Official position of the Indiana Public Library Association (ILPA) of the Indiana Library Federation (ILF).
Yes, being a member of ILF is important. When being a member of an organization, you should ask yourself: "What can I do to make it [the organization] better," rather than, "What can it do for me?"
Points to Consider before Voting on the Public Question of Placing Tax Caps into the Constitution
It is time for Hoosiers to educate themselves, do research, and look deeper into the issue of permanently placing property tax caps into the state’s constitution. Voters will be asked to respond to this issue on the Nov. 2 ballot. Here are some points to consider:
• Popular Misconception: While the word “caps,” may entice property owners into thinking their taxes won’t increase, that is not the case. It is a cap on the taxes paid relative to the assessed value of the home. The assessed value can still rise.
• Truth: While many property-tax initiatives are politically popular, they often mask a hidden truth: the revenue lost likely leads to increases in many other kinds of taxes and user fees.
• Current: Caps are already in effect—they are in statute—having been enacted by the General Assembly. Libraries, schools, cities and towns, counties and other local units are already operating under the 1%, 2% and 3% limits. It is unnecessary to vote them into the Constitution. The caps will not guarantee homeowners’ property taxes to decrease.
• Future: Understand that if the amendment is approved by your vote on Nov. 2, it will take about five years to remove if, subsequently, it is judged to be too restrictive. We urge voters to appreciate the need for flexibility for all local government units.
Elected local officials, library directors, staff, educators and others involved in delivering necessary services at the local level have urged caution. The more prudent approach is to wait and see how significantly the statutory 1%, 2% and 3% caps impact the delivery of needed services.
• Fact: Everyone wishes for lower taxes but few want the consequent reductions in services. Citizens value good schools, good streets, quality libraries, emergency services, police protection and livable communities; property taxes are by far the most significant revenue stream which supports these services.
• Consequence: Placing tax caps into the constitution will result in some unintended consequences. You can expect user fees, fines, penalties and probably more regulatory fees to proliferate in your daily life due to loss of the revenue. The statutory caps have already resulted in local units experiencing decreases of millions of dollars for schools, libraries and other services.
• It is unnecessary to vote them into the Constitution because they are already law.
That is why it is important for YOU to do research and think about the result of your vote on Public Question #1 on the Nov. 2 ballot.
This statement was developed by members of the Indiana Library Federation, the Indiana Public Library Association, the Indiana Urban Schools Association, the Indiana PTA, the Association of Indiana Counties, Sustainable Libraries Coalition, Central Indiana Jobs with Justice, the NAACP Indianapolis (Branch #3053) and several educators.
IPLA website
Monday, October 4, 2010
Finally, a new post!
I can't believe that it has been well over a year since I last posted. Fortunately there hasn't been anything to report as far as the threat of consolidation to Indiana Libraries.
The next big issue is the editing the Indiana Constitution to place caps on property taxes. Many sides have valid points, but the point that matters is that the caps are already in place. Do we have traffic laws in the Constitution, no, so why does this have to be added. We are going to allow Legislators to tie their own hands and then we will be in a real mess.
Another point. Daniels running for President. Oh dear. One of the "buzz points" is that Indiana's budget is balanced. That's nice, but he did it by taking away money promised to the schools...as usual...only select bits of information are being provided.
Below is a text edition of a presentation delivered by Dr. Larry DeBoer of Purdue University entitled, "Indiana's Constitutional Referendum on Tax Caps, November 2010." If you would like a .pdf copy, please contact me here
----------------------- Page 1-----------------------
Purdue Cooperative Extension Service
Indiana’s Constitutional Referendum
on Tax Caps, November 2010
Larry DeBoer
Department of Agricultural Economics
Purdue University
August 2010
For more information
DeBoer’s Indiana Local Government Information Website:
www.agecon.purdue.edu/crd/Localgov
----------------------- Page 2-----------------------
PROPERTY TAX REFORM, 2008-2010
What happened in 2008?
o Sales tax increase from 6% to 7%, on April 1.
o Added homestead credits reduce homeowner taxes by about one-third.
o Township trustees give up assessing duties to counties; most township
assessor offices are eliminated, as of July 1.
o Township assessors eliminated in 30 of 43 larger townships after voter
referendum on November 4.
o Capital projects become subject to referendum; as of June 2010 there have
been 30 capital projects referenda; 11 have passed.
o General Assembly passed first resolution to amend theprop erty tax caps into
the Indiana Constitution.
