Indiana Realtor blog by James P Wells. Discussing Real Estate topics concerning Central Indiana and the US. Focusing on Boone and Marion County.

Well it’s about time. There is a lot of debate regarding how to fix the Indiana property tax problem, but at least we are now working towards a solution. Yesterday, Indiana’s Governor Mitch Daniels proposed the following changes to address Indiana’s serious property tax problems:

• Cap every home owner’s property taxes to no more than 1% of a home’s true value
• Increase sales tax by 1% and use a “small share” of the state’s budget surplus
• Move school operating costs and the cost of protecting abused and neglected children to the state level
• Control excessive government spending on school construction, libraries, fire departments, and local services by making the County Tax Board responsible for spending
• Any new capital project or spending in excess of the growth of local income be approved by voter referendum
• Elimination of political assessors and the appointment of a single qualified and certified assessor to be responsible for future assessments

I’ve reviewed many discussions regarding the proposed changes and there are people on both sides of the fence. Non-homeowners are upset that they will be required pick up a larger portion of taxes if the burden is pushed to sales tax. There have been requests to eliminate property taxes for those over 65, so they can truly own their home. There is also a debate that transferring the tax burden to sale tax will hurt the lower and middle class.

I don’t know that we can find a solution that will make everyone happy, but I do believe the proposed changes will be an improvement over our current situation. While the Governor’s changes aren’t exactly in line with the proposed changes by the IAR, they are very similar in nature.

As a Realtor, I am tired of seeing friend, family, clients, and myself hurt by the current property tax assessment system. Change is needed and needed soon. I am a little surprised that no one has proposed to use income from the lottery to replace the reduction required in property taxes.

The Indiana Association of Realtors announced their proposed property tax reform the other day citing

“The current property tax mess is the product of three decades of decisions by public officials in both political parties at both the state and local levels. When it comes to property tax reform, we, as Hoosiers, have resisted change for too long; we can not afford to do so any longer. Realtors are offering a plan that calls on everyone in Indiana to step out of their comfort zone, accept the needed changes, and demand reform.” - Karl Berron, CEO of the Indiana Association of Realtors

Referencing high foreclosure rates, falling home prices, and general uncertainty among employers, he goes on to state that Realtors understand the property tax system and that reform is achievable. Her are the proposed changes:

• Eliminate the township assessment system - Reducing the current number of 1008 assessors within the state and require that they be certified as real estate appraisers. In addition they should be appointed positions without political pressure to perform there responsibilities.
• Consolidate local government - Voters should not tolerate local government’s requests for new sources of revenue until they are willing to reform the current antiquated structure. Indiana has more than 2700 local government units with the authority to levy property taxes.
• Cut property taxes - Examples cited: moving certain levies now supported by property taxes, such as court, school, and welfare costs to the State or restricting a property taxpayer’s maximum tax bill to a specific percentage- such a 1%- of their assessed value each year.

The report goes on to say that we must acknowledge that property taxes can not be eliminated. Voters would not tolerate the offsetting taxes that would be required, it would also cause severe harm to the economy, and the fact that we cannot risk potential major cuts in critical services such as education.