Week of Feb. 11, 2008

The Legislature’s Better Half?
Second half of legislative session off to a slow start…

As if playing a game of chicken, the second half of the legislative session got off to a slow start. The House and Senate kept a watchful eye on each other, waiting for the other to blink—giving some indication of where this session is heading.

Though slow, there was action with the House Ways and Means Committee hearing from urban school systems on the impact of the property tax circuit breakers proposed by Gov. Mitch Daniels. With early projections estimating a $100+ million shortfall for Marion County alone, the same committee will hold hearings Monday and Tuesday, Feb. 11-12, to hear from local government officials about the potential impact circuit breakers will have on their budgets.

In addition, there may be trouble brewing in the property tax reform efforts, as new information was released showing a decline in the state’s anticipated sales tax revenue. A vital component of the governor’s tax plan hinges on increasing the state’s sales tax from 6 to 7 percent. In the coming weeks, expect more discussion surrounding this issue as the specter of an approaching recession will call into question the ability of local governments to effectively plan for a downturn in revenues from a less stable and predictable sales or income tax.

LOCAL GOVERNMENT AND FISCAL POLICY

Issue: Marion County Government Modernization (SB280)
What it means to you: Increased efficiency, accountability and transparency in local government. Authored by Sen. Jim Merritt (R-Indianapolis), SB280 was originally a more robust bill that would have control of IMPD under the Mayor, eliminates township assessors and trustees in Marion County by 2011. But, as the bill has progressed through the legislative process, it has been pared down to only include the consolidation of Marion County township and Airport fire departments with Indianapolis Fire Department, creating a single, county-wide fire department while saving an estimated $15 million a year.
What happened last week: After passing the Senate, the bill has been sent to the House where it will be carried by Reps. Bill Crawford (D-Indianapolis), Jerry Torr (R-Carmel) and Phil Hinkle (R-Indianapolis).
What’s next? Though disappointing that a more robust bill will not be considered in the House, it is encouraging that after four years of trying, Marion County may have a unified fire department that offers better service at a lower cost. Expect a hearing on the bill in the coming weeks and hopefully, broad-based support for this measure.

Issue: Property Tax Reform (HB 1001)
What it means to you: Contains the elements for property tax reform as proposed by Gov. Mitch Daniels, including: plans to limit property taxes to 1 percent of assessed valuation for homesteads, 2 percent for rental properties and 3 percent for commercial/industrial properties; shifting payments for child welfare and school general funds from counties to the state; limiting the growth of municipal budgets to the growth of county income levels, consolidating township assessors into a single appointed county assessor; requiring referenda on debt issued by a county that exceeds 1 percent of the county budget and increases the state sales tax to 7 percent. The bill would also eliminate the newly created, but yet-to-be-implemented County Tax Review Boards and shift the authority to review budgets and veto capital projects the County Council (City-County Council for Marion County).
What happened last week: The bill was heard by the Senate Tax and Fiscal Policy Committee, where members heard from citizens and interest groups on the potential impact to tax bills and government budgets. No vote was taken, and the committee is expected to debate the bill once more before sending it to the full Senate for consideration.
What’s next? With new information being released showing a decline in the State’s sales tax revenue, chairman of the Tax and Fiscal Policy Committee, Sen. Luke Kenley (R-Noblesville) is walking a tightrope as he tries to deliver meaningful reforms without destroying local governments’ ability to fund needed services such as public safety. Expect many possible changes, including restoring referenda for all significant capital projects. Ultimately, a compromise will be hashed out in the final days of the legislative session by the leaders of all four caucuses.

Issue: Elimination of Township Assessors (SB16)
What it means to you: The bill was originally designedto transfer the duties and responsibilities of all township assessors to a county assessor statewide, thus providing more accountable, transparent and uniform assessments. Unfortunately, the bill was amended to exempt townships with more than 15,000 parcels and townships with an international airport from forced consolidation—which means every township in Marion County has been exempted.
What happened last week: The bill was sent to the House where it was assigned to Ways and Means, where Chairman Bill Crawford (D-Indianapolis) will have a chance to address the concerns of Marion County.
What’s next? As is, the bill will face a lot of scrutiny in the House. House leadership may choose to wait to see what action is taken on similar language encompassed in HB1001, which is now being considered in the Senate.

Issue: Limits on Redevelopment Commission and TIFs (SB17)
What it means to you: SB17 limits the amount of time placed on repayments of debt with respect to Tax Increment Finance projects (TIFs) to 25 years. The bill also creates greater oversight by local fiscal bodies on debt issued for economic and redevelopment projects and restricts the expansion of TIF districts.
What happened last week: The bill unanimously passed out of the Senate 47-0 and was sent to the House for consideration, where House Ways and Means Chairman Bill Crawford (D-Indianapolis) will carry the bill. No action has occurred since passage.
What’s next? As a major component of several tax reform proposals, expect this bill to garner bipartisan support AND opposition as it moves through the legislative process. The final version will not to be known until the last days of session.

Issue: Limitations on Government Debt (SB18)
What it means to you: Limits the amount of debt issued by local taxing units, while restricting the amount of time placed on repayments of debt to 25 years for Tax Increment Finance projects (TIFs) and 20 years for all other debt. SB18 also limits the authority of the taxing unit to utilize revenue in excess of anticipated amounts or as a result of re-issuance of bonds. The bill also requires referenda for debt issued for major capital projects, with some exceptions for school districts that have an annual growth rate of more than 4 percent. The bill could have serious consequences for economic development projects around the state as well as negatively impacting school districts that may not be growing at 4 percent, but nonetheless require improvements or additions to their facilities.
What happened last week: The bill passed through the Senate on a split 31-16 vote more than a week ago, but no further action has taken place.
What’s next? The bill heads to the House for consideration, where Ways and Means Chairman Bill Crawford (D-Indianapolis) will carry the bill.

