Thursday, January 21, 2010


On Tuesday, November 2, 2010, Hoosier voters will decide in a referendum whether or not they want the property tax caps placed in the Indiana Constitution.

The Senate voted 35-15 on Tuesday to approve the tax caps; the House approved the caps on January 12, 2010. With both legislatures approving the measure, the way is now paved for the
voter referendum in November. The referendum requires a majority to make the caps permanent and place them in the Constitution.

Four Senators from Northwest Indiana voted against making the caps permanent: Senator Karen Tallian, Ogden Dunes; Senator Lonnie Randolph, East Chicago; Senator Earline Rogers, Gary; and Senator Jim Arnold, LaPorte.

Senator Tallian voted against making the caps permanent because she feels they aren't a good solution to the property tax mess. Senator Rogers also voted no. She feels it's too premature to make the caps permanent because the full effects of the caps haven't been felt yet.

If voters approve the referendum, property tax rates would be capped at 1% for owner-occupied homes, 2% for rental properties and farmland and 3% for business and industrial properties. To pay off county debt, however, taxpayers in Lake and St. Joseph Counties will be charged at a rate above the cap until 2019.

Property taxes have impacted most Hoosiers throughout the state; some counties have been hit harder than others. It should be up to the voters to decide whether or not the caps should be made permanent and just how much government they can live with and live without.

Tuesday, January 19, 2010


The next Team Hammond general meeting will be Tuesday, January 26, 2010 at the Woodmar United Methodist Church, 7320 Northcote Avenue. Meet and greet begins at 6:30 p.m. with the general meeting to follow at 7:00 p.m.

Items on the agenda include property tax caps, elimination of townships, House Bill 1001 (lobbying reform) and updates on city and county council meetings and the Hammond school board meeting.

Any interested in property tax reform and good government are welcome to attend. For more information, contact George Janiec at (219) 678-6761.



The Indiana Senate Tax and Fiscal Policy Committee has a public hearing scheduled for Thursday, January 21, at 9:00 AM, on Senate Bill 309.

SB 309 is best identified as Business-As-Usual-Bill #1 because it is the first General Assembly bill to increase homeowner property taxes to have a public hearing scheduled since the 2008 property tax reform program.

Please contact your State Representative and State Senator to let them know that you oppose BAUB #1. Information on how to identify and contact your State Representative and State Senator can be found at http://www.finplaneducation.net/general_assembly_ratings.htm.

The property tax reform program passed by the General Assembly in 2008 will lower 2010 total property taxes $610.6 million and 2011 total property taxes $534.0 million when compared to the 2007 statewide total property tax burden. The portion of the total property tax savings that will be enjoyed by homesteads is $457.4 million in 2010 and $401.9 million in 2011. The total combined $1.1446 billion property tax savings comes from two property tax reform categories.

1. The 1% - 2% - 3% property tax caps will provide $953.6 million of the combined $1.1446 billion in 2010 and 2011 total property tax savings. The 1% homestead property tax cap will provide $249.6 million of the combined $859.3 million in homestead property tax savings. This property tax reform category would be protected by passage of the constitutional amendment that is expected to be on the ballot this November.

2. The remaining $609.7 million in 2010 and 2011 homestead property tax savings comes mostly from the 35% supplemental homestead deduction, the state assumption of school general fund expenditures, and the qualified senior homestead credit. The state assumption of school general fund expenditures will help provide property tax savings for other property classes. This property tax reform category is susceptible to erosion by the General Assembly.

BAUB #1 will increase 2010 and 2011 statewide total property taxes $116.5 million by allowing the limit on school corporation expenditures from the capital projects fund for utility services and property and casualty insurance to increase from 3.5% to 6% of the 2005 school formula revenue. BAUB #1, which is authored by State Senator Ron Alting (Lafayette), will increase homestead property taxes $35.4 million statewide.

The state has assumed MOST school general fund expenditures, while school capital project funds get their revenue from property taxes. There has been a LOOPHOLE the past several years where school capital project funds are used to help pay for the school general fund expenditures of utility services and property and casualty insurance. BAUB #1 will make this property tax LOOPHOLE bigger.