What happened in 2009?
o State took over school general fund and county welfare funds, eliminating
those property tax levies.
o State property tax replacement credits and most homestead credits were
eliminated; small state homestead credit retained, to be phased out.
o Homeowners received new 35% homestead deduction.
o Tax caps begin phase in, at 1.5% of gross assessed value for homeowners,
2.5% for farm land and rental housing, and 3.5% for all other property;
created local revenue losses.
o General Assembly did not hold a second vote on amending the tax caps into
the Indiana Constitution.
What’s happening in 2010?
o Tax caps tighten to permanent levels, at 1% of gross assessed value for
homeowners, 2% for farm land and rental housing, and 3% for all other
property; this creates greater tax savings and greater local revenue losses.
o State homestead credits continue to phase out.
o General Assemblypassed the second resolution to amend the tax caps into the
Indiana Constitution; Voters will see a referendum on November 2, 2010.
1
----------------------- Page 3-----------------------
HEA 1086 (2010); Public Law 113: SECTION 185. [EFFECTIVE UPON PASSAGE]
(a) If the amendment to Article 10, Section 1 of the Constitution of the State of Indiana agreed to
by the One Hundred Fifteenth General Assembly (P.L.147-2008) is agreed to by the One
Hundred Sixteenth General Assembly, the amendment shall be submitted to the electors of the
state at the 2010 general election in the manner provided for the submission of constitutional
amendments under IC 3.
(b) Under Article 16, Section 1 of the Constitution of the State of Indiana, which requires the
general assembly to submit constitutional amendments to the electors at the next general election
after the general assembly agrees to the amendment referred to it by the last previously elected
general assembly, and in accordance with IC 3-10-3, the general assembly prescribes the form in
which the public question concerning the ratification of this state constitutional amendment must
appear on the 2010 general election ballot as follows:
"PUBLIC QUESTION #1
SHALL PROPERTY TAXES BE LIMITED FOR ALL CLASSES OF PROPERTY by
amending the Constitution of the State of Indiana to do the following:
(1) Limit a taxpayer's annual property tax bill to the following percentages of gross
assessed value:
(A) 1% for an owner-occupied primary residence (homestead);
(B) 2% for residential property, other than an owner-occupied primary residence,
including apartments;
(C) 2% for agricultural land;
(D) 3% for other real property; and
(E) 3% for personal property.
The above percentages exclude any property taxes imposed after being approved by the
voters in a referendum.
(2) Specify that the General Assembly may grant a property tax exemption in the form of a
deduction or credit and exempt a mobile home used as a primary residence to the same extent as
real property?"
2
----------------------- Page 4-----------------------
SENATE JOINT
RESOLUTION No. 1, 2010
A JOINT RESOLUTION proposing an amendment to Article 10, Section 1 of the Constitution
of the State of Indiana concerning taxation.
Be it resolved by the General Assembly of the State of Indiana:
SOURCE: (10)SJ0001.2.1. --> SECTION 1. The following proposed amendment to the Constitution of
the State of Indiana, which was agreed to by the One Hundred Fifteenth General Assembly of the State of
Indiana and referred to this General Assembly for reconsideration and agreement, is agreed to by this the
One Hundred Sixteenth General Assembly of the State of Indiana.
SOURCE: CON 10; (10)SJ0001.2.2. --> SECTION 2. ARTICLE 10, SECTION 1 OF THE
CONSTITUTION OF THE STATE OF INDIANA IS AMENDED TO READ AS FOLLOWS: Section 1.
(a) Subject to this section, the General Assembly shall provide, by law, for a uniform and equal rate of
property assessment and taxation and shall prescribe regulations to secure a just valuation for taxation of
all property, both real and personal.
(b) A provision of this section permitting the General Assembly to exempt property from
taxation also permits the General Assembly to exercise its legislative power to enact property tax
deductions and credits for the property. The General Assembly may impose reasonable filing
requirements for an exemption, deduction, or credit.
(c) The General Assembly may exempt from property taxation any property in any of the following
classes:
(1) Property being used for municipal, educational, literary, scientific, religious, or charitable
purposes.
(2) Tangible personal property other than property being held as an investment.
(3) Intangible personal property.
(4) Tangible real property, including curtilage, used as a principal place of residence by an:
(A) owner of the property;
(B) individual who is buying the tangible real property under a contract; or
(C) individual who has a beneficial interest in the owner of the tangible real property.
(b) (d) The General Assembly may exempt any motor vehicles, mobile homes (not otherwise exempt
under this section), airplanes, boats, trailers, or similar property, provided that an excise tax in lieu of the
property tax is substituted therefor.
(e) This subsection applies to property taxes first due and payable in 2012 and thereafter. The
following definitions apply to subsection (f):
(1) "Other residential property" means tangible property (other than tangible property
described in subsection (c)(4)) that is used for residential purposes.
