Indiana Senate Announces Brandt Hershman will Chair Commission on Personal Property and Business Taxation

During the summer and fall, State Sen. Brandt Hershman (R-Buck Creek) will chair the Commission on Business Personal Property and Business Taxation.

Hershman authored a new law during the 2014 legislative session that established this commission, which will review the competitive advantages and disadvantages that result from Indiana’s state and local business taxes. The commission will also study the impact of property taxes and tax increment financing and make recommendations on how to best structure these taxes.

“While Indiana maintains a reputation as a low-tax, business-friendly environment, that doesn’t mean our work is done,” Hershman said. “Economists widely recognize the negative impact of certain taxes on business growth, and in order to stay ahead of the curve, we must continually assess our tax climate. Through this commission, we will be able to solidify Indiana’s national status and encourage more companies to set up shop in our state.”

Hershman was also appointed to the following summer study committees, commissions and councils:

• Interim Study Committee on Fiscal Policy, vice-chair
• Legislative Council
• Legislative Council, Audit and Financial Reporting Subcommittee

When Indiana’s part-time legislature is not in session, lawmakers are assigned to interim study committees that meet to review the state’s top issues, as identified by the General Assembly during the prior legislative session. 

Study committee topics are assigned by the bipartisan Legislative Council, comprised of 16 voting members — eight from the House of Representatives and eight from the Senate.

To view interim committee agendas and stream hearings online, visitiga.in.gov and click on “Interim Committees.”

http://www.indianasenaterepublicans.com/news/2014/06/23/2014/sen.-hershman-to-chair-business-taxation-commission/#.U6izocittxI.twitter

The full list of 2014 INTERIM STUDY COMMITTEE ASSIGNMENTS may be found here:

http://www.indianasenaterepublicans.com/clientuploads/2014%20INTERIM%20STUDY%20COMMITTEE%20ASSIGNMENTS.PDF

House Republicans Publish Summer Study Topics

(8) INTERIM STUDY COMMITTEE ON FISCAL POLICY

THE COMMITTEE IS CHARGED WITH STUDYING THE FOLLOWING TOPICS:

(A) The following:

(i) Whether Indiana should implement a state-based health exchange.

(ii) The current operation of the federal exchange in Indiana.

(iii) The definition of "essential health benefits" for use in Indiana under the

Affordable Care Act, including ensuring that the definition results in adequate benefits.

(iv) Access to consumer choice of health care providers.

(HB 1309, SECTION 1 (as introduced)).

(B) A multi-year review, analysis, and evaluation of all tax incentives according to a schedule developed by the Committee.

(HEA 1020-2014, SECTION 1).

(C) Comparison of the effectiveness of tax credits to the effectiveness of grant programs in encouraging the preservation and commercial redevelopment of historic properties.

(HEA 1215-2014, SECTION 1).

(D) The factors contributing to the shift of the local property tax burden, including the following issues:

(i) Shifts in property taxes that result from property tax abatements.

(ii) Abatement claw-backs.

(iii) Property tax deductions, exemptions, and credits that shift the local property tax burden.

(iv) Increased circuit breaker losses to local units that may result from property tax shifts.

(v) Increasing numbers of taxpayers that are claiming property tax exemptions.

(HR 81-2014).

…

SECTION 4. In addition to any other topic assigned to the committee by statute, the study committee identified in this SECTION shall study the following topics and make a final report with findings and recommendations to the Legislative Council before November 1, 2014, in an electronic format under IC 5-14-6:

(1) COMMISSION ON BUSINESS PERSONAL PROPERTY & BUSINESS TAXATION (SEA 1-2014, SECTION 12)

THE COMMISSION IS CHARGED WITH STUDYING THE FOLLOWING TOPICS:

(A) The topics assigned to the Commission by SEA 1-2014, SECTION 12.

(B) The topics described in SEA 118-2014, SECTION 39 (redevelopment commissions, authorities, and departments).

http://www.in.gov/legislative/house_republicans/pdfs/2014/LCR_14-01_study_topics_AS_ADOPTED.pdf

Chapman Asks How Effective are Tax Incentives?

