Monday, November 1, 2010

Why I'll Vote "YES" On The Tax Cap Question

There is a public question on the back of this year's ballot. It would put the property tax caps into the Indiana State Constitution. Here is how the question is written:
PUBLIC QUESTION #1

SHALL PROPERTY TAXES BE LIMITED FOR ALL CLASSES OF PROPERTY by amending the Constitution of the State of Indiana to do the following: (1) Limit a taxpayer's annual property tax bill to the following percentages of gross assessed value: (A) 1% for an owner-occupied primary residence (homestead); (B) 2% for residential property, other than an owner-occupied primary residence, including apartments; (C) 2% for agricultural land; (D) 3% for other real property; and (E) 3% for personal property. The above percentages exclude any property taxes imposed after being approved by the voters in a referendum. (2) Specify that the General Assembly may grant a property tax exemption in the form of a deduction or credit and exempt a mobile home used as a primary residence to the same extent as real property?

The main reason I will vote YES, is that the property tax caps do confer significant protection to property owners and posting them in the Constitution would provide protection to the tax caps themselves. To undo the tax caps, the same multi-year, multi-vote, public process would have to be engaged. This increases the likelihood that the tax caps will remain unscathed for years to come.

Another reason is that the State took over many obligations that had previously resided with property tax payers for schools and cities. In return, they increased the sales tax by 1%, and projected the net effect to the State would be an increase in revenue - even after accounting for the increased obligations. Back in 2008, the estimate was for an net extra of $128 million a year. The State should be encouraged to share more of the revenue with local cities, libraries, etc. But that is an independent course that should be taken regardless of whether or not the tax caps become incorporated into the State Constitution.

Some like to say that the tax caps don't stop increases in Assessed Value of your property. And, that is true. But, the assessed value is supposed to reflect market values. I know our house lost assessed value for the past two years running. Again, the tax caps do not exclude any discussion of also limiting assessed values, say for as long as one owner retains the property.

The tax caps may not be the entire solution to the onerous property tax burdens we saw a couple of years ago. But, they are a mighty step forward in assuaging that burden. I shall be voting YES on the public question, as that is the best route for keep the burden as low as possible for the forseeable future.

6 comments:

Anonymous said...

There are too many ways around tax caps, for example; referendums and exclusions to tax caps such as public safety.

Had Enough Indy? said...

They will never go back on the 1% increase on sales tax, or the referenda.

You can either have the increased sales tax, referenda, and tax caps. Or, take a chance that they'll roll off the tax caps and leave everyone with ever increasing tax bills again.

Carrie said...

I'm confused, I voted yes, because I don't want my taxes to go up. Was there a referendum vote on this ballot. I thought for sure Franklin Township was going to try to pass the referendum again. But I didn't see it on the ballot.

Paul K. Ogden said...

HEI,

I agree...at least you can challenge the assessed value if it strays too far from fair market value.

Paul K. Ogden said...

Carrie,

If they're smart, they'll try to do it during a primary election. Turnout will be lower and they'll have a better chance.

Anonymous said...

Whatever happened to the 170 or so million dollars that was given to the state for riffed teachers to keep schools from getting huge class sizes?
Is this actually going to the schools? With Daniels' majority, will he and Bennett use this money for other things?