FOR IMMEDIATE RELEASE
Property tax relief is important part
of new state budget that goes in effect July 1
The new two-year state budget which went into action Sunday will provide some significant relief for Indiana property taxpayers.
Here is a summary of what the budget does in property tax relief:
- Budget Includes $2.65 Billion in Property Tax Relief. House Enrolled Act 1001, our new two-year Indiana state budget, includes $2.1 billion in traditional property tax replacement funds to offset costs associated with local government. In addition, lawmakers reacted to reports of residential property tax increasing 25 percent and higher by including another $300 million for property tax relief yet this year and still another $250 million to help offset property taxes payable in 2008 -- $2.65 billion of relief in all. This year’s relief should reduce average increases by more than two-thirds. Average homeowners will see $554 in relief for tax years 2007 and 2008. This estimate doesn’t include property tax savings that may be realized if counties adopt new Local Option Income Taxes (LOITs).
- Local Leadership Can Shift From Property Taxes; Seniors Can Benefit. HEA 1478 gives local governments important tools to shift from outdated, unfair taxes on property to LOITs, which may be used to fund government operations and/or further replace local governments’ dependence on property taxes. Neither Operations LOITs nor Property Tax Reduction LOITs may either one exceed 1 percent of taxpayers’ income. Each must reduce property taxes one dollar for each dollar raised. Adopting entities will be county councils or county option income tax councils. If counties implement both the Operations LOIT and Property Tax Reduction LOIT, they may also create a Public Safety LOIT not to exceed .25 percent. Public Safety LOITs, which are new monies for local government, must be used exclusively for police, fire, emergency services or related pensions. Remember, LOITs are intended to help replace Indiana’s antiquated system of property taxes with a more modern, fairer tax system based on actual personal income.
- Indiana’s “Circuit Breaker” to Protect Homeowners Remains in Place. The 2 percent “circuit breaker”–lawmakers’ commitment that property taxes will not be higher than 2 percent of assessed value on owner-occupied homes – remains in place. Out of fairness, a slightly higher 3 percent “circuit breaker” will apply to business properties, because LOITs would not be required of some businesses.
- Local Decisions Can Help Control Costly Government Construction. HEA 1478 creates County Boards of Tax and Capital Projects to review local government and school construction projects. A petition/remonstrance procedure can override a board rejection. Local boards include city and county governments, schools, the county auditor and two citizens elected by voters. This helps keep important cost-containment decisions on the local level.
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