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INDIANAPOLIS – Local officials warned state lawmakers Monday that proposed caps on property tax bills could lead to cuts in public safety and other services.
“Residents seem to think these services come at them at no cost and don’t realize that property taxes are paying for them,” Logansport Mayor Michael Fincher told members of the House Ways and Means Committee.
Fincher was among mayors, police officers and firefighters who testified about the proposed caps and legislation that seeks ultimately to amend them into the state constitution. Several police officers and firefighters were in the meeting room, and dozens of others gathered outside to demonstrate their concerns about the possible effect of the caps.
A bill passed by the House and now before the Senate would cap homeowners’ tax bills at 1 percent of their home’s assessed value beginning in 2009, with 2 percent limits on rental property and 3 percent caps on business property. The Senate has passed a bill that would phase those caps in by 2010.
The caps – also called “circuit breakers” – are projected to save property taxpayers about $635 million in 2010. But that also is $635 million less in tax revenue that schools and local governments would otherwise be projected to collect that year.
Of that, schools would get about $171 million less and local governments $464 million less. School officials voiced their concerns before Ways and Means last week, with a third meeting on the proposed constitutional caps scheduled for today.
Lawmakers are under pressure to pass significant property tax relief and reform this session, largely because a variety of factors caused homeowners’ bills last year to increase by 24 percent on average statewide.
But many saw much higher increases.
Logansport would get about $2.1 million less in 2010 under the proposed caps, according to new estimates by the Legislative Services Agency. That would amount to 14.3 percent of its projected budget and about 25 percent of its property tax levy.
Fincher said without the money, the city would have to consider such things as not paying school crossing guards, not replacing three firefighters expected to retire this year, and ending a curbside recycling program.
He also said the city might charge a $20- to $22-a-month fee for trash collection. That means that if somebody got a $200 property tax break from the caps one year, that homeowner would still pay $240 in trash fees, he said.
Beech Grove Fire Chief Dennis Buckley said he would have to cut about $450,000 from the department’s budget of $2.38 million in 2009, and $350,000 more the next year.
Rep. Jeff Espich, R-Uniondale, told officials that they would still get more property tax dollars, the caps would simply slow their growth.
Rep. Bill Davis, R-Portland, said lawmakers were trying to answer an outcry from taxpayers, some of whom are losing their homes because of property tax increases.
