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Property tax overhaul seen by some as another step toward privatization

Gov. Mitch Daniels has a plan to bring property tax relief to Hoosiers as soon as next May. And, the Republican governor is taking bold and powerful steps to ease property taxes in the future.
‘It is not acceptable that any citizen cannot afford to keep the home they may have worked all their lives to buy,’ said Daniels in an address on Oct. 23. ‘The status quo is not tolerable, and we must act to fix it.’
The proposal would provide $1 billion in property tax relief. Daniels’ plans include raising the state’s sales tax from 6 percent to 7 percent, shifting school funding from the local to state level, moving the county assessors from multiple elected positions to a single appointed position by county councils, and guarantees no Hoosier will have to pay more than a penny on the dollar of their home’s value by capping homeowner property taxes at 1 percent of the assessed value. Daniels looks to put the tax percentages into the state’s constitution for permanence.
‘That creates a real problem,’ Dr. Neyland Clark, superintendent of the South Harrison Community School Corp., said of Daniels’ proposal.
The legislature will be unable to change the additions to the state constitution should a problem arise, said Clark.
Harrison County officials say the plan has some merit, but they have problems with a few aspects.
‘I see a few good things,’ said Harrison County Auditor Pat Wolfe, a Democrat, ‘but this plan is heading towards privatization of the state, and I’m against that. Government was not meant to be privatized. We need the checks and balances our system provides. It is the only way we all can choose to have a voice.’
One factor that would immediately cut the property tax bill by more than a third would be shifting the rest of school operating costs and the cost of protecting abused and neglected children from the local to the state level, according to Daniels. The state would take over the General Fund and Transportation Fund of the schools under the governor’s plan.
Clark questioned whether the state will look at the variables and factors that determine the local general fund such as the Collective Bargaining Law 217.
‘I have not heard the governor, or his office, say anything in reference to 217,’ said Clark. ‘If they don’t take that into consideration, I don’t see how that’s going to work.’
The governor is looking to outsource the general operating cost of running school buses around the state, according to Clark. The large geographical area of Harrison County separates it from other counties across the state in terms of bus travel.
‘I don’t think the schools should be governed by the state,’ said Carl (Buck) Mathes, chairman of the Harrison County Council who is a Democrat. ‘It should be kept at the local level. We sometimes get lost in the shuffle.’
Daniels said the only way to make a real lasting difference would be to get to the root of the problem, which, according to him, is excessive spending.
‘He wants to reduce expenditure. I agree with that, but he needs to be careful how he does it,’ said Clark. ‘He may not get what he wants.’
The local spending on school construction, libraries, fire departments and all of the local services cannot keep rising faster than Hoosier incomes, said Daniels, adding that the state must have single-point responsibility for spending, and that no one is responsible today.
‘The County Tax Board in each county must accept the duty of reviewing the total of local spending plans and trimming those budgets as needed to keep our taxes down,’ said Daniels.
Daniels cited borrowing for new schools and other construction as the biggest driver of property-tax increases.
‘I will propose that any significant new capital project, or any spending in excess of the growth in local income, must be approved by voter referendum,’ said Daniels.
Clark said the current remonstrance system for new school projects works. A public hearing takes place, in which 10 to 20 people can stop a process if it is in their interest, according to Clark.
The voter referendum, proposed by Daniels, will be expensive, said Clark.
The governor would protect other property taxpayers from being exploited by proposing hard ceilings, with no exceptions and no loopholes, by creating a 2-percent levy for rental properties and 3-percent for other businesses.
‘From a taxpayer’s perception, this plan is very well received,’ said Clark.
One last point to Daniels’ proposal addresses what he referred to as ‘our unfair and unfixable assessment’ system.
‘I will propose the elimination of all political assessors and the appointment by each county council of a single, qualified and certified assessor to oversee trained professionals in conducting future appraisals,’ he said.
Wolfe defended those who work on the local level.
‘Our local township assessors do a wonderful job,’ she said. ‘They handle all personal property assessments as well as real estate. The value of talking to a person at the local level is priceless.’
Wolfe said she doesn’t see how the state will be able to hire someone cheaper than the current assessors. She fears the assessors hired under Daniels’ plan will only have to answer to the county council that appoints them, not the entire public.
Mathes also expressed disapproval of the governor’s assessor plan.
‘I don’t think that will work out,’ said Mathes. ‘All county officials should be elected.’
The plan also includes an increase in the school ‘Rainy Day’ fund by $50 million.
‘Before settling on the cut-and-cap approach, I looked hard at the idea of totally eliminating property taxes in our state,’ Daniels said. ‘Much as I would like to have taken that route, the risks to our schools, to small business and to our economy generally dissuaded me. In particular, I could not support the large increase in personal income taxes, paid by every Hoosier worker and most small businesses which would be necessary for total elimination.’