July 14, 2007

Governor Mitch Daniels sent a letter today to legislative leaders that offers two proposals for targeted property taxpayer relief: use of a credit instead of a rebate and local circuit breakers. The letter and proposals are below.

The governor recently has taken several actions within his authority to help reduce local property taxes. Among those actions, the governor:

*Extended by two months the deadline for counties to decide to use other available revenue tools to help them reduce local property taxes. Legislation enacted this year gives counties the authority to adopt local option income taxes. The August 1 deadline has been moved to October 1.

*Directed the Department of Local Government Finance (DLGF) to approve any county's application to permit homeowners to pay their property taxes in installments and to extend bill due dates.

*Directed the Indiana Bond Bank to facilitate short-term financing by local governments that need cash while awaiting installments.

*Ordered the DLGF to further analyze commercial and industrial parcel data for Marion County to determine if assessments between residential and commercial properties are fair or if a reassessment for Marion County will be ordered.

Here is Governor Daniels' letter:

July 14, 2007

The Honorable Patrick Bauer

The Honorable Brian Bosma

The Honorable David Long

The Honorable Richard Young

Dear Rep. Bauer, Rep. Bosma, Sen. Long, and Sen. Young:

In recent days, some Hoosiers have received property tax bills with increases that are simply unacceptable. Throughout the week, I've taken actions within my authority to begin to assist those localities that are experiencing problems.

I said I was formulating some ideas that would need action by the General Assembly, and I've been discussing them with a number of people this week. Today, I offer for your consideration two broad proposals for targeted property tax relief that incorporate maximum flexibility for counties. The property tax increases that some are experiencing are highly localized, and there isn't a one size fits all answer. I believe taxpayers and their locally elected representatives are in the best position to determine the relief plan that most fits their needs.

First, we could give each county the ability to use its share of the $300 million appropriated for property tax relief in this fiscal year as it sees fit. In essence, we would create local circuit breakers. For example, with the estimated $45 million that Marion County will receive as its share of the relief, the county could limit homeowners' tax bills to approximately 1.6 percent of gross assessed value. Howard County, for example, could use its estimated share of about $4.4 million to limit bills to 1.1 percent.

Second, in the interest of speed and economy, we might consider changing the current rebate plan that would deliver a check months after bills are due to an immediate credit against this year's tax bill.

You'll find a description of these ideas on the attached page. Of course, we're always open to other ideas. I know the Indiana Commission on State Tax and Financing Policy, chaired by Senator Kenley, plans a property tax hearing on July 23 to hear from Marion County taxpayers, so I wanted to get additional ideas into the discussion. Please let me know your thoughts.

Sincerely,

Mitch Daniels

Attachment (Proposals for targeted property tax relief)

cc: The Honorable William Crawford

The Honorable Jeffrey Espich

The Honorable Luke Kenley

The Honorable Robert Meeks

Proposals for targeted property taxpayer relief

Proposal 1 - Use a credit instead of a rebate to provide property tax relief.

*Distribute the $300 million appropriated for property tax relief as a credit instead of sending rebate checks. It would speed up the process and provide relief to homeowners this fall instead of next year.

Proposal 2 - Give each county freedom and flexibility to target property relief

· Counties would be given flexibility to determine the amount of relief each taxpayer receives.

1 Among the options counties might consider are:

· Providing credits for taxpayers whose bills exceed a certain percentage of their homes' gross assessed value (circuit breaker protection).

1 Providing credits for taxpayers whose bills exceed a certain percentage of their adjusted gross income. (Other states have used this approach successfully.)

2 Providing credits for taxpayers whose bills increased by a certain percentage or dollar amount.

3 Setting aside a certain percentage of their relief fund for taxpayers who are on fixed incomes.

· This approach allows counties to design a relief plan that is most responsive to the needs of taxpayers who have been hit hardest by property tax increases this year.

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