INDIANAPOLIS | Lake County will get no reprieve from the severe spending cuts local government would be forced to make under looming state property tax caps, Gov. Mitch Daniels emphatically declared Friday.

So-called circuit breakers already on the books for 2010 would sap an estimated $279 million a year from cities, schools and other taxing units in Lake County. Daniels wants to make those property tax breaks even sweeter, a move that would force the county to shave another $88 million in local spending.

"Business as usual would have to change in Lake County, but people have said that for a long time," Daniels told reporters. "Even existing law will compel that. What won't work is to continue on with 88 taxing districts doing their own thing, no cooperation, no consolidation, no economies of any kind and ask for a bailout from the rest of Indiana. That ain't happening."

Lake County homeowners already see their bills capped at 2 percent of assessed value, meaning they pay no more than $2,000 in annual property tax on a $100,000 home. The cap kicks in next year for homeowners in every other counties, including Porter.

Legislation approved last spring will limit tax bills to 3 percent of assessed value for landlords and businesses statewide, beginning in 2010.

Daniels wants to move the start date to 2009 and lower the caps to 1 percent for homeowners, 2 percent for landlords and 3 percent for businesses. That would force local governments across Indiana to cut $703 million in spending -- or raise income taxes.

"That should be the very last resort," Daniels said of potential county income tax hikes. "Local governments and schools, all they have to do is moderate their spending growth going forward."

Touting new estimates released this week by legislative fiscal analysts, the Republican governor declared that the property tax relief plan he has sent lawmakers would result in "the biggest tax reduction in Indiana history."

Others suggest Daniels' rhetoric is a little fuzzy.

"It's not the biggest tax cut in history -- it's a major swap," said Democratic House Speaker Pat Bauer, of South Bend. "I do think it's a meaningful solution to the problem ... the word cut is probably incorrect."

Daniels' plan would reduce property taxes by $1.8 billion in 2009, but it would be bankrolled by $928 million from a 1-cent sales tax hike and another $180 million redirected from state reserves. The remaining $703 million would come from local spending cuts forced by his tax caps, more than half of which would be imposed on Lake County.