By Jeff Chapman in the Indianapolis Star:

Creating jobs and boosting local economies are of primary importance to legislators in virtually every state. Yet lawmakers too often rely on incomplete, conflicting or anecdotal evidence when deciding whether to adopt and maintain tax incentives to spur economic development. Indiana is poised to take a major step toward ensuring effective evaluation of the state’s tax incentives with the Indiana Economic Development Tax Incentives Evaluation Act (House Bill 1020).

Tax incentives — which include credits, exemptions and deductions — are designed to encourage businesses to locate, hire, expand and invest within a state. HB 1020 continues a commitment by the legislature and by the Indiana Economic Development Corporation to enhance the quality of information available to determine which incentives work, which do not, and how these programs can be improved.

All of this represents real progress for the Hoosier State. A study by The Pew Charitable Trusts showed that until 2012, Indiana was one of the states that did not take the basic steps necessary to assess the results of its tax incentives.

HB 1020, which passed the House and Senate by wide margins, cements recent efforts into law, borrowing proven practices and tools from other states. For example, it would establish regular evaluations of all economic development incentives, requiring that each program be reviewed every five years to determine whether it is meeting the state’s goals and how it can be refined.

But conducting evaluations is not enough, because evidence produced in studies is often not given substantive consideration in policy and budget discussions. HB 1020 would ensure that lawmakers are directly involved in the evaluation process by holding public hearings to examine the data. The Rhode Island legislature passed a similar proposal last year with only a single dissenting vote. This year, Indiana is one of a number of states considering following suit, along with Maine, Mississippi, Nebraska and North Dakota.

When the state of Washington adopted a comprehensive evaluation process in 2006, it established a schedule to review each tax incentive at least every 10 years. Nonpartisan analysts work with a citizen commission to examine a set of incentives annually and make recommendations to the legislature on whether to continue, reform or end them.

Pew’s research shows that evaluators should ask the right questions and draw clear conclusions about what policy changes a state should consider. HB 1020 follows best practices by guaranteeing that programs are evaluated based on how well they reflect state priorities. And it requires rigorous analysis to measure the economic impact of incentives.

This type of evaluation can yield useful results. In Louisiana, businesses benefiting from the state’s Enterprise Zone program reported creating 9,000 jobs. An evaluation by the state’s economic development department found, however, that the new jobs in hotels, restaurants, retail and health care mostly displaced existing jobs. The agency estimated that the program netted only 3,000 new jobs and identified several ways the incentive could be strengthened. The Louisiana legislature now has adopted many of the suggestions.

In Indiana, HB 1020 would give lawmakers the evidence they need to ensure that Hoosier taxpayers get a good return on the millions of state tax dollars spent each year on economic development incentives. This will improve their ability to encourage businesses to create jobs, increase investment, and enhance the state’s quality of life.

http://www.indystar.com/story/opinion/2014/03/07/how-effective-are-tax-incentives-indiana-may-soon-find-out/6183191/

Daily News Reports Greensburg Council Takes Official Stance Against Tax Cut

From the Greensburg Daily News:

The Greensburg City Council has officially opposed a state legislative proposal that has the potential to significantly reduce local tax revenues.

Gov. Mike Pence proposed late last year to completely eliminate the tax that businesses pay annually on their personal property, such as metal stamping machines, plastic injection molding machines and other equipment. Bills in the Indiana Senate and Indiana House tackle the tax in different ways, but both would eliminate just some of the tax.

Proponents of the elimination of the tax say it hinders economic growth because it essentially punishes businesses when they invest in new machinery — and in each subsequent year so long as they own the equipment. Most other states either have eliminated the tax or assess it at a lower rate than Indiana.

However, the tax brings in about $1 billion annually into the coffers of the state’s local governmental units — including counties, cities, towns, townships, sanitation districts and libraries — and city and school officials have said that if the state legislature does not find a way to replace the $1 billion, popular local services, on which residents rely daily, will suffer.

