Week of Feb. 25, 2008

Let the Games Begin!
 Legislators scramble to salvage dying legislation as deadlines approach

The end of the 2008 session of the Indiana General Assembly is quickly approaching, leaving legislators scrambling to salvage dying legislation and tying up loose ends of bills heading into conference committee.

The jockeying began Tuesday morning when the Senate Tax and Fiscal Policy Committee gutted HB1001—the main property tax reform bill—and inserted its own language (detailed below). On Wednesday, Democrats on the House Ways and Means Committee threw out language in SJR-1 that constitutionally caps property taxes at 1 percent of assessed valuation for homeowners and injected ambiguous language capping property taxes at 1 percent of household income, claiming it is a more appropriate measure of ability to pay.

But the true meltdown occurred late Thursday evening when House Republicans walked off the floor to protest Speaker Pat Bauer’s (D- South Bend) procedural maneuvering to ward off amendments to the Immigration Bill (SB335).

The move reminded legislators and lobbyists of the fragile state of negotiations over property tax reform. If not properly handled, the slightest misstep could derail efforts for true reform. This scenario is highly unlikely, but still possible.

Your Indianapolis Chamber business advocates continue to actively support government and property tax reform to ensure greater Indianapolis remains competitive for business development and quality of life.

LOCAL GOVERNMENT AND FISCAL POLICY

Issue: Property Tax Reform (HB 1001)
What it means to you: HB1001, which has changed many times throughout the legislative process is THE bill for property tax reform. Most, if not all bills dealing with reform, will likely end up in HB1001 on the final evening of the legislative session.
What happened last week: The bill was heard by the Senate Tax and Fiscal Policy Committee and was heavily amended to include the following:

  • Additional Homestead and Property Tax Replacement Credits
  • Property tax caps phased in by 2010 set at 1 percent for homesteads, 2 percent for rentals and 3 percent for commercial/industrial properties, provisions to allow for referendum approved debt to not be included in the caps
  • New supplemental homeowner deductions
  • State assumption of local tax levies, including school general fund, child welfare, pension bond debt for schools and 100 percent of local police and fire pensions
  • Circuit breaker protection funds for schools

To help pay for the new costs incurred, the bill would increase the State’s sales tax by 1 percent and provides greater latitude in the use of local income taxes to make up for shortfalls associated with the property tax caps. To help control spending, the committee will require referenda on certain capital projects, and gave greater control over other projects and budgets to the County Council (Indianapolis/Marion County City-County Council).

Unfortunately, the panel also voted to strip the bill of true assessing reform, choosing to inject language encompassed in SB17 to exempt Marion County for assessors consolidation—a move adamantly opposed by the Chamber.

The committee also injected several provisions from SB17 including: limiting the amount of time placed on repayments of debt with respect to Tax Increment Finance projects (TIFs) to 25 years, greater oversight by local fiscal bodies on debt issued for economic and redevelopment projects, restrictions on the expansion of TIF districts, and permitting a remonstrance on TIFs unless granted a waiver by the Indiana Economic Development Corporation.
What’s next? Expect many changes to be made in the bill as it moves to conference committee, including the addition of elements contained in several bills that failed to advance through the legislative process. Ultimately, a compromise will be hashed out in the final days of the legislative session by the leaders of all four caucuses.

Issue: Marion County Government Modernization (SB280/HB1105)
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 placed control of IMPD under the mayor and eliminated township assessors and trustees in Marion County by 2011. As the bill progressed through the legislative process, it had 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 was stalled in the House by Ways and Means Chairman Bill Crawford. Sen. Jim Merritt amended the fire consolidation language into HB1105, which passed out of the Senate 43-3.
What’s next? Despite the best efforts of Sen. Merritt, House Ways and Means Chairman Bill Crawford (D-Indianapolis) has vowed to kill the bill when it returns for a vote in the House. All might not be lost as we are continually reminded nothing is truly dead until the legislature adjourns Sine Die!

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. Though no action was taken in the House, language exempting Marion County from consolidation was injected into HB1001 in the Senate.
What’s next? As a standalone bill SB16 is dead for the session, though the language will continue as a part of HB1001. As is, the bill does not address the problem areas around the state and will face attempts by the Chamber and our partners to further strengthen the bill.

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 standalone bill SB17 is dead for the session, though the language will continue as a part of HB1001.

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, yet require improvements or additions to their facilities.
What happened last week: The bill passed through the Senate on a split 31-16 vote. No further action took place in the House.
What’s next? As a standalone bill SB18 is dead for the session, though the language will continue to be included in HB1001.

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, but no action was taken.
What’s next? As a standalone bill, SB1, is dead for the session, though the language will continue to be included in HB1001. As a major component of several property tax reform plans, expect this issue to continue 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 was amended by the Tax and Fiscal Policy Committee to send the issue to a summer study committee, where financing mechanisms for this and other projects around the state will be considered in the coming months.
What's next? Though sent to a study committee, the bill has the support of several powerful lawmakers and could be resurrected in the waning days of the legislative session.

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 was sent to the Senate where no action was taken. However, Rep. Terri Austin (D- Anderson) was able to inject the language into SB19 where it faces an uncertain future.
What’s next? Whether or not this amendmenr will remain in SB19 is still unknown.

Issue: Energy Efficient Buildings (HB1280)
What it means to you: Requires all public works contracts related to buildings and structures to have an energy efficient certification.
What happened last week: With strong concerns from the Indiana Hardwood Association and with opposition from the Greater Indianapolis Chamber of Commerce regarding the mandate, the chair of the Senate Environment and Energy Committee amended the bill to send it to a summer study committee for further review.
What's next? The legislation moves to the full Senate for consideration with the summer study recommendation for the Environmental Quality Study Committee.

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) and sponsored by Rep. Peggy Welch (D-Bloomington) and Rep. Kathy Richardson (R-Noblesville) in the House. Although the bill was originally referred to House Elections and Apportionment Committee, Rep. Matt Pierce did not schedule the bill for a hearing. In order to preserve the language, Sen. Sue Landske offered an amendment to HB1196, a bipartisan election bill, to insert language from SB2 into the bill. The amendment passed 5-3 along party lines. The heavily amended election bill passed 5-2 out of Local Government and Elections Committee.
What’s next? HB1196 will be heard on second reading in the Senate before the second reading deadline on Tuesday, Feb. 26. All bills must pass the second house before the third reading deadline on Wednesday, Feb. 27.

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 and sponsored by Rep. Greg Porter (D-Indianapolis) and Rep. Bob Behning (R-Indianapolis). Although SB111 was originally assigned to House Rules and Legislative Procedures Committee, the bill was reassigned to House Education Committee and heard on Wednesday, Feb. 20. SB111 was amended in committee, where the technology language was deleted. SB111 passed unanimously out of committee, 9-0, as amended.
What’s next? SB111 will need to be heard on second reading and third reading this week before the third reading deadline in the House on Wednesday, Feb. 27.

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 and 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) sponsored by Rep. Greg Porter (D-Indianapolis) and Rep. Bob Behning (R-Indianapolis). Although SB248 was originally assigned to House Education committee, Chairman, Rep. Greg Porter (D-Indianapolis) did not schedule a hearing for the bill before the committee report deadline on Thursday, Feb. 21. However, Rep. Bob Behning (R-Indianapolis) proposed an amendment to SB262 on second reading, which contains some of the original language from SB248. SB262 was not called for second reading due to the walkout by House Republicans.
What’s next? The second reading calendar from last Thursday, Feb. 21 will roll over to today, Feb. 25. We anticipate Rep. Behning’s amendment will receive debate on the House floor due to opposition from urban schools.