(2) "Agricultural land" means land devoted to agricultural use.
(3) "Other real property" means real property that is not tangible property described in
subsection (c)(4), is not other residential property, and is not agricultural land.
3
----------------------- Page 5-----------------------
(f) This subsection applies to property taxes first due and payable in 2012 and thereafter. The
General Assembly shall, by law, limit a taxpayer's property tax liability as follows:
(1) A taxpayer's property tax liability on tangible property described in subsection (c)(4) may
not exceed one percent (1%) of the gross assessed value of the property that is the basis for the
determination of property taxes.
(2) A taxpayer's property tax liability on other residential property may not exceed two
percent (2%) of the gross assessed value of the property that is the basis for the determination of
property taxes.
(3) A taxpayer's property tax liability on agricultural land may not exceed two percent (2%) of
the gross assessed value of the land that is the basis for the determination of property taxes.
(4) A taxpayer's property tax liability on other real property may not exceed three percent
(3%) of the gross assessed value of the property that is the basis for the determination of property
taxes.
(5) A taxpayer's property tax liability on personal property (other than personal property that
is tangible property described in subsection (c)(4) or personal property that is other residential
property) within a particular taxing district may not exceed three percent (3%) of the gross
assessed value of the taxpayer's personal property that is the basis for the determination of
property taxes within the taxing district.
(g) This subsection applies to property taxes first due and payable in 2012 and thereafter.
Property taxes imposed after being approved by the voters in a referendum shall not be considered
for purposes of calculating the limits to property tax liability under subsection (f).
(h) As used in this subsection, "eligible county" means only a county for which the General
Assembly determines in 2008 that limits to property tax liability as described in subsection (f) are
expected to reduce in 2010 the aggregate property tax revenue that would otherwise be collected by
all units of local government and school corporations in the county by at least twenty percent
(20%). The General Assembly may, by law, provide that property taxes imposed in an eligible
county to pay debt service or make lease payments for bonds or leases issued or entered into before
July 1, 2008, shall not be considered for purposes of calculating the limits to property tax liability
under subsection (f). Such a law may not apply after December 31, 2019.
4
----------------------- Page 6-----------------------
Sorry, but the charts and tables didn't transfer to the text file.
8
----------------------- Page 10-----------------------
Some Observations about the November 2010 Tax Cap Constitutional Referendum
The amendment will not provide additional property tax relief, since the provisions of the
amendment are already in law, and are already restricting property tax bills.
o The amendment will prevent Constitutional challenges to the differential caps
(1% / 2% / 3% for different property types) based on the “uniform and equal rate
of property assessment and taxation” phrase in Article 10, Section 1.
o It will prevent future adjustments in property tax relief from raising property tax
bills above the caps (e.g., a reduction in the homestead deductions can only raise
homeowners taxes to 1% of gross assessed value).
The amendment will make permanent the reduction in property tax revenues received by
local governments. Here are three possible consequences:
o Local governments will need to become more efficient, in order to deliver
services at lower cost.
Voters who think that government can/should become more efficient, and
think that revenue reductions will force efficiencies, will vote yes; those
who think that few efficiencies are available, or don’t like the means used
to attain efficiencies (e.g. layoffs, consolidation) will vote no.
o Indiana residents will have to accept a lower level of services, if there is not
enough revenue to continue to deliver the services provided in the past.
Voters who think that Indiana local government is too big, and provides
services that are not demanded by residents, will vote yes; those who
value the services that are likely to be cut, or think more should be
provided, will vote no.
o Other revenue sources may be used, such as local income taxes and charges/fees.
Voters who dislike property taxes and favor other sources of revenue to
support local government, will vote yes; those who prefer property taxes
as a means to support local government will vote no.
9
The next big issue is the editing the Indiana Constitution to place caps on property taxes. Many sides have valid points, but the point that matters is that the caps are already in place. Do we have traffic laws in the Constitution, no, so why does this have to be added. We are going to allow Legislators to tie their own hands and then we will be in a real mess.
Another point. Daniels running for President. Oh dear. One of the "buzz points" is that Indiana's budget is balanced. That's nice, but he did it by taking away money promised to the schools...as usual...only select bits of information are being provided.