Instead of increasing the LOOPHOLE limit, school corporations should be encouraged to find more efficient ways of handling their general fund expenditures such as insurance pools for purchasing property and casualty insurance. ALSO, allowing BAUB #1 to pass would encourage school corporations to further abuse the integrity of their capital project funds by trying to include additional general fund expenses such as maintenance and health insurance expenses.

Informed Hoosier taxpayers must insist that their General Assembly public servants oppose the property tax abuse in BAUB #1.

From Watchdog Indiana

Monday, January 18, 2010



STATUS: HB 1001 was passed by the House Rules and Legislative Procedures Committee 9-0 on December 16, 2009.

TESTIMONY - December 16, 2009 - House Rules and Legislative Procedures Committee:

HB 1001 can be evaluated from two vantage points: (1) will the actions of lobbyists and contractors to affect government outcomes become more transparent, and (2) will ordinary citizens have a better chance to affect government outcomes.

HB 1001 is Taxpayer Friendly because it will INDEED make more transparent the actions of lobbyists and contractors to affect government outcomes. The nineteen Taxpayer Friendly provisions of HB 1001 are listed next.

1. The minimum reportable amount for the total daily gifts to a legislator or legislative employee given by a registered lobbyist is reduced from $100 to $50.

2. The minimum reportable amount for a single gift received by a legislator or legislative candidate is reduced from $100 to $50.

3. An individual who holds a state elected office and ceases to hold the state office after June 30, 2010, may not be registered as a lobbyist for 365 days after expiration of the term of office.

4. An individual who holds a position in the executive branch appointed by the Governor (other than a special state appointee) and who ceases to hold that appointment after June 30, 2010, may not be registered as a lobbyist for 365 days after ceasing to hold the appointive position.

5. A member of the General Assembly may not be registered as a lobbyist for 365 days after ceasing to be a member of the General Assembly.

6. The Governor and Governor candidate committees may not solicit campaign contributions, accept campaign contributions, and conduct other fundraising activities during the long session of the General Assembly and during the day before, the day of, and the day after each organization day.

7. Legislators may not solicit campaign contributions, accept campaign contributions, and conduct other fundraising activities during the long session of the General Assembly beginning in January.

8. Persons with contracts with state government, or who bid on contracts with state government, and certain persons affiliated with the contractors and bidders may not make political contributions to an individual who holds a state office or is a candidate for a state office.

9. State employees in the executive branch who have purchasing or procurement authority may not solicit political contributions unless the soliciting individual is a candidate for public office.

10. If a candidate or a candidate’s committee receives a contribution from a person who is prohibited from making a contribution, then they are required to pay an amount equal to the value of the contribution to the Election Division within 30 days of receiving the contribution.

11. The Election Commission shall assess a civil penalty equal to the greater of two times the amount of any prohibited contributions received, or $1,000.

12. Persons with contracts with state government, or who bid on contracts with state government, must register with the Indiana Department of Administration (IDOA).

13. The IDOA must make the information about state contractor registrants available in a searchable database on the IDOA’s web site.

14. State contractor registrants must notify their affiliated persons that they are registered.

15. A civil penalty of not more than $1,000 may be assessed for each business day that a person knowingly or intentionally fails to update a state contractor registration, fails to provide material information on a registration, or states false information on a registration. These penalties are in addition to any investigative costs incurred.

16. Contractors or bidders who violate the registration statutes may be found nonresponsible and have their contracts voided.

17. State officers, employees, and appointees in the executive branch may not accept inherently incompatible outside employment.

18. The Inspector General must create procedures for the issuance of advisory opinions granting approval for certain state employees to have outside employment.

19. If state contractors recklessly, knowingly, or intentionally make prohibited contributions, then they commit a Class B misdemeanor.

Special note should be made of the HB 1001 provisions that keep those who hold a state elected office and a position in the executive branch from joining the lobbyist ranks before a year goes by after they leave their office or position. The public good is NOT served if a public servant is using his current government influence as part of a lobbyist job application.

