A Texas man who took hostages in a northwestern Indiana realty office and held police at bay for several hours suffered three gunshot wounds before dying, likely from two different weapons, a coroner said Saturday. Roy L.INDIANAPOLIS – Property tax caps are expected to be enshrined in the Indiana Constitution when voters cast ballots Tuesday.
Organized opposition from the Indiana Chamber of Commerce and Indiana Farm Bureau has faltered in the face of the caps’ popularity among Hoosiers.
The Mike Downs Center for Indiana Politics released a poll Tuesday that showed 52percent of those surveyed statewide planned to vote for the constitutional amendment. The poll found 21 percent were opposed to the amendment proposal and 27 percent undecided.
One major union representing public employees – AFSCME – started running radio ads against the caps recently.
Regardless of which way voters are leaning, Hoosiers should be informed about the proposal and its ramifications, which could be felt for decades to come.
With that in mind, The Journal Gazette offers this primer on the proposed constitutional amendment:
Q. How do the caps work?
A. Though they are often referred to as property tax caps, they were actually designed as “circuit breakers,” because your tax liability can move up and down and is not fixed permanently. The caps limit property tax bills to a certain percentage of assessed value depending on the type of property. For instance, Hoosiers living in owner-occupied homesteads would be prohibited from paying more than 1 percent of the home’s assessed value in property taxes. The caps are higher – 2 percent – for farmland, rental houses, large commercial apartment buildings and second homes. Business property would have caps for property taxes set at 3 percent of assessed valued.
Q. Can my taxes still go up?
A. Yes, in two ways. First, most homeowners and businesses have bills that fall below the caps. That means the bills can increase slowly until they reach the caps. Your taxes can also rise even if you are at the cap if your property’s assessed value increases. For instance, if your home was assessed at $100,000, then your tax bill was capped at $1,000. But if the value of your home increases the next year to $110,000, your tax bill can rise to $1,100. Your taxes can also rise if more spending is approved through referendums, as detailed below.
Q. How is assessed value calculated?
A. Assessed value for homes is largely based on sales of similar properties in your neighborhood. This trending factor is applied to assessed values every year. Your assessed value can also change when you alter your property. Building an addition or putting in a pool would be examples. Farmland is assessed under a specific formula set by the General Assembly and is the same statewide.
Assessed values for businesses may be calculated with the business’s income as a basis because sales of similar businesses are not as common as home sales. Additionally, assessing officials may use the cost to replace the property as a basis for the assessed value. Generally speaking, when determining the assessed value on a business property, the assessing official should calculate the assessed value using all three approaches (sales, income or cost). For some types of properties, the assessor is required by law to use the lowest value of the three methods.
Q. How do referendums play a role?
A. Schools and local governments can offer referendums for capital construction. If they are approved by voters, those property taxes are figured outside the cap. This means that even if your taxes have reached the cap, you have to pay more. Schools also have the option of holding referendums on taxes to provide more spending money for general operations. Such taxes would also be unaffected by the cap.
Q. Who has benefited from the caps so far?
A. A recent review of property tax caps for 2010 showed that 50 percent of the relief provided by the caps goes to the 2 percent-cap category – including farmland, rentals and second homes. Taxpayers in this category saved about $183 million statewide.
An additional $91 million in relief went to homeowners in the 1 percent category, with just 11.5 percent of homesteads hitting the cap in 2010. The relief that is provided more often goes to homes valued above $250,000.
About $88 million in relief went to business property.
Q. How about in Allen County?
A. In Allen County, taxpayers saved $24.6 million in 2010. Of that, $9.8 million went to homesteads with $12.2 million going to apartments and other residential.
Q. If I am paying less, does someone else have to pay more?
A. No. The caps simply mean local governments, schools, public transportation, libraries and other units don’t receive the money above the caps to provide services. In 2010, that meant units did not receive $478 million in property tax revenue statewide because of the caps. The number is expected to rise dramatically in 2011 – to $577 million – due in part to an overall drop in assessed value statewide.
Q. Is there any way for local governments to raise money lost through the caps?
A. Lawmakers have given counties the authority to raise local option income taxes and put some of that money toward property tax relief, which ultimately means fewer taxpayers would be at cap levels.
Q. What is the impact of putting the caps in the constitution?
A. The caps are currently state law, but supporters argue that unless they are added to the Indiana Constitution, they aren’t permanent because future lawmakers could eliminate them or approve exceptions. Nothing is truly permanent, but the process to change the constitution is vastly more difficult than to simply change a law.
Opponents believe the constitution should be for guiding principles – not specific tax policy – and fear the caps will devastate local government and schools, leaving lawmakers with little leeway for change.
Q. Is anyone exempt from the caps?
A. There’s an exemption to the caps for property owners in Lake and St. Joseph counties. Debt service that existed before July 1, 2008, is exempt from the caps in those two counties until 2020.
Q
.
What is the second part of the question regarding mobile homes?
A
. The constitutional question is actually twofold. The first involves the tax caps. The second allows lawmakers to give the same deductions and credits to people who use a mobile home as their principal residence as they do to someone owning a traditional home. Voters cannot vote separately on the two issues.
