Details of the property tax relief deal state lawmakers are working on as part of House Bill 1001. (Read a related story.)
IMPACT
Statewide, this year's homeowner property tax bills are expected to come in an average of 26 percent lower than last year. County-by-county estimates were not available. Next year's bills are expected to be 38 percent lower than what homeowners paid on average in 2007.
TAX HIKES
SALES: On April 1, the state sales tax will rise from 6 percent to 7 percent. The move will raise $620 million this year, which will be used to provide property tax credits to homeowners. Starting next year, the sales tax money will be used to shift about $1 billion in local costs off property taxes and onto the state's ledger.
INCOME: Counties can impose income taxes of up to 1 percent to provide property tax relief or offset local government funding losses triggered by new tax caps. Counties that pass a property tax relief income tax of at least 0.25 percent can raise the tax another 0.25 to fund police and fire services
CAPS
In 90 counties, including Porter, property tax bills will be capped at 1 percent of assessed value for homeowners, 2 percent for landlords and 3 percent for businesses by 2010. In Lake and St. Joseph counties, existing construction debt won't be covered by the caps until 2020. Local government and schools in Lake County faced $250 million in annual spending cuts under the full caps, but it was not immediately clear how much those losses would be reduced by the debt exemption. Key lawmakers said Lake County homeowners would pay less that 2 percent of their assessed value in property taxes between next year and 2020.
DISTRESSED UNITS
A local governments or school districts that loses at least 5 percent of its budget to the new tax caps will be able to make funding pleas to a new Distressed Unit Appeal Board. The seven-member board, a majority of which will be appointed by the governor, will have the power to relax to exempt debt from the tax caps or relax the caps between now and 2012.
SCHOOLS
Lawmakers set aside $120 million -- $50 million next year and $70 million in 2010 -- to split among school districts that lose more than 2 percent of their property tax collection to the new tax caps. Statewide, schools had been expected to lose about $90 million next year and $190 million in 2010. But a late addition to the tax plan exempted existing school construction debt in Lake and St. Joseph counties, which will lessen the cap losses. The impact of exempting the school debt was unclear late Thursday. School can conduct a referendum every seven years to ask voters to offset operating budget losses caused by the property tax caps.
REFERENDA
Voters must give approval to new construction projects that exceed:
$12 million for municipal, county or township projects
$20 million for high school classroom projects
$10 million for elementary and middle school classroom projects
ASSESSORS
Township assessors will be eliminated in all but 42 of Indiana's 1,008 townships. There will be referendums in November to decided whether local assessors keep their jobs in the 42 townships that handle more than 15,000 parcels. The referendums will decide the fate of assessors in Center, Calumet, Hobart, North, Ross and St. John townships in Lake County and Center and Portage townships in Porter County.
COSTS SHIFTS
Next year the state will eliminate $2 billion in property tax relief subsidies to local government and use about $1 billion from a penny sale tax hike to take over roughly $3 billion in local program costs. The following will be shifted to the state:
$2.4 billion in school operating (general fund) costs
$487 million in child welfare levies
$100 million in Hospital Care for the Indigent levies ($25.5 million from Lake County)
$97 million in municipal police and fire pension costs for employees hired prior to 1977
$23 million in county juvenile incarcerations costs
SENIORS
Seniors who own a home under $160,000 and have a household income of less than $30,000 for singles or $40,000 for couples are guaranteed property tax hikes of no more than 2 percent a year. In other words, a qualifying senior who paid $1,000 in property taxes one year would pay no more than $1,020 the next.
RENTERS
Increased the renter deduction on state income taxes from $2,500 to $3,000.
LOW-INCOME FAMILIES
Increases the state earned income tax credit from 6 percent to 9 percent.