Special note should also be made of the HB 1001 provisions that keep persons affiliated with state government contractors and bidders, and executive branch employees who have purchasing or procurement authority, from making or soliciting political contributions for state office candidates. These provisions help prevent an egregious potential abuse that has not received a lot of public attention.

The "conflict of interest" provisions in the bill should be deleted. It should be the responsibility of a client to determine if a prospective lobbyist representing other clients involves a conflict of interest.

It is hoped that the legislative gift reports that include the lowered $50 minimum reportable amount will be made accessible online in a searchable database.

Because they require a change of heart rather than legal remedy, HB 1001 cannot be expected to lessen the obstacles to ordinary citizen Statehouse influence that are listed next.

(1) Ordinary citizens will have no greater success in getting face-to-face meetings with their Governor and General Assembly leaders to discuss important legislative matters.

(2) Ordinary citizens will have no greater success in getting their Governor and General Assembly leaders to take their phone calls about important legislative matters.

(3) Ordinary citizens will have no greater success in knowing whether or not their Governor and General Assembly leaders have read their letters and E-mails about important legislative matters.

(4) Ordinary citizens will continue to not have the same time as lobbyists to make their points during public hearings.

In conclusion, HB 1001 is Taxpayer Friendly because it will make more transparent the actions of lobbyists and contractors to affect government outcomes. However, HB 1001 will not lessen the obstacles to ordinary citizens trying to influence the decisions made at their Statehouse. On balance, HB 1001 represents a step forward in open governance and should be passed out of this Committee.

From Watchdog Indiana

Blunt Proof of the Feasibility to Permanently Abolish Property Tax

Media Contacts:
Melyssa Donaghy 317-938-8913
Max Katz 765-409-6669

Hoosiers For Fair Taxation, Senator Delph, Representative Noe, Representative Elrod and many other legislators along with Stop Indiana, attorney John Price, Eric Miller's Advance America, and the Statewide Taxpayer Alliance know that property tax abolishment, without substantial increases in sales tax and income tax, is realistic and possible. The economist Dr. Bill Styring's 2/2/2 Plan demonstrates that the state of Indiana can completely replace property tax without changing the state's current spending habits.

Dr. Styring's plan does not account for positive changes in Indiana's economy that will undoubtedly follow the elimination of property tax such as heavy real estate investment and increased consumer spending due to increased statewide disposable income. The real estate investment in Indiana alone would cause such an economic boom that it could likely end our abandoned property and foreclosure crisis. Property tax elimination would also likely cause a surge in Indiana's population as more people locate to Indiana to take advantage of real estate purchase opportunities without the burden of property tax. With the population surge would come more sales and income taxes.

The General Assembly does not have to adopt a specific plan until the year 2011. In the meantime, we recommend that the General Assembly approves the 27steps outlined in the report prepared by the Sheperd Kernan commission. While the Governor's commission cannot forecast the savings to the state once the plan is implemented, there is no doubt that the savings would be substantial--perhaps equivalent to the the entire property tax burden currently placed on Indiana's homeowners because our legislators have not had the political will to liberate Indiana's governing structure and her taxpayers from the 19th century.

Our citizen networks will work to replace all legislators who do not support property tax repeal in the November 2008 election.

The 2/2/2 Plan, to replace property taxes in Indiana based upon the latest revenue forecast (07/08 fiscal, estimate):

1) Current IN sales tax (state level rate of 6%): $5.601 billion2% increase would yield an additional $1.867 billion

2) Current corporate profits tax: ~$2 billion

2% increase would yield an additional $.286 billion ($286M)

3) A 2% statewide average of the COIT would yield $2.705 billion to cover local civil units of gov.

By adding these three together ($1.867 billion + $.286 billion + $2.705 billion), a total of $4.858 billion is realized; enough revenue to replace property taxes.

Indiana has a 70-plus year history of attempts to lower property taxes by raising other, non-property taxes. In every case these have failed miserably. The new taxes, or higher rates on old taxes, remain in place. And, in short order, property taxes rise back to their old levels, poised to roar even higher.

