Indiana voters passed an amendment to the State Constitution by referendum in 2010 which made permanent changes to the local property tax formula.
The measure limited local property tax rates to one percent for residential homesteads, two percent for commercial property and second homes, and three percent for industrial and agricultural property. Tax rates set through referendum are exempt from the prohibition. If a school’s tax rate exceeds the cap, then the shortfall must be made up by other entities in the taxing group — for example, the city, township or county.
Governor Mitch Daniels proposed and designed the amendment, which effectively limits the amount local governments and schools can raise by issuing bonds and debt without turning to voters for approval. More than 70 percent of voters cast ballots in favor of the amendment.