The size of the potential tax revenue losses varies greatly among Indiana cities, counties, towns and libraries and depends on how heavily the counties rely on equipment-heavy jobs such as manufacturing. Potential losses for the city of Greensburg could reach about $425,000. Losses for Greensburg Community Schools could exceed $300,000, and for Decatur County government, the loss could be close to $170,000, according to a report from the Legislative Services Agency, which helps legislators and residents understand the impact of proposed legislation. But depending on the language in the bill, the potential losses could be significantly reduced.

Greensburg City Council on Monday unanimously adopted a resolution to oppose the elimination of the tax at this time. The Council said that the issue needs to be studied more over the summer and that the tax should be eliminated only if the state finds replacement revenues for local governmental units so that they do not have to cut local services.

Many cities, towns and schools in the state oppose the legislation, and some have adopted similar resolutions.
...

http://www.greensburgdailynews.com/local/x1387847321/Council-takes-official-stance-against-state-proposal-to-eliminate-tax

Tribune Reports Gay Marriage Tax Benefit Nixed

From the South Bend Tribune:

Gay rights advocates said they're deeply concerned about a split in state policy from a new federal approach to taxes recognizing same-sex marriage that the Indiana Senate approved 41-6 on Tuesday.

Lawmakers voted to change a tax bill Monday, a move allowing the state to keep its current policy, which does not recognize same-sex marriages for tax purposes.

The move comes in the wake of an emotional debate to ban gay marriage in the state constitution that was derailed earlier this session.

Tim Orient, who lives with his husband and two children in Indianapolis, was married five years ago in Massachusetts. If the bill passes through final legislative negotiations and is signed by Gov. Mike Pence, he'll have to file jointly for his federal return then split his assets for the state.
 

"I guess it was something I'd figured I'd have to live with," Orient said. If Indiana keeps the split with federal policy, "it's going to cost us twice as much" to file his returns, he said.
 

Without the changes to the bill, Indiana could have adopted a new Internal Revenue Service policy giving same-sex marriages equal privileges in tax filings.
...

http://www.southbendtribune.com/news/politics/gay-marriage-tax-benefit-nixed/article_19869f68-a451-11e3-ace4-0017a43b2370.html

IBJ Reports Bill Adds Oversight to Redevelopment Commissions

From the Indianapolis Business Journal:

Despite opposition from cities and towns, the Indiana House passed a Senate bill Monday night that will mean more oversight of redevelopment commissions and force decades-old tax-increment financing districts to expire.

Senate Bill 118, approved on a 71-27 vote, is a victory for Sen. Luke Kenley, R-Noblesville, who for the past two years failed to get similar legislation through the House. The bill was authored this year by Sen. Pete Miller, R-Avon, and combined with related bills by Republican Sens. Greg Walker and Jim Smith.

The legislation will return to the Senate for concurrence.

The bill prohibits redevelopment commissions from issuing public debt greater than $5 million without approval from their local town or city councils.

“Senator Kenley feels strongly that when you’re making a significant obligation … you should have an elected official involved,” Miller said.

He said Kenley asked him last summer to carry a bill similar to one Kenley had filed in the past.

The Carmel Redevelopment Commission was the poster child for lax oversight until 2012, when the city passed a local ordinance that gave the Carmel City Council final say on the CRC’s spending. The CRC had issued millions in debt without council oversight, and the council ended up helping to refinance $184 million by pledging the local property-tax base.

Miller said the bill's limits on tax-increment financing districts caused "some heartburn" for cities and towns, including Greencastle, Brownsburg and Avon in his own district. There are 40 to 50 TIF districts around the state that were grandfathered into perpetuity by the existing statute. Under the bill, any TIF district created before 1995 now must be dissolved by 2025.

