Local Government Media Center

Editorial: Setting the Record Straight on Businesses and Property Taxes
Misinformation has fanned the flames in our state’s ongoing property tax crisis. It’s not a battle of businesses vs. homeowners. Everyone is in the same boat, the same broken boat that is rapidly sinking. Too often though, attention is misplaced on the convenient notion that “businesses don’t pay their fair share of taxes.” Reality tells another story.

Indiana is among the top third of states for business property taxes, while Hoosier homeowners’ percentage of property taxes paid ranks in the bottom third of all states. In fact, business property represents only 35 percent of Indiana’s total property assessments and homeowners comprise 65 percent; nevertheless, businesses pay more than 50 percent of all property taxes.

The elimination of the state’s tax on inventory has been a focal point of “what went wrong.” When the inventory tax repeal passed the 2002 General Assembly, measures were provided to protect homeowners, but it was up to each county to act. Counties were encouraged to eliminate the inventory tax early – before 2007 – and to implement a homestead credit in order to negate any shift in taxes to homeowners from an inventory tax elimination that has helped secure thousands of new jobs throughout the state.

Ratification of the inventory tax repeal was on the 2004 general election ballot and passed with more than 70 percent of the vote statewide. So, all counties were well aware it was coming. Yet, only 43 of Indiana’s 92 counties took steps to protect their homeowners. The remainder did not.

Going forward, for the sake of all taxpayers, what must be examined is the property tax burden itself. What we need is a complete overhaul of the assessment process and to get the assessments right, and then we can determine where the spending and tax burdens are too high. Further, the business community accepted other taxes in 2002 in return for the repeal of the inventory tax, which now comprises only four percent of the statewide property tax levy.

While assessment problems are a major contributor, local government budgets must also be scrutinized. They are currently growing bigger and bigger every year, by about six percent on average. Certainly, most personal and business budgets aren’t increasing by that amount.

There also needs to be more emphasis on efforts to realize possible efficiencies – most notably with centralizing the assessing duties at the county level. This would be a significant step toward the fairness and uniformity of assessments, and avoiding a repeat of this year’s tax debacle.

Sincerely,

Kevin M. Brinegar
President, Indiana Chamber of Commerce

Patrick J. Kiely
President, Indiana Manufacturers Association

Editorial: Education and Thoughtful Course Needed With Property Taxes
It was painfully clear from the Indiana Chamber’s recent poll of statewide voters that many Hoosiers – 40% to be exact – either don’t know where most of their property tax dollars are being spent or incorrectly think that state government is the number one beneficiary. Why does this matter? People cannot be expected to make informed decisions on actions they want their government to take regarding property taxes if they don’t know what that revenue is even used for.

In the Chamber survey, nearly half of the 800 respondents thought that state government spending was the cause of property tax increases; that’s just not accurate. Nearly all – more than 99% – of the property tax monies collected are for local government purposes. By themselves, schools account for over half of the overall local government property tax total.

Collectively, over the next few months, government leaders, advocacy organizations and the media must make a concerted effort to remedy this wave of misinformation of where property taxes go and make the true facts readily available to the general public.

Hand in hand with that education, the Indiana Chamber believes more visibility and accountability in the property tax system should be high on everyone’s to-do list. When people can see exactly what their property tax money is paying for and who is responsible for the increases, then they can make informed decisions about whether they want to support those increases or hold the responsible entities accountable.

Another message from the Chamber poll was that voters expect equity and fairness regarding who pays what. Agreeing that market value is the correct assessment standard, a majority of voters – 58% to 29% – said that a business and residence with the same market value in the same taxing district should pay the same amount of property tax. This is also in line with the requirements of the Indiana Constitution to establish a “uniform and equal” system.

When it comes to what actual action to take to address the property tax crisis, the answer is not to play the shell game of shifting property tax burdens. Raising new taxes or using money from gaming or the state surplus also miss the mark. Such tinkerings are band-aid reactions and provide no long-term solutions. These approaches have all been used in the past and only make matters worse by ignoring the inherent flaws in our property tax system.

Raiding the state’s surplus would be an especially big mistake since our reserves are not where they need to be. The prudent estimate for what amount should be consistently kept in surplus is 10-12% of the state’s annual budget according to financial experts. We’re currently only at 7.9%. On top of that, economists are warning that Indiana is overdue for a downturn, with this current period of economic growth having lasted longer than normal.

Bottom line: We don’t want to squander all the good work the Daniels administration has done to get the state back in the black on one-time property tax relief that does nothing to fix the root problem.

We must face realities and focus on the true culprits. We must make the organization of local government more efficient by design. We must make it simpler for consistent assessments to be generated. We must make government spending transparent. Only when these issues are dealt with will there be long-lasting solutions that impact all taxpayers.

Sincerely,

Kevin M. Brinegar
President, Indiana Chamber of Commerce

Tax spokespeople and media contacts
To arrange an interview with one of the Indiana Chamber spokespeople, please contact This e-mail address is being protected from spambots. You need JavaScript enabled to view it  at (317) 264-6897 or This e-mail address is being protected from spambots. You need JavaScript enabled to view it  at (317) 264-3792.

• Kevin Brinegar
  President
  Area of expertise: all tax matters
• Mark Lawrance
  Senior Vice President, Foundation and Operations
  Area of expertise: local government (impact, structure and needed efficiency efforts)
• Bill Waltz
  Director, Taxation and Public Finance
  Area of expertise: all tax matters
• Cam Carter
  Vice President, Economic Development
  Area of expertise: economic and workforce implications
• Derek Redelman
  Vice President, Education and Workforce Development
  Area of expertise: school reform