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Tax Caps Save Hoosiers Millions, State Budget Woes Continue

The circuit breaker has lowered bills on all properties statewide by nearly $500 million.

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Photo: Noah Coffey (Flickr)

Along with the tax caps, legislators approved Daniels‘ plan to shift all school funding and some other local spending to the state.

Four years ago this week, outrage over soaring property taxes boiled over with protests at the governor‘s mansion that lit the fuse for a constitutional cap on tax bills. The circuit breaker Governor Daniels proposed months later became law the following year, and is now part of the constitution. About one in eight homes bumped against the caps last year, the first year they were in full effect. Those property owners saved about $100 million in taxes. The circuit breaker has lowered bills on all properties statewide by nearly $500 million. Along with the tax caps, legislators approved Daniels‘ plan to shift all school funding and some other local spending to the state. That move lopped another $900 million off property tax bills, but Hoosiers have paid about the same amount in increased sales taxes to cover it. Kokomo realtor and Howard County Commissioner Paul Wyman, a leader of the push to put the caps in the constitution, said the changes have created a fairer tax system and stabilized property values.

“I”t‘s helped a lot of people on fixed incomes plan their family budgets for the following year,” said Wyman. Putting a little bit on the sales tax, the sales tax to me is a more fair tax; everybody who‘s out participating in the economy and spending money is sharing in the tax burden.”

Wyman said before the caps, there were neighborhoods where taxes had skyrocketed so much that it was literally impossible to sell homes. Andrew Berger with the Association of Indiana Counties warns the money taxpayers have saved is money local governments have lost and that voters who approved putting the tax caps in the constitution will have to decide whether they‘re comfortable with the effects on local government services.

“Something that a taxpayer may see immediately is the fact that a road that definitely needs to be repaved is not going to be repaved and there‘s not any plans to repave it,” said Berger.

He said counties have made the easy spending cuts, but many may soon have to cut workers. Berger said Hoosiers should be ready for longer lines as the price of lower bills.

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