Issue: Child Welfare Levies (SB1)
What it means to you: Shifts the burden of funding for Child Welfare, a state administered program, from counties to the state. As the fastest-growing portion of the Marion County budget, removing this levy will provide immediate property tax relief to Marion County and counties across the state.
What happened last week: The bill unanimously passed the Senate 48-0 and was sent to the House for consideration more than a week ago, but no further action has taken place.
What’s next? As a major component of several property tax reform plans, expect this issue to garner bipartisan support as it makes it way through the legislative process.

 

ECONOMIC GROWTH

Issue: Transportation Tax Area (HB1220)
What it means to you: Further develops and expands the mass transportation opportunities in northwest Indiana and provides central Indiana with additional evidence of the economic benefits related to mass transportation. Money raised through a Sales Tax Increment Financing arrangement will be leveraged to match $500 million of federal funding secured by US Rep. Pete Visclosky (D-IN).
What happened last week: The bill passed the House 55-41 and has been sent to the Senate where it will be considered by the Tax and Fiscal Policy Committee Feb. 12.
What's next? Expect this bill to move through the legislative process and gain bipartisan support. Communities throughout the state will view this legislation as a funding model for mass transportation in their areas.

Issue: Transit Districts (HB1245)
What it means to you: Introduced by State Rep. Terri Austin (D-Anderson), this gives flexibility to local communities throughout the state to fund mass transportation projects through the creation of transit districts. The transit district is able to capture part of: 1) the sales tax in the district; and 2) the adjusted gross income tax withheld from the wages of employees within the district.
What happened last week: After passing the House with a bipartisan vote of 90-7, the bill has been sent to the Senate where it too will be heard by the Senate Tax and Fiscal Policy Committee.
What’s next? Expect further amendments to be introduced to provide communities with greater options to fund mass transit. Whether or not the bill receives a warm reception is still unknown.

Issue: Green Building/Sustainable Design (HB1280)
What it means to you: Requires all new public buildings and structures, (excluding those contracted by a public school corporation, buildings listed on the National Register of Historic Places and structures designed solely to store commodities or other property) and public building repairs valued in excess $1 million, to meet LEED (Leadership in Energy and Environmental Design) Silver or an equivalent rating system. Currently, building to these standards costs no more than 1.5 – 2 percent more than conventional buildings. However, building to LEED Silver standards produces considerable cost savings. It is estimated that the additional investment required to build to LEED standards can be recovered in 12-24 months.
What happened last week: After passing through the House by a close 51-45 vote, the bill has been sent to the Senate where it will be considered by the Energy and Environmental Affairs Committee.
What’s next? Concerns over mandates vs. incentives may prompt opposition by the more conservative Indiana Senate.

 

EDUCATION AND WORKFORCE DEVELOPMENT

Issue: Moving School Board Elections From The Primary To The General Election (SB2)
What it means to you: Greater transparency and accountability with school boards and therefore potentially greater voter turnout. The bill requires that elected school board members must stand for election at general elections.
What happened last week: Authored by Sen. Teresa Lubbers (R-Indianapolis), Sen. Jim Merritt (R-Indianapolis), and Sen. Vaneta Becker (R-Evansville) the bill was passed on third reading 34-13 and was referred to the House. The House sponsor will be Rep. Peggy Welch (D-Bloomington) and the co-sponsor will be Rep. Kathy Richardson (R-Noblesville).
What’s next? The bill has been referred to the House Elections and Apportionment Committee. The Indianapolis Chamber is working with Sen. Lubbers to persuade Rep. Matt Pierce (D-Bloomington) to hear the bill in committee despite pressure from Indiana State Teachers Association (ISTA) to not hear the bill.

Issue: Graduation Rate (SB111)
What it means to you: SB111 amends the current graduation rate formula to ensure that a student is counted in only one cohort in the graduation rate. This primarily affects students who graduate in less than four years. The bill specifies that students graduating as members of a cohort include students from the cohort who graduate during the expected graduation year or during a previous reporting year. The bill also provides that students may count as graduating members of only one cohort and corrects an incorrect cross-reference.
What happened last week: Authored by Sen. Teresa Lubbers, the bill passed 43-5 on third reading and was referred to the House. The House sponsor is Rep. Greg Porter (D-Indianapolis) and the co-sponsor is Rep. Bob Behning (R-Indianapolis).
What’s next? SB111 has been assigned to the House Rules and Legislative Procedures Committee but has not yet been scheduled for a committee hearing.

Issue: Scholarship Granting Organization Tax Credit (SB248)
What it means to you: Promotes school choice and provides an incentive for individuals and businesses to donate to approved, non-profit scholarship granting organizations that serve Hoosier students. These programs would provide scholarships to qualifying low-income families. Donors would receive a partial credit against their state tax liabilities based on their donations.
What happened last week: Authored by Sen. Jeff Drozda (R-Sheridan), the bill passed on Third reading 27-21 and was referred to the House. The House sponsor is Rep. Greg Porter (D-Indianapolis) and the co-sponsor is Rep. Bob Behning (R-Indianapolis).
What’s next? SB248 has been assigned to the House Education Committee but has yet to be scheduled for a committee hearing.