The property tax relief plan Republican Gov. Mitch Daniels unveiled Tuesday promises to reduce homeowners' tax bills roughly 33 percent by 2009. It would:

-- Create permanent circuit breakers designed to limit tax bills. Starting in 2009, homeowners would get a 1 percent cap, meaning the tax bill for an owner-occupied home, or homestead, could not exceed $1,000 on a $100,000 home. The cap, also starting in 2009, would be 2 percent for other residential properties, including rental units, and 3 percent for businesses. The existing 2 percent circuit breaker for homeowners already approved by the General Assembly would remain in place for 2008. Daniels insists his proposed circuit breakers be amended into the Indiana Constitution, a three-year process that would go before voters in 2010 at the earliest.

-- Raise the state sales tax one penny, to 7 percent. If legislators allowed the sales tax hike to take effect in April, it would raise $700 million for homeowner tax relief next year, on top of $250 million the Legislature appropriated last spring for 2008.

-- Get rid of elected assessors. With 92 counties and 1,008 townships, Indiana has 1,110 elected assessors. Under Daniels plan, each county council would appoint one assessor, who would have to meet training standards set by state regulators.

-- Have the state assume $3.2 billion in school and child welfare costs now shouldered by local property owners. The state would pick up $2.1 billion in school operating costs, $495 million in school transportation expenses and $474 million in welfare levies. To accomplish this, the state would reassign $2 billion in property tax replacement credits that now flow to local government. The sales tax hike would fund another $928 million of the swap, with wagering taxes on new slot machines at downstate horse racing tracks covering $100 million more.

-- Limit local spending by stipulating that combined annual increases in a county, including county, library, municipal, school and townships budgets, cannot exceed a six-year average of the growth in personal income within the county. The Daniels administration says this means most counties would have to limit spending increases to 2 to 5 percent per year.

-- Expand the homestead deduction. Homeowners would get a 35 percent reduction on top of the $45,000 annual deduction already in place. A $200,000 home, for instance, would receive the $45,000 deduction to $155,000 in assessed value. The additional 35 percent homestead reduction then would reduce the home's tax value by another $54,250, meaning property taxes would be applied to a base value of $100,750.

-- Further empower county-level tax control boards. The Legislature created the panels, which will begin service in 2009, to lord over local construction projects, determining which should be shelved or reduced in scope. Under Daniels plan, the control board also would review, and potentially reduce, operating budgets.

-- Require voter referendums for "significant" local construction projects. Indiana now uses a remonstrance system that allows voters to oppose capital projects. Voters now would get a vote. Local governments that want to increase annual spending beyond the inflationary limits proposed by Daniels also would have to secure referendum approval.

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