Governor stumps for plan

We are close to a huge breakthrough in delivering permanent property tax relief for Hoosier homeowners. Legislators from both parties have worked hard and in good faith to evaluate and improve the original plan that I proposed to them last October.
I hope that, in the next week or so, I will be able to sign legislation that cuts property taxes sharply and protects against future unfair increases by capping them forever, while addressing the concerns of local governments and schools about their ability to provide services in the coming era of property tax restraint.

This week, Sen. Luke Kenley and others produced a compromise plan that deserves bipartisan and universal support. It meets all four of the elements I have laid out as essential to real property tax reform: immediate and significant relief for all property taxpayers; permanent protection against future tax increases; meaningful controls on local government spending; and improved accuracy and fairness in the assessment of property values.
Despite many changes, the basic framework of my original proposal has been maintained. It provides an additional $700 million in relief for 2008 tax bills, in addition to the $250 million already allocated by the General Assembly. The average homeowner would see about a 1/3 cut with those hardest hit seeing even greater relief. It takes the cost of funding school operations, child welfare, and other local obligations off the backs of property taxpayers and shifts them to the state. It caps property tax bills at 1 percent of a home's assessed value, requires referenda to approve major new capital projects, and sharply reduces the number of assessors responsible for valuing property.

At the same time, this compromise plan is exactly that - a compromise. It takes into account the concerns that have been expressed most loudly during the legislature's consideration of property tax reform. It provides special tax relief for lower income Hoosiers, renters, and senior citizens. It eases the transition for schools and local governments to a new era of lower property taxes and gives them more flexibility than they've ever had to manage their fiscal affairs. The plan is especially sensitive to the concerns of our schools, providing two years of special payments to partially offset the impact of the new taxpayer protections, allowing communities to exceed the caps for school spending with taxpayer approval, and increasing the school "rainy day fund."

This practical plan provides an opportunity for Hoosiers to come together in our state's best tradition of pragmatic problem solving. It would provide Hoosier homeowners and businesses with security and predictability they've never before enjoyed, knowing that there is a fair and final limit on the amount of tax they will ever pay on their property. It gives taxpayers a much stronger voice in decisions about the new public and school facilities that are built in their communities. It places clear accountability for local government spending on local government officials, finally ending the state subsidies that rewarded those who spent the most locally with the greatest amount of state support.

As I've traveled the state the past few months, I've seen the consequences of high property taxes firsthand. I've met with homeowners of all ages who are scared that they will have to leave their homes because they can no longer pay their property tax bills. They don't understand a system that first decides how much government wants to spend and then sends out the bills, regardless of how high they are. Taxpayers want government to stop living beyond their means and instead hold spending down to what they can afford to pay.
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Mitch Daniels is governor of Indiana.