For Property Tax Heartburn, Tums or Pepcid AC?

December 4, 2005

Andrea Neal column for Jan. 6 and thereafter

(Editors: Please note that graf 3 assumes Jan. 7 publication. Edit as needed)

ImageINDIANAPOLIS — The rhetoric leading up to this year’s General Assembly sounds a lot like the advertising war over indigestion tablets. To address rising property tax bills, the Democrats are offering Tums for "fast relief." Republicans are touting Pepcid AC. It controls acid to prevent heartburn.

Relief versus control. That’s a summary of the debate that resumes in Indianapolis this week. The Republican-controlled Senate reconvened Tuesday for the 2004 short session. The Democrat-controlled House returns on Thursday.

This year, look for lawmakers to conduct less business than usual for three reasons: One, state revenues remain tight so there’s no money to throw at Indiana’s problems. Second, it’s a big election year with control of the governor’s office and the Indiana House of Representatives at stake. Third, they already met once to tackle the property tax situation and agreed on little, except to disagree.

"I really don’t expect to see too much," says Sen. Thomas J. Wyss, R-Fort Wayne, who is sponsoring a few traffic safety bills but otherwise has low expectations for the session. "When you are out of dollars, there is not a heckuva lot you can do in our present condition. This will be a year of politics for both legislative seats and the governor’s race so I am sure we will see a lot of rancor and blaming for all the problems of Indiana by each party."

In the House, members have introduced nine bills aimed at helping homeowners hit hard by the state’s 2003 move to market-based property assessment.

Among the measures under discussion: HB 1002 introduced by House Speaker B. Patrick Bauer, D-South Bend, to increase the homestead deduction for two years; HB 1003, a farmer’s deduction sponsored by Reps. Alan Chowning, D-Sullivan, Terri Austin, D-Anderson and Scott Reske, D-Pendleton; HB 1004, introduced by Rep. Phil Pflum, D-Milton, a historic homestead deduction that would benefit anyone owning a home at least 50 years old.

Republicans insist such deductions are premature and counterproductive. Premature because the reassessment process is not yet complete — 15 counties haven’t even finalized bills. Counterproductive because any savings enjoyed by homeowners would harm everybody else who would make up the difference through higher tax rates. Bauer’s bill, for one, would shift $268 million in taxes.

The Republicans have gotten behind a modest economic development package they hope will stimulate the economy and therefore generate new incomes and sales tax revenue for the state. For example, SB 47, sponsored by Sen. David C. Ford, R-Hartford City, would provide grants to accelerate getting new inventions of Indiana high-tech businesses to market.

What explains the stark and perplexing difference in perspective? Democrats aren’t usually the ones championing tax relief and Republicans don’t often object to a good deduction.

It comes down to one seat in the Indiana House, the seat that gave Democrats their 51-49 majority. Rep. David Orentlicher, D-Indianapolis, represents District 86, which is populated with civic-minded retirees still fuming from property tax increases of 100 to 300 percent. Orentlicher won the seat in 2002 by just 37 votes. Keeping Orentlicher in office is a Democratic priority. Keeping District 86 voters happy is a political necessity.

Sound advice for the session ahead comes from Sen. Nancy Dembowski, D-Knox, a former Knox mayor who wants to see if reassessment "settles out" before major changes are made. She voices the opinion of many Hoosiers when she wonders if it’s time to take schools and other budget items off the property tax altogether.

"I would like the legislature to begin studying other methods of taxation," Dembowski says. "I have come to realize that in many cases property ownership is not an indicator of wealth. I would like to see a study of using property taxes only to fund local government. This would certainly give a truer picture of its cost. We need to study sales or income taxes for all other funding, or perhaps a combination of the two."

What’s needed over the next two months is bipartisan agreement to thoroughly study the effects of reassessment so long-term solutions can be considered in the next long session, no matter which party is in control.

The right public policy will inevitably benefit all of Indiana, not just District 86. The right public policy is hard to find when politicians are fixated on the next election.

Andrea Neal is former editorial page editor of the Indianapolis Star and adjunct scholar and columnist with the Indiana Policy Review Foundation. Contact her at


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