Articles
Governor Daniels' Weekly Wrap-up: 3/18/08
Weekly Wrap-up
A look at news and events in the Daniels Administration
Volume 2, Issue 73
March 10 - 17, 2008
Governor announces a new era of taxpayer protection
Mar. 16, 2008- On March 14, the Indiana General Assembly overwhelmingly passed HB 1001, a bipartisan plan to provide property tax relief and permanent protection against future property tax increases. The plan is an historic win for Hoosier taxpayers. Property taxes will be cut significantly, and caps on future growth provide permanent protection for homeowners and business. When caps are fully in place, the plan delivers $1.72 in tax cuts for each $1 of revenue raised by a one penny sales tax increase.
As Governor Daniels noted, HEA 1001 ushers in a "new era of taxpayer protection" in
Thanks to HEA 1001, Hoosiers will have some of the lowest property taxes in the country - in the bottom 10 states - and among the very strongest protections against future tax increases. "This is a huge step toward making
Key elements of HEA 1001
The plan adopted by the General Assembly meets all four of the key elements laid out by Governor Daniels as essential to providing meaningful and lasting property tax reform in
1. Immediate Relief
a. Homeowners will see an average tax cut of more than 30 percent in 2008 vs. 2007 bills
b. 2008 homeowner relief increased by $620 million - the total expected collection from the sales tax increase - bringing the 2008 total homeowner relief to $870 million
2. Permanent Protection
a. The plan caps homeowner property taxes at 1 percent of a home's assessed value starting in 2010. (In 2009, the cap will be 1.5 percent)
b. The plan caps property taxes for apartments and agricultural land at 2 percent of assessed value in 2010 (In 2009, the caps will be 2.5 percent)
c. The plan caps business property taxes at 3 percent of assessed value in 2010 (In 2009, the cap will be 3.5 percent)
d. When caps are fully in place, the plan delivers $1.72 in tax cuts for each $1 of new sales tax.
e. This plan takes the first step toward placing the caps in the Indiana Constitution. Taxpayers will get a chance to approve the caps in the November, 2010 general election only if lawmakers approve them again next year.
f. State takes over about $3 billion of costs that were previously on local property tax rolls:
i. The remaining 15 percent of school operating costs
ii. Child welfare levies
iii. Costs of juvenile incarceration in state facilities
iv. State fair and forestry levies
v. Health care for the indigent
vi. Pre-school special education levies
vii. Costs of police and fire pensions
g. The state will pay for these costs with revenue raised by increasing the sales tax from 6 percent to 7 percent, existing gaming revenue, and redirecting state sales tax currently used to subsidize local spending.
3. Limits on local government spending
a. Referenda required for new school and local government capital projects.
i. For elementary and middle school projects over $10 million
ii. For high school projects over $20 million
iii. For local government projects over $12 million or 1 percent of assessed value
b. Eliminates loopholes on levy appeals that previously enabled local governments to spend more than budgeted
c. County Council oversight of non-elected board budgets
4. Improved accuracy and fairness in assessment of property value
a. Reduces the total number of assessors from 1,100 to 92 county assessors and 42 township assessors, an 88 percent reduction.
b. Requires referendums this November in townships with more than 15,000 parcels to determine if township assessor duties should be transferred to the county
c. Increased requirements for assessor certification that will mean more equity, uniformity and fairness.
d. A process in place to remove an assessor who does not meet performance expectations.
e. Stronger state oversight with the Department of Local Government Finance required to be party to any vendor contract
5. Other Elements of HEA 1001
a. Provides transition period to ease the impact of the property tax caps on local government
b. Provides special accommodations for Lake and
c. Provides $120 million for schools in 2009 and 2010 to reduce the impact of the tax caps
d. Increases school "rainy day" fund to ensure adequate funding is available in the event of an economic downturn
e. Limits property tax bill increases to no more than 2 percent annually for seniors who make less than $30,000 annually (single) or less than $40,000 (joint), if the assessed value of their homes is $160,000 or less.
f. Increases renters deduction from $2,500 to $3,000.
g. Increases earned income tax credit for lower-income Hoosiers from 6 percent to 9 percent.
Medco breaks ground on world's largest pharmacy
Mar. 11, 2008- Medco Health Solutions, Inc. (NYSE:MHS), joined by Indiana Gov. Mitch Daniels, broke ground on its $140 million automated pharmacy at AllPoints at Anson, and also announced plans to establish a world-class research center for personalized medicine within the pharmacy. The center will feature active collaborations between Medco, universities and the area's colleges of pharmacy to investigate how to deliver more precise pharmacy care through innovations in personalized medicine.
