The Journal Gazette, 600 W. Main St., Fort Wayne IN

INDIANAPOLIS – State lawmakers learned Wednesday there isn’t really a problem with churches being taxed illegally.

But they considered amending the constitution to prohibit the practice anyway.

“We do not have a crisis today of taxing religious property,” said Sen. Patricia Miller, R-Indianapolis, the author of Senate Joint Resolution 2. “My concern is for the future.”

Statewide, about $24 billion worth of assessed value – or 6.3 percent of the state’s gross assessed value – is exempted from property taxes because of various exceptions including religious purposes.

But speaker after speaker testified Wednesday before the Senate Judiciary Committee that the current system is working well.

“We have a fairly good system that sorts these things out,” said Indianapolis attorney John Price, who has taken these types of tax issues to court before. “What we have now works.”

So why is the state considering a constitutional amendment, asked Sen. David Ford, R-Hartford City.

“Are we muddying the waters further?” he wondered.

And Sen. Tim Lanane, D-Anderson, asked whether there is some dire threat against tax-exempt property that he is unaware of.

In 2003, the legislature even widened the state law, saying all land owned by churches was free from property tax so long as it was used for tax-exempt purposes. Before that, there was a 15-acre limitation that few assessors enforced.

In addition to the acreage issue, the legislature in 2003 clarified provisions in the law in which churches and non-profit organizations might be taxed if their land or buildings are used for profit-making ventures.

But some have scrutinized tax-exempt property as part of the property tax debate because it shifts the burden to other taxpayers.

And at least one House member has considered filing a bill to make non-profit organizations pay a fee in lieu of taxes for public services. But the bill would not affect churches.

The proposed constitutional amendment affects only the religious tax exemption and is narrower than the current law. For instance, it exempts buildings and personal property regularly used for religious worship, while current law uses the term religious purpose.

Any amendment would have to pass two General Assemblies in 2008 and 2009 before a public vote in 2010.

Eric Miller, founder of Advance American, an organization advocating religious freedoms, said unless the amendment is changed he can’t support it because it would pre-empt the law and take away benefits.

Many of the questions revolved around definitions. What is a church? What counts as ministry? What is a religious purpose? What if the church owns land for future projects that isn’t in use? What if the land and buildings produce income?

“It’s very difficult to know where to draw the line,” Sen. Miller said. “It sounds easy, but it’s not.”

Indianapolis Pastor Mark Miller reminded the panel that churches use property for good works in communities, which usually is an offset for property tax exemptions.

He said that his church allows the local police to conduct interviews there and fire departments to conduct training, and the church also serves as a polling place.

“There is a reciprocal value,” Mark Miller said.

nkelly@jg.net