB 1001, with a readable summary of the bill.