Below is a text edition of a presentation delivered by Dr. Larry DeBoer of Purdue University entitled, "Indiana's Constitutional Referendum on Tax Caps, November 2010." If you would like a .pdf copy, please contact me here
----------------------- Page 1-----------------------
Purdue Cooperative Extension Service
Indiana’s Constitutional Referendum
on Tax Caps, November 2010
Larry DeBoer
Department of Agricultural Economics
Purdue University
August 2010
For more information
DeBoer’s Indiana Local Government Information Website:
www.agecon.purdue.edu/crd/Localgov
----------------------- Page 2-----------------------
PROPERTY TAX REFORM, 2008-2010
What happened in 2008?
o Sales tax increase from 6% to 7%, on April 1.
o Added homestead credits reduce homeowner taxes by about one-third.
o Township trustees give up assessing duties to counties; most township
assessor offices are eliminated, as of July 1.
o Township assessors eliminated in 30 of 43 larger townships after voter
referendum on November 4.
o Capital projects become subject to referendum; as of June 2010 there have
been 30 capital projects referenda; 11 have passed.
o General Assembly passed first resolution to amend theprop erty tax caps into
the Indiana Constitution.
What happened in 2009?
o State took over school general fund and county welfare funds, eliminating
those property tax levies.
o State property tax replacement credits and most homestead credits were
eliminated; small state homestead credit retained, to be phased out.
o Homeowners received new 35% homestead deduction.
o Tax caps begin phase in, at 1.5% of gross assessed value for homeowners,
2.5% for farm land and rental housing, and 3.5% for all other property;
created local revenue losses.
o General Assembly did not hold a second vote on amending the tax caps into
the Indiana Constitution.
What’s happening in 2010?
o Tax caps tighten to permanent levels, at 1% of gross assessed value for
homeowners, 2% for farm land and rental housing, and 3% for all other
property; this creates greater tax savings and greater local revenue losses.
o State homestead credits continue to phase out.
o General Assemblypassed the second resolution to amend the tax caps into the
Indiana Constitution; Voters will see a referendum on November 2, 2010.
1
----------------------- Page 3-----------------------
HEA 1086 (2010); Public Law 113: SECTION 185. [EFFECTIVE UPON PASSAGE]
(a) If the amendment to Article 10, Section 1 of the Constitution of the State of Indiana agreed to
by the One Hundred Fifteenth General Assembly (P.L.147-2008) is agreed to by the One
Hundred Sixteenth General Assembly, the amendment shall be submitted to the electors of the
state at the 2010 general election in the manner provided for the submission of constitutional
amendments under IC 3.
(b) Under Article 16, Section 1 of the Constitution of the State of Indiana, which requires the
general assembly to submit constitutional amendments to the electors at the next general election
after the general assembly agrees to the amendment referred to it by the last previously elected
general assembly, and in accordance with IC 3-10-3, the general assembly prescribes the form in
which the public question concerning the ratification of this state constitutional amendment must
appear on the 2010 general election ballot as follows:
"PUBLIC QUESTION #1
SHALL PROPERTY TAXES BE LIMITED FOR ALL CLASSES OF PROPERTY by
amending the Constitution of the State of Indiana to do the following:
(1) Limit a taxpayer's annual property tax bill to the following percentages of gross
assessed value:
(A) 1% for an owner-occupied primary residence (homestead);
(B) 2% for residential property, other than an owner-occupied primary residence,
including apartments;
(C) 2% for agricultural land;
(D) 3% for other real property; and
(E) 3% for personal property.
The above percentages exclude any property taxes imposed after being approved by the
voters in a referendum.
(2) Specify that the General Assembly may grant a property tax exemption in the form of a
deduction or credit and exempt a mobile home used as a primary residence to the same extent as
real property?"
2
----------------------- Page 4-----------------------
SENATE JOINT
RESOLUTION No. 1, 2010
A JOINT RESOLUTION proposing an amendment to Article 10, Section 1 of the Constitution
of the State of Indiana concerning taxation.
Be it resolved by the General Assembly of the State of Indiana:
SOURCE: (10)SJ0001.2.1. --> SECTION 1. The following proposed amendment to the Constitution of
the State of Indiana, which was agreed to by the One Hundred Fifteenth General Assembly of the State of
Indiana and referred to this General Assembly for reconsideration and agreement, is agreed to by this the
One Hundred Sixteenth General Assembly of the State of Indiana.
SOURCE: CON 10; (10)SJ0001.2.2. --> SECTION 2. ARTICLE 10, SECTION 1 OF THE
CONSTITUTION OF THE STATE OF INDIANA IS AMENDED TO READ AS FOLLOWS: Section 1.
(a) Subject to this section, the General Assembly shall provide, by law, for a uniform and equal rate of
property assessment and taxation and shall prescribe regulations to secure a just valuation for taxation of
all property, both real and personal.
(b) A provision of this section permitting the General Assembly to exempt property from
taxation also permits the General Assembly to exercise its legislative power to enact property tax
deductions and credits for the property. The General Assembly may impose reasonable filing
requirements for an exemption, deduction, or credit.