That means the incremental property-tax revenue that the districts captured for redevelopment will become available to local government units, such as schools and libraries.
...

http://www.ibj.com/bill-adds-oversight-to-redevelopment-commissions/PARAMS/article/46473

AP Reports Business Tax Cuts Bills Enter Negotiations

By the Associated Press in the Kokomo Tribune:

A package of business tax cuts is on its way to negotiations between Indiana House and state Senate lawmakers following a party-line vote in the Senate.

The Senate voted 33-15 Tuesday to advance the package, sending it to a conference committee of House and Senate members. House and Senate Republicans have agreed broadly on eliminating the state's business equipment tax for small businesses and creating local "super abatements" for some manufacturers.

A few key sticking points remain between the two sides. House Republicans would like to give county leaders the option of eliminating the equipment tax completely.

Gov. Mike Pence started the session seeking a complete elimination of the equipment tax. But he later scaled back his request amid concern from local leaders who stood to lose $1 billion.

http://www.kokomotribune.com/breakingnews/x1783701071/Business-tax-cuts-enter-House-Senate-negotiations

Riley: Important High for Indiana Business Personal Property Taxes

By Larry Riley in the Muncie Star-Press:

The proposal pushed by Gov. Mike Pence to eliminate or reduce business personal property taxes in Indiana appears off the table this legislative session and headed to a study committee.

The idea of making the state more competitive by taxing businesses less joins just about every other of his suggestions for this year’s General Assembly. For a guy who lots of people think wanted to show presidential timber, Pence has his hands full just trying to look like a gubernatorial leader.

Statewide, eliminating business personal property taxes would have taken something like $1 billion or so from local governments — not necessarily a bad move if those local governments would restructure, consolidate and streamline, but they won’t.

So they’d suffer immensely.

That’s not the total reason why legislators are lukewarm at best to the initiative, though howling from officials at local levels throughout the state didn’t hurt opposition at the statehouse.

(A more fundamental reason is legislative leaders don’t want to open the state’s two-year budget, approved last year. Thus the governor’s last minute willingness to replace some or all of the lost local revenues with state money didn’t move anybody, either.)

What exactly is business personal property, or BPP, and what exactly does this tax mean in Delaware County and Muncie?

BPP is anything tangible that businesses use to engage in commerce: furniture, computers, machinery (I guess computers are machines), anything not real estate (that is, land and buildings).

Not included, however, is inventory, and a number of news story headlines unfortunately conflate the two. Inventory, which eventually becomes the actual product sold, is not taxed and hasn’t been for a decade.
...

See the full article here:

http://www.thestarpress.com/apps/pbcs.dll/article?AID=2014303020010

AP Reports Same Sex Marriage Tax Benefits up for Indiana Vote

By the Associated Press in the Indianapolis Star:

Indiana would break from an Internal Revenue Service policy recognizing same-sex marriage for tax purposes if a late-session change becomes law.

The Senate on Monday approved adding the language to another tax bill. The measure is up for a final vote in the chamber Tuesday.

The IRS last year announced all same-sex marriages would be recognized in federal tax returns. The ruling applies regardless of whether the couple lives in an area where their marriage is recognized.

If passed into law, the Indiana bill would split from the IRS and not grant same-sex couples the same tax breaks other couples now receive.

Republican Sen. Brandt Hershman of Buck Creek says blocking the benefits would match Indiana tax policy with the state ban on same-sex marriage.

http://www.nwitimes.com/news/state-and-regional/indiana/same-sex-marriage-tax-benefits-up-for-indiana-vote/article_380486b9-48b6-5e86-9f29-432f518598d7.html

Hayden - Advertising Could Keep School Buses Running

By Maureen Hayden in the Kokomo Tribune:

ash hungry schools may start selling ads on the sides of buses to make up millions of dollars lost because of property tax caps.

Legislation moving through the General Assembly would create a pilot program allowing a few districts to peddle the rights to place ads on buses. It would be the first step in what supporters envision as a statewide program making Indiana the latest state to allow schools to transform their yellow buses into rolling billboards.

