HAMMOND | Gov. Mitch Daniels told Northwest Indiana business leaders Wednesday the state is preparing to lift the local tax burdens off their backs.

"Business as usual is going to end in Lake County," Daniels said in a breakfast address to the Lakeshore Chamber of Commerce.

Daniels visited the area to drum up support for his plan to permanently cap property taxes at 1 percent assessed value for homesteads, 2 percent for rental properties and 3 percent for business.

Tax "ceilings would come down and governments ... will only have the choice to reduce spending and modernize, cooperate (and) maybe even consolidate various functions of government," Daniels said.

Chamber members and local politicians offered the governor both praise and questions about details of his tax-relief package, and they asked whether it can pass in the state Legislature during the 2008 session.

Daniels responded, "You say we might run out of time. We will make more time. (Legislators) can bring their sleeping bags as far as I'm concerned, but I don't think that will be necessary."

A real estate broker asked why businesses have to pay three times the property tax rate assigned to homeowners in the governor's package.

Daniels said, "To me home ownership is sacred. The American dream starts with owning your own home. For some it's the only wealth they have. I have no hesitation viewing home ownership as having precious value that sets it apart."

Daniels said that while business taxes will be higher, his cap on taxes would become a permanent feature of the state's constitution. "That would bring clarity and certainty for business."

"Fair, far-reaching and final relief only works if we have finally true control over local spending.

"In Lake County, 88 units of government each taxes at the level they believe they can get away with. We need single-point accountability, a tax control board so the total doesn't grow too fast," he said.

Daniels said the biggest single driver in the rise of property taxes is the cost of borrowing to build new buildings. "Three-fourths of that are schools, but there are plenty of municipal buildings and libraries and the rest. We need new facilities and to make investments of that kind, but we are way out of whack with the rest of America.

"I suggest we swap out the awkward rather chunky petition drive and just trust the people and have a referendum. Take your case to the citizens to vote up or down," Daniels said.