(c) The General Assembly may exempt from property taxation any property in any of the following
classes:
(1) Property being used for municipal, educational, literary, scientific, religious, or charitable
purposes.
(2) Tangible personal property other than property being held as an investment.
(3) Intangible personal property.
(4) Tangible real property, including curtilage, used as a principal place of residence by an:
(A) owner of the property;
(B) individual who is buying the tangible real property under a contract; or
(C) individual who has a beneficial interest in the owner of the tangible real property.
(b) (d) The General Assembly may exempt any motor vehicles, mobile homes (not otherwise exempt
under this section), airplanes, boats, trailers, or similar property, provided that an excise tax in lieu of the
property tax is substituted therefor.
(e) This subsection applies to property taxes first due and payable in 2012 and thereafter. The
following definitions apply to subsection (f):
(1) "Other residential property" means tangible property (other than tangible property
described in subsection (c)(4)) that is used for residential purposes.
(2) "Agricultural land" means land devoted to agricultural use.
(3) "Other real property" means real property that is not tangible property described in
subsection (c)(4), is not other residential property, and is not agricultural land.
3
----------------------- Page 5-----------------------
(f) This subsection applies to property taxes first due and payable in 2012 and thereafter. The
General Assembly shall, by law, limit a taxpayer's property tax liability as follows:
(1) A taxpayer's property tax liability on tangible property described in subsection (c)(4) may
not exceed one percent (1%) of the gross assessed value of the property that is the basis for the
determination of property taxes.
(2) A taxpayer's property tax liability on other residential property may not exceed two
percent (2%) of the gross assessed value of the property that is the basis for the determination of
property taxes.
(3) A taxpayer's property tax liability on agricultural land may not exceed two percent (2%) of
the gross assessed value of the land that is the basis for the determination of property taxes.
(4) A taxpayer's property tax liability on other real property may not exceed three percent
(3%) of the gross assessed value of the property that is the basis for the determination of property
taxes.
(5) A taxpayer's property tax liability on personal property (other than personal property that
is tangible property described in subsection (c)(4) or personal property that is other residential
property) within a particular taxing district may not exceed three percent (3%) of the gross
assessed value of the taxpayer's personal property that is the basis for the determination of
property taxes within the taxing district.
(g) This subsection applies to property taxes first due and payable in 2012 and thereafter.
Property taxes imposed after being approved by the voters in a referendum shall not be considered
for purposes of calculating the limits to property tax liability under subsection (f).
(h) As used in this subsection, "eligible county" means only a county for which the General
Assembly determines in 2008 that limits to property tax liability as described in subsection (f) are
expected to reduce in 2010 the aggregate property tax revenue that would otherwise be collected by
all units of local government and school corporations in the county by at least twenty percent
(20%). The General Assembly may, by law, provide that property taxes imposed in an eligible
county to pay debt service or make lease payments for bonds or leases issued or entered into before
July 1, 2008, shall not be considered for purposes of calculating the limits to property tax liability
under subsection (f). Such a law may not apply after December 31, 2019.
4
----------------------- Page 6-----------------------
Sorry, but the charts and tables didn't transfer to the text file.
8
----------------------- Page 10-----------------------
Some Observations about the November 2010 Tax Cap Constitutional Referendum
The amendment will not provide additional property tax relief, since the provisions of the
amendment are already in law, and are already restricting property tax bills.
o The amendment will prevent Constitutional challenges to the differential caps
(1% / 2% / 3% for different property types) based on the “uniform and equal rate
of property assessment and taxation” phrase in Article 10, Section 1.
o It will prevent future adjustments in property tax relief from raising property tax
bills above the caps (e.g., a reduction in the homestead deductions can only raise
homeowners taxes to 1% of gross assessed value).
The amendment will make permanent the reduction in property tax revenues received by
local governments. Here are three possible consequences:
o Local governments will need to become more efficient, in order to deliver
services at lower cost.
Voters who think that government can/should become more efficient, and
think that revenue reductions will force efficiencies, will vote yes; those
who think that few efficiencies are available, or don’t like the means used
to attain efficiencies (e.g. layoffs, consolidation) will vote no.
o Indiana residents will have to accept a lower level of services, if there is not
enough revenue to continue to deliver the services provided in the past.
Voters who think that Indiana local government is too big, and provides
services that are not demanded by residents, will vote yes; those who
value the services that are likely to be cut, or think more should be
provided, will vote no.
o Other revenue sources may be used, such as local income taxes and charges/fees.
Voters who dislike property taxes and favor other sources of revenue to
support local government, will vote yes; those who prefer property taxes
as a means to support local government will vote no.
9
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