“We don’t know yet how much money it will generate, but with the boat we’re in now, every little bit helps,” said Mike Shafer, chief financial officer for Zionsville Community Schools, which lost more than $500,000 in transportation funds last year due to property tax caps.

Zionsville administrators lobbied for the measure, and their district would be one of three in the pilot program. Other districts may soon follow.

“If it’s something a local community wants, I think the state should provide the option to do it,” said Rep. Todd Huston, R-Fishers, author of a larger school transportation bill that contains the advertising provision. “It’s not deemed as something that solves the larger problem, but it can be used as a complementary revenue source.”

Some Howard County superintendents were more hesitant about the possibility of advertising on buses.

“It’s pretty clear when people see a big yellow bus coming down the road that it’s carrying children. I wouldn’t want to do anything to change that,” said Ryan Snoddy, superintendent of Northwestern School Corp. “Having that advertising on the side could distract from their safety. We may have revenue issues, but that’s not the route I’d want to go.”

Schools have been hit hard by the tax caps passed by voters in 2010. While the caps saved property owners $704 million on their tax bills last year, schools lost more than $245 million in funds they used to keep buses running and to pay for other big-ticket items.

...

http://www.kokomotribune.com/local/x1196468547/Advertising-could-keep-school-buses-running

Hayden: Legislators Looking to Help Close Bus Funding Gap

By Maureen Hayden in the Kokomo Tribune:

Legislators are closing in on a way to help some school districts that stand to lose millions of dollars in transportation funds.

A proposal in a school debt service bill essentially stalls for three years a law that requires schools to pay their debts before spending money on buses, building repairs or other big-ticket items.

The delay only helps districts that will lose at least 10 percent of their transportation funds due to the new “protected levy” law – or fewer than 100 of the state’s 294 districts. Schools losing less than that amount must absorb the cuts or dip into operating funds – which pay for salaries for teachers and administrators – for transportation or other needs.

The 10 percent benchmark is seen as a victory by some. An earlier version of the bill set the cutoff at 20 percent.

“We’ll be able to help a lot more schools,” said Sen. Randy Head, R-Logansport, who helped negotiate the new limit. Under the protected levy, Logansport Community Schools stand to lose more than 17 percent of the funds used to keep their buses running – almost $200,000.

Legislators and school officials have spent weeks trying to devise a plan to relieve school districts that have already lost millions from their transportation and capital funds due to property tax caps approved in 2010. Losses vary by district, but overall the caps have cost schools more than $642 million over the past three years.

Current law allows school corporations to spread such losses over several funds, including those for debt service, school pension debt, capital projects, transportation and bus replacement. But the protected levy law, which passed in 2012 and takes effect this July, removes that flexibility. It requires districts to apply property tax revenues to debt payments before other expenses.

...

http://www.kokomotribune.com/local/x1196468549/Legislators-looking-to-help-close-bus-funding-gap

Star Reports Legislature Considers Tax Break for Olympic Prize Money

From the Indianapolis Star:

Olympic medalists from Indiana could soon come home to more than just an adoring public and a proud hometown.

They could be getting a tax break.

The Indiana House is poised to exempt Olympic medals and prize money from Indiana income taxes.
The tax break would be retroactive to Jan. 1, which means it would apply to just one person: Nick Goepper, the 19-year-old from Lawrenceburg who won a bronze medal in slopestyle skiing at the Sochi Winter Olympics.

Other Hoosier medalists such as West Lafayette diver David Boudia will have to win another medal if they want to qualify.

"It would definitely be a blessing," Boudia said of the legislation. He won two medals at the 2012 London Olympics, a gold on 10-meter platform and a bronze in the synchronized event.

In addition to Goepper's bronze medal, he will receive $10,000 from the U.S. Olympic Committee. Gold medal winners receive $25,000, silver medal winners $15,000.

A legislative analysis of the tax break lists its cost to the state as "insignificant."
...

http://www.indystar.com/story/behind-closed-doors/2014/02/27/olympic-skier-nick-goepper-may-get-indiana-tax-break/5873025/

Journal-Gazette Reports Business Tax Legislation Closer to Agreement

From the Fort Wayne Journal-Gazette:

Legislation to cut business taxes is coming together as House and Senate Republicans are moving closer on the details.

