Pence property tax plan helps business, hurts the homeowner

Errington wants to repeal protected taxes for schools

By Rick Yencer

MUNCIE, INDIANA (NEWS) -  A bold property tax plan by Gov. Mike Pence has lawmakers and others wondering about the future of government and education.

Pence proposed to repeal taxes on business equipment that would take $1 billion out of government and school coffers, some that already have been emptied by tax caps and protected tax levies.

Sen. Doug Eckerty, R-Yorktown, a member of the Senate Appropriations Committee, was unsure how much attention the governor's plan would get, since he offered no way to make up the lost revenue.

The Legislature will reconvene Tuesday after a winter storm that shut down Indiana and taxes could be an issue in the short session.

Rep. Sue Errington, D-Muncie, has filed a bill to repeal protected tax levies for schools, giving local educators more leeway in spending. That comes after property controls left Muncie Community Schools without much of a transportation fund and little way to recover the lost money.

Pence's plan has the support of Rep. Jack Lutz, R-Anderson, in principle, but he also said the money had to be made up, and he was unsure how that could be done.

Lutz. like other Republican lawmakers supported phases out inheritance taxes and other corporate income taxes besides imposing tax caps for business, farms and homes at the expense of government and schools.

Any further tax reduction, even to benefit creating jobs and the economy, would have to offset, both Democratic and Republican lawmakers agree.

Sen. Tim Lanane, D-Anderson, Senate minority leader, doubted there would be much change in property tax rules in a short session that also is an election year for the 100 House members and half of the 50 Senate members, including himself and Eckerty.

"I don't think the state could afford to do that," said Lanane, about repealing personal property on equipment. "That would be the last straw."

The windfall in business taxes would benefit big companies like Eli Lilly, Toyota and General Motors by millions while homeowners could pay an extra $175 million in property taxes, according to Legislative Services Agency.

And cities and towns could lose $175 million, according to the LSA with schools hit another $150 million.

Muncie schools already is in debt $50 million and has consolidated high schools and could end bus service since its $77 million budget is not enough to operate.

Muncie city government depends on millions in federal dollars just to keep firefighters employed and that money runs out soon, leaving local officials to raise income taxes or reduce public safety.

Rep. Tom Saunders, R-Lewisville, believed everyone wanted to pay less taxes until their streets were not plowed of snow or trash went uncollected.

The mayor of New Castle recently told citizens that the city had limited means to plow snow, which upset some motorists, Saunders said. 

Saunders, a veteran lawmaker, also was unsure what tax issues might get traction at the Legislature. But he did not think government and schools could afford any less revenue.

Eckerty said the governor's plan would get a hearing, and he thought the Senate also might take a look at tax increment financing districts that take money from new development and put it back into infrastructure and utilities to benefit that new business.

Delaware County and Muncie has numerous TIF districts that takes money that would normally go to government and uses it for new development. A recent plan would create a south Muncie TIF to attract new development there.