FORT WAYNE – Hoosiers overwhelmingly approved putting property tax caps into the Indiana Constitution on Tuesday.
Statewide results showed the caps approved by 72 percent of the vote with 89 percent of the precincts reporting.
Overall, 1,017,117 Hoosiers supported the caps while 396,064 were against.
The caps are already in state law. But supporters argued that enshrining them in the constitution would prevent future lawmakers from eroding the caps.
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.
The caps limit property tax bills to a certain percentage of assessed value depending on what kind of property. For instance, Hoosiers living in owner-occupied homesteads are prohibited from paying more than 1 percent of their assessed value.
The percentage rises to 2 percent for farmland, small rental houses, large commercial apartment buildings and second homes.
Business property falls under a 3 percent circuit breaker.
Property taxes for capital projects or operational spending approved in referendums are calculated outside the cap.
Organized opposition from the Indiana Chamber of Commerce and Indiana Farm Bureau faltered early in the face of the caps popularity.
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 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. And the relief that is provided more often goes to homes valued at more than $250,000.
About $88 million in relief went to business property.
This is money that local governments and schools dont receive to provide services.
In some areas of the state, the caps are already causing major cuts. In others, fees are being raised to try to mitigate the loss.