Both sides amended bills on the business personal property tax in separate committees Tuesday.

The House program is contained in House Bill 1001 and the Senate proposal is in Senate Bill 1.

Gov. Mike Pence started the discussion by pushing for an elimination or phase-out of the business personal property tax paid on equipment and machinery. It brings in about $1 billion in revenue annually to Indiana schools, cities, towns and other local units.

But legislative Republicans have been working around the margins on the issue.

On Tuesday both the House and Senate inserted language creating a so-called “super abatement” that local units could give to specific companies on equipment for up to 20 or 25 years. Current law limits that to 10 years.

They both agree on eliminating filing for some small businesses, but are still tinkering on the formula. The latest estimate is that only 50 percent of businesses in the state would have to file, but that saves only $13 million statewide because a small number of major businesses pay the bulk of the tax.

“This is a nice improvement,” said Sen. Luke Kenley, R-Noblesville. “It’s much more temperate to locals.”

But House Republicans continue to push a wider-scale option for counties to permanently exempt all new equipment from the business personal property tax. While there would be no immediate fiscal effect, in time the revenue would disappear as equipment is replaced.

Both bills also now include a further reduction in the state corporate income tax. Lawmakers previously passed legislation lowering it from 8.5 percent to 6.5 percent by 2015. It is currently at 7.5 percent.

Both bills now would further drop the tax to 4.9 percent by 2022.

“We stretched that out so it makes revenue loss less and makes the glide path into implementation a little shallower,” said Sen. Brandt Hershman, R-Buck Creek.

http://journalgazette.net/article/20140225/LOCAL06/140229532/0/SEARCH

AP Reports House Looks to Restore Business Tax Cut

From the Associated Press in the Kokomo Tribune:

A panel of Indiana House lawmakers is considering a series of amendments that would overhaul the Senate-approved plan for cutting the state's property tax on business equipment.

The House proposals would also protect tax credits that Senate Republicans proposed cutting to pay for the business equipment plan. If approved, the changes would effectively alter the Senate Republican plan to reflect the earlier House-passed measure.

Senate Appropriations Chairman Luke Kenley has suggested the issue might need to be reviewed after this year's legislative session by a study committee before lawmakers take any action.

Republican Gov. Mike Pence originally sought the elimination of the equipment tax, but trimmed back his request in the face of strong opposition from local government leaders, including many Republican mayors.

http://www.kokomotribune.com/breakingnews/x2039932830/Indiana-House-looks-to-restore-business-tax-cut

Star Press Reports Schools Closer to Tax Relief

From the Muncie Star-Press:

Another step was taken this week that could provide relief for districts dealing with protected taxes legislation.

Muncie Community Schools has been keeping a close eye on this legislative session, which could provide money — at least for a short time — to help keep the school buses running.

Because of protected taxes, MCS stands to lose 89 percent of its transportation fund. Bills moving through the senate and the house in recent weeks could keep that from happening.

This week, the senate appropriations committee heard an amended House Bill 1062, which deals with circuit breaker/protected taxes issues.

The amended bill would exempt school corporations who are impacted by 10 percent or more, including MCS, through 2016. The bill was passed unanimously, 12-0, by the committee. It now moves to the full senate.

A similar bill, SB 163, would have exempted corporations impacted 20 percent or more and offer grants to districts needing relief.

The amended bill is a blending of the two and, as such, will provide relief for 34 more state school districts.

The League of Women Voters of Muncie and Delaware County, which has sent representatives to speak in front of the general assembly, has stated that it believes there will not be anymore hurdles for the bill, that it will pass both the House and Senate.

