INDIANAPOLIS | Region legislators urged caution Thursday amid news that Lake County officials might challenge a 2003 state law that eased big industry tax bills at the expense of homeowners and smaller businesses.
"Every bill that we pass is eligible to be challenged," said state Rep. Chet Dobis, D-Merrillville. "I don't personally agree with it, and I think they'll probably end up losing in court. My question is how much money are they going to spend to get this done and what happens if they fail? Is it just wasted taxpayers' money?"
State Sen. Earline Rogers, D-Gary, said the 2003 law helped stabilize industry and spurred investment in new steel blast furnaces and a planned $3 billion expansion of the BP Whiting Refinery.
Some legislators suggested the threatened lawsuit might simply be posturing by officials looking for a financial boost from the state.
But Lake County Councilman Larry Blanchard said the county has 100 million reasons to be serious about challenging the 2003 tax law.
"We have no choice in the matter," Blanchard said. "It is really a gross abuse of power, as far as I'm concerned."
Created through House Bill 1858, the law was intended to ease property tax bills for local steel mills and the BP refinery, which argued that they had long shouldered an unfair share of the cost of local government.
The problem is the law has worked too well, Blanchard said, pointing to county data showing that businesses' share of the property tax load dropped by 14 percent, with homeowners and landlords now paying about $100 million more a year than they did in 2002.
Such comparisons are somewhat muddied because the industry tax change took hold about the same time the state undertook a court-ordered overhaul of its property tax assessment system.
Indiana is now in the first year of a similar revolution called trending -- an annual minireassessment process intended to keep property values in line with the real estate market. With assessments in flux, Blanchard argues that the best thing state lawmakers could do is nothing -- let trending take hold before further tinkering.
Postponing the onset of the 2 percent circuit breaker -- another three years until 2013 -- was one suggestion Lake County officials offered state lawmakers this week.
Blanchard says more time is needed to judge how the tax cap will affect local government finances in Lake County. The state puts the 2010 hit at $223 million, while a county study projects $93 million.