Medco President and Chief Operating Officer Kenneth O. Klepper announced the research center at the groundbreaking for the automated pharmacy, which will cover an area equivalent to six-and-a-half football fields. The mail-order pharmacy is expected to start operating early in 2009 and will be able to dispense one million prescriptions a week when it reaches peak capacity in 2012. Using the most advanced technologies, the automated pharmacy will exceed Six-Sigma ? accuracy levels, delivering the highest level of prescription drug dispensing accuracy in the pharmacy industry.
High-tech motor maker adds jobs
Mar. 13, 2008- Kinetic Art and Technology, a Greenville-based designer of precision modular motors for a myriad of high-tech applications, is commercializing its technology with the help of an
The state awarded the developer and designer of compact electromechanical systems a $1.9 million grant in 2007 to further develop and market its advanced Specialty Equipment Market Association motor technology for use in aerospace, automotive and industrial markets.
Since the state's award, the company has increased employment by more than a third and secured more than $1 million in additional capital.
"The 21st Century Fund is a powerful tool aimed at growing new and innovative companies like Kinetic Art and Technology that are working to bring cutting edge technologies to the marketplace," said Governor Mitch Daniels.
Founded in 1990, Kinetic Art and Technology has developed motor systems in partnership with nearby Honeywell in
"The 21 Fund is allowing the KAT and Honeywell teams to work faster. At an engineering level, we work like one team," said Roy Kessinger, founder and president of Kinetic Art and Technology. "It's a great combination. Our small business does the thing that we do better than anybody, while our big-business partner does what we could not do by ourselves. It's a win for us, Honeywell and for
The Honeywell-KAT partnership has resulted in several joint patent disclosures with more anticipated in the near future, Kessinger said.
Governor's schedule for March 19-21
NOTE: All times are local.
Wednesday, March 19
-Governor Daniels, Speaker of the House B. Patrick Bauer, Senate President Pro Tempore David Long and Lieutenant Governor Becky Skillman will participate in a bill signing event for House Enrolled Act 1001, which provides significant property tax relief and permanent protection against future property tax increases for all Hoosiers.
1 p.m.
State House rotunda
-The governor will give the keynote address at the Clark County Lincoln Day Dinner.
5:30 p.m.
300 Spring Street
Thursday, March 20
-Governor Daniels will discuss HEA 1001 and other topics from the recent legislative session during a town hall meeting.
8:30 a.m.
Betty's Townhouse Café
-The governor will chair a meeting of the board of directors of the Indiana Economic Development Corporation.
10:30 a.m. - meeting
11:45 a.m. approximately - media availability
Old National Bank (8th floor conference room)
Friday, March 21
-Governor Daniels will give welcoming remarks at the YMCA Good Friday Breakfast in
7:30 a.m.
Marriott Hotel
IN THE NEWS
Property-tax reforms make homeowners big winners in Indiana legislature
March 16, 2008
He told lawmakers in his State of the State address in January to be "brave" in their stand against special interests and make homeowners the focus of their work.
That's just what they did.
On Friday, with hours to spare before a midnight deadline, the House and Senate passed a tax-restructuring plan with a focus almost entirely on cutting taxes for homeowners and giving them more say over how much bills increase in the future.
"There was a perception or the actuality of a crisis, and there were millions of people who were afraid of property taxes costing them their home," said House Speaker Pat Bauer, D-South Bend. "We knew we had to do something."
The bill raises the sales tax from 6 percent to 7 percent and provides homeowners with an average 30 percent property-tax cut this year. By 2010, the average homeowner will still be paying about 28 percent less than they were in 2007, although the numbers will vary for counties and individuals.
Some of the state's most powerful lobbying groups -- traditional allies of both Republicans and Democrats -- had fought key provisions of the bill. And while lawmakers made minor adjustments to heed their concerns, many of those lobbyists left the Statehouse on Friday grumbling.
"We have alienated friends -- whether it's agriculture or the business community or mayors," Rep. Jeff Espich, R-Uniondale, said as he argued for the bill in the House. "They all seem to be unhappy with us in one way or another."
Pat Kiely, president of the influential Indiana Manufacturers Association, said last week that his members will get some tax relief next year.
But they are worried about its long-term impact. That's because the legislation limits homeowners' tax bills to no more than 1 percent of assessed value while allowing the owners of commercial property to pay as much as 3 percent -- triple the tax exposure.
"When you go to put homes at 1 percent, you're taking out a big chunk of tax capacity that's going to move to business over time," said Kiely, a former lawmaker. "And we don't have the similar protections that homeowners do, and that is: Produce a lot of votes."
But it's not just business groups that lost their battle for big changes.
Education groups are concerned because those limits on bills -- for homeowners, businesses and rental property -- will cut millions of dollars that otherwise would have flowed to schools.
Construction trades fought key provisions that require referendums for high-value construction projects. And mayors and other local government officials complained repeatedly that they could be forced to lay off police and firefighters to deal