News and Tribune

Clark County

October 6, 2006

State officials support Hometown Matters

IACT proposal could decrease property taxes, provide new revenue

As Madison Mayor Al Huntington gave examples of various budget cuts in cities and towns, he said he knew of one community that had to cut its public works budget leaving administrative staff on snow removal detail.

“Frankly, I’m getting tired of going out in the cold,” he said.

Huntington and mayors James Garner of New Albany and Mike Hall of Charlestown led a public meeting in New Albany on Thursday during which Huntington and Indiana Association of Cities and Towns Executive Director Matt Greller laid out their case for Hometown Matters, the organization’s legislative proposal for the upcoming General Assembly.

Hometown Matters proposes giving communities the option to implement taxes — such as income, sales, innkeepers, food and beverage and wheel taxes — that would be used, in part, to reduce property taxes. Money not legally required to be utilized for property tax relief would likely serve as financial windfalls in most communities. Counties would have the right to adopt one or more of the taxes first, then municipalities within a county could adopt some of the taxes if the county declined the opportunity.

About 35 people, most of them elected officials from throughout Southern Indiana, attended Thursday’s workshop.

Garner said New Albany utilizes a number of high-mileage police cars and older fire trucks. The city has used some of its share of County Economic Development Income Tax receipts for sewer repairs.

“We can’t continue to use (CEDIT) funds to maintain our city, to maintain our county,” Garner said. “We need to look at overhauling our tax system in the state of Indiana.”

IACT has not proposed caps on most of the tax options it seeks, but Greller said he anticipates the General Assembly would limit each tax to 1 percent or less. The implementation of each tax would likely include optional increments of .25 percent, he said.

The wheel tax would only be available to municipalities in counties that have not already adopted it, Greller said.

“The most important thing that can happen for local communities … is the potential for property tax cuts,” Huntington said. “Families on fixed incomes are struggling to keep their homes.”

Hometown Matters includes a provision in which each community establishing one or more of the new taxes would establish a “rainy day” fund, equal to the amount of new tax collected during the first year. The fund’s purpose is to provide a safety net for revenue streams that are less predictable than property taxes and would be established during the first three years the new tax or taxes were in place, Greller said.

Greller said during the past few years, the General Assembly has adopted laws that have harmed communities’ abilities to fund local services. Those actions included capping maximum levies at 2003 levels, capping the Property Tax Replacement Credit so that the state no longer pays 20 percent of new property taxes that are generated and the “2 percent circuit breaker” which prohibits property owners from paying more than 2 percent of their assessed property value in taxes during a given year.

“It’s been a tough time for us at the statehouse,” Greller said.

Thursday’s meeting was the first of 16 IACT will host throughout the state between now and Nov. 7. Greller said that IACT is in the process of meeting with all candidates for the Senate and House of Representatives to educate them on Hometown Matters.

The proposal was introduced in the House this year and was assigned to committee but never received a hearing. Greller said sponsors of the proposal’s 2007 version won’t be announced until after the November election.

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