STATEHOUSE (Feb. 25, 2010) - Property tax cap co-authors Sen. Brandt Hershman (R-Lafayette) and Luke Kenley (R-Noblesville) said their reforms were always “intended to provide fairness, stability and predictability to all classes of property owners - important factors investors and employers seek in a state’s tax code.”

A study released overnight by Ball State University concludes Indiana’s 2008 property tax relief and reforms crafted by Hershman and Kenley could over time result in as many as 97,000 new jobs statewide.

BSU economists who studied the impact of Indiana capping property tax rates - 1 percent of assessed value on owner-occupied homes, 2 percent on other residential and agricultural property and 3 percent for businesses - also expect more immediate improvements in industries that had been negatively impacted by high property taxes. The report specifically pointed to early gains among real estate rentals and sales, wholesale and finance industries.

“Businesses experience a relatively large decrease in property tax payments,” according to BSU’s report entitled, “The Economic Effects of Indiana’s Property Tax Rate Limits.” Savings each year among businesses were estimated at $248 million in the short run and $103 million annually in the long run.
 
Overall, state and local government will take $496 million less from homeowners, farmers and employers, despite a 1 percent increase in sales taxes to fund shifts in local responsibilities to the state level.

“Those are significant numbers in terms of impacting disposable income for Hoosier households and investment capital available for employers and potential employers looking to locate in Indiana. Jobs and the economy are still by far the biggest concerns among Hoosiers. A modern, fair, stable and predictable tax structure is paramount to competing in today’s global economy. That’s why Sen. Kenley and I have worked nonstop the past several years to cut taxes and control government spending,” Hershman said.

“Results of the BSU analysis showed Indiana’s property tax caps are expected to have a considerable, positive effect on increasing employment, income and investment,” Kenley said. “That’s what happens when common sense replaces tax-and-spend craziness. Our reforms said very clearly to current and future taxpayers: Indiana sides with tax payers and not tax spenders. Ball State’s findings should reinforce the will of lawmakers and voters to keep the promise of permanent property tax relief and reform.”

Hoosier voters in November’s general election will determine if the Hershman-Kenley caps on property tax rates will be added to the Indiana Constitution.

“State lawmakers’ final passage this year of the historic reforms sets the stage to add the 1-2-3 caps to Indiana’s Constitution,” Kenley said.  “In order to change the Indiana Constitution, an amendment must be passed by two separately-elected sessions of the Indiana General Assembly and then be approved by voters statewide.”

“In the immediate aftermath of the 2007 property tax crisis, both chambers worked quickly to pass our property tax caps amendment in 2008. The Republican-led Senate kept momentum for the amendment by passing it again in 2009, but it did not receive a vote last year in the Democrat-controlled House. Because lawmakers successfully shepherded the amendment through both chambers this session, Hoosier voters will have the final say on Nov. 2,” Hershman said.

BSU’s report “offers no insight into whether the state constitution should be amended to include property tax caps.”

Hershman represents Senate District 7, which includes Carroll, Clinton, Howard, Jasper, Tippecanoe and White counties.

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