Legislators failed to pass similar legislation in 2013, instead agreeing to delay implementation of the protected-levy law until this year.
...

http://www.thestarpress.com/apps/pbcs.dll/article?AID=2014302230032

Tribune Argues Local Governments Endangered if Business Equipment Tax Lost

From the Kokomo Tribune:

Indiana legislators face a tough challenge as they attempt to deliver a knockout blow to the state’s business personal property tax.

And a lot of the problem can be laid at their own feet, according to a recently released study by the Indiana Fiscal Policy Institute.

The goal of the group — a private, governmental research non-profit — is to enhance government effectiveness and accountability by educating Indiana’s business, labor and government leaders on fiscal policy issues.

The business tax is one of those issues.

Gov. Mike Pence has said abolition of the tax is high on his priority list, and with a strong majority in both houses, Republicans see their way clear to doing just that.

But even the governor has said he doesn’t want to hurt local government or schools, which depend on the tax for a large chunk of revenue.

Most of the discussion has revolved around how to replace any loss rather than simply forcing educators, cities and towns to further tighten their already tight belts.

The problem, as the 36-page institute paper points out, is the state’s property tax cap, first a law and now a constitutional amendment, immensely complicates the chore.
...

http://www.kokomotribune.com/opinion/x1196449045/Local-govts-endangered-if-business-equipment-tax-lost

AP Reports Business Property Tax Could Drive up other Taxes

By the Associated Press in the Indianapolis Star:

A new legislative report says cutting the business personal property tax could raise taxes for homeowners and workers across the state.

Republican Gov. Mike Pence has made eliminating the tax on business equipment a centerpiece of his second-year legislative agenda. He says the cut is needed to spur job creation.

But cutting that tax could force cash-strapped local governments to raise taxes elsewhere.

The personal property tax accounts for about $1 billion in local tax collections each year. If it were eliminated, analysts for the nonpartisan Legislative Services Agency project property taxes on homeowners could rise and locally based income taxes could increase by nearly 1 percentage point.

The proposal also would mean big losses for local governments — unless another tax was created or increased to make up for the revenue.

To do so with the individual income tax would mean a statewide average increase of more than three-quarters of a percent, according to the report completed Monday.

That could mean an additional $577 a year for a family with taxable income of $75,000. And for residents of more manufacturing-heavy counties, the amount would be substantially higher — as much as three times more.

Currently, the tax generates nearly $1.1 billion for cities, counties, schools, libraries and other local governmental units, according to the Legislative Services Agency report.

LSA estimates a tax-burden shift in this case could mean the owners of so-called real property — which includes homes, buildings and land — would pay about $375 million more annually. Homeowners would be the largest single class of property owners to pay more.

Without other changes or replacement revenue, cities and towns would be hit hardest by the elimination of the personal property tax, with about $175 million in total losses, according to the report. Schools would also be big losers — about $151 million.

David Bottorff, executive director of the Indiana Association of Counties, said that other states that eliminated the business personal property tax covered the losses for local governments. He noted that Illinois' reimbursement for local governments is included in the state's constitution.

"We'll be seeking (for) the state to replace that money."
...

http://www.indystar.com/story/news/politics/2013/12/24/business-property-tax-cut-could-drive-up-other-taxes-report-says/4193431/

News Reports Shelbyville Council Grants Abatement to KN Platech; Passes Resolution Opposing Phase Out of Personal Property Tax

From the Shelbyville News:

The Shelbyville Common Council voted Monday to approve a tax abatement for KN Platech.

The abatement will relieve personal property tax for $2.1 million in new equipment. The abatement works by relieving 100 percent of the personal property tax for a year, 90 percent the second year and so on for 10 years. After that the company pays the full tax.

The new equipment will expand KN Platech's capabilities and the company promised to hire 20 people. The company makes board coverings used in vehicle trunks and impact absorbers for vehicles. It opened in 2011 and recently expanded its operations.
Attorney Stephen Schrumpf appeared with Human Resources Manager Randy Danhauer.

"We're talking about taking KN's employees up to 100," Schrumpf said.

The factory started with 28 workers and currently has 80 employees.

The abatement passed 5-0, with council members David Carmony and Jason Brown absent.