--1933. General Assembly imposes two new taxes: an individual gross income tax and a corporate gross income tax. The morgue of the Indianapolis Star indicates that the political leadership at the time said this was for property tax relief (1933 was the pits of the Great Depression, and people were losing their homes. Home prices declined by over 40% in the 1929-1933 period). Property tax relief was nonexistent. The state used the money to bail out the state's own finances.

--1963. General Assembly imposes a new sales tax at a rate of 2% and changes the 1933 individual gross income tax (from 1933) to an adjusted gross income tax (the one we have now) at a rate of 2%. Again, the ostensible reason was for property tax relief and again little PTR was forthcoming.

--1967. Those 1963 tax changes were raising more money than projected. The GA decides to give back 8% of sales and income tax revenue to local government for property tax relief. Local units spent the money. No PTR.

--1973. Gov. Otis Bowen launches the most determined PTR offensive yet. The sales tax goes to 4% and a new corporate supplemental net income (profits) tax is imposed. Strict property tax levy controls are imposed. It works... for a time. By 1980, property taxes adjusted for inflation are some 30% lower than in 1973. When Bowen leaves office the levy controls are relaxed. By the end of the decade, property taxes (adjusted for inflation) are back to 1973 levels. The doubling of the sales tax rate from 2% to 4% remains in place, along with the new corporate SNIT.

--2002. More fiddling with the sales tax in the hope of property tax relief. The results of this are obvious, or we wouldn't be debating the current property tax mess. All of this suggests that unless the property tax is totally ripped up by constitutional amendment, the assessment and collection mechanism dismantled, it will grow back. The PTR-inspired hikes in other taxes remain. That is our history. It is a terrible deal for taxpayers.

2. A vote in the 2008 legislative session for a constitutional amendment to repeal property taxes does not amend the constitution. It merely starts the amendment process. Amendments must be passed by two consecutively elected General Assemblies, then submitted to a referendum. Thus any amendment passed by the '08 Assembly must be passed by either the 2009 or 2010 legislatures, then submitted to the voters at the 2010 general election. The General Assembly does not need to decide on a "replacement revenue" package until the 2011 session.

3. What might such a "replacement revenue" package look like? The particular answer will come from the 2011 General Assembly and cannot be determined now (if for no other reason than forecasting state level taxes and property taxes out that far would be a most unreliable exercise. No one need be locked into any particular plan just yet. However, as an illustration that a replacement plan is feasible and less scary than many fear (we don't need to be talking about a 12% or 13% sales tax ... in fact, we should not be), consider just this one possibility.

Local sales taxes are generally very bad policy, for a whole host of reasons too numerous to mention in this short sketch. Sales and corporate taxes are best levied at the state level. It happens that roughly a 2% increase in the sales tax and a 2% increase in the corporate profits tax roughly take care of school propertytaxes. The loss of local control by the state assuming school property taxes is minimal. About the onlylocal control left is on building projects.

For local civil units, a statewide average increase in the individual adjusted gross income tax of about 2% suffices to replace local civil government property taxes, higher than 2% in some units, less than 2% in others.

Thus, a "2-2-2" plan~2% sales and 2% corporate profits at the state level for schools and a 2% average on personal income taxes for civil units—is about what would be needed. This is merely a ballpark projection to 2011.

There may be better plans, it's really a policy question for the General Assembly: do you want to make the trade of something like this in exchange for no-property-taxes-forever-on-anything? Everyone understands "zero."

4. Are there "practical problems? Of course. The two identified are how to make the civil government transition from a property tax base to an income tax base, and how to handle debt backed by property taxes. Without elaborating, the former can be handled using locator software (Map quest-type programs). The debt problem might be handled by treating the current state paid PTRC's as in lieu of property taxes (which they are) and paying PT-backed debt service from each unit's own PTRC.

Conclusion: Total elimination of the property tax via constitutional amendment is the only way to give property tax relief that will stick. The other tax action necessary to achieve this goal—in 2011-are large but not so scary as "a 13% sales tax." They are feasible. The question is for the General Assembly. Are we going to once again go down that 70-odd year path of failed PTR policies or are we going to rip the property tax up by the roots?

Posted by Hoosiers For Fair Taxation on Friday, January 4, 2008.