Before voting on the abatement, the council and Mayor Tom DeBaun had some strong words for the state legislature and Gov. Mike Pence.

The council passed a resolution, 5-0, denouncing plans to phase out personal property tax.

The governor and some legislators want to get rid of the tax on equipment. Two bills are making their way through the Statehouse. Senate Bill 1 would get rid of the tax for businesses with under $25,000 in personal property. House Bill 1001 would give each county an option to remove personal property tax.

DeBaun and the council's concern is that Indiana is on a slippery slope towards eliminating the tax, with no stated way to recoup the costs. Shelbyville, which has a heavy manufacturing base, could lose a significant amount of revenue, as would local schools and county government.

The loss of the personal property tax could also raise real estate property taxes, including homes, if the property hasn't reached the tax cap, and the resolution states a fear of "increased personal income taxes."

DeBaun testified in front of the Indiana House Ways and Means Committee last Wednesday on Senate Bill 1, on trips up to the Statehouse last week to meet legislators and other mayors.

"They are not looking at the total impact," DeBaun said at the council meeting Monday.

Council member Ron Hamilton agreed, calling the legislation "outrageous."

"It was done without consulting local government or caring how they feel about it," he said.
...


http://www.shelbynews.com/articles/2014/02/18/news/doc53027ca748e85447585085.txt

Tribune Reports Study of Business Tax Cut Likely

By the Associated Press in the Kokomo Tribune:

Lawmakers considering a cut to Indiana's tax on business equipment might leave the matter to a summer study committee, a move that would delay any action by at least a year.

Senate Appropriations Chairman Luke Kenley of Noblesville said during a hearing Tuesday the issue might be too complicated for this year's short legislative session.

Senate Republicans have proposed cutting the tax for small businesses and cutting the state's corporate income tax. House Republicans have offered a plan that would let counties decide whether to eliminate the tax on new equipment.

The proposals respond to Gov. Mike Pence's suggestion the state phase out the equipment tax completely. Supporters say a phase-out is needed to improve the state's competitiveness. Opponents have said it would hurt local governments.

http://www.kokomotribune.com/breakingnews/x2039927910/Study-of-business-tax-cut-likely-outcome

Pharos-Tribune Reports Cass County Officials React to Potential Loss of Business Personal Property Tax

From the Logansport Pharos-Tribune:

Cass County and Logansport officials’ views vary on the changes to the business personal property tax the Indiana General Assembly is considering.

The state Senate and House of Representatives have devoted part of the current legislative session to Indiana Gov. Mike Pence’s initiative to end the business personal property tax. Pence says doing so will boost jobs and draw businesses to the state that are establishing in other states in the area that already don’t have the tax.

The Senate has drafted a bill to eliminate the tax only for businesses with less than $25,000 worth of equipment. The House wants to give counties the option of exempting taxes on new business equipment. Neither offer a mechanism for replacing the lost revenue, but Pence has expressed a desire to explore a replacement after leaders across the state voiced their opposition to the initiative.

State Sen. Randy Head, R-Logansport, supports the Senate’s proposal, titled Senate Bill 1.

“What we’re trying to do is give a break to small business people,” Head said, adding it will ultimately “leave more money in the hands of people who earned it in the first place.”

There are 35 taxing units in Cass County. According to a report prepared by the state’s Senate Majority Fiscal Office, the county’s expected deduction under the Senate bill is $150,925.

While Head supports the bill, he expressed concerns over the fact that this figure has more than doubled since projections were first released on the matter.

“It’s certainly troubling,” Head said. “You have to wonder if they’re going to change again.”

Head said he recently spoke with Sen. Luke Kenley, an author of the bill, and was told the bill would be changing again before a final vote on the matter.

“Things are in flux,” Head said.

According to the Senate Majority Fiscal Office report, Logansport would lose $53,013 — the most of all the county’s taxing units.

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http://www.pharostribune.com/local/x1196439003/Officials-react-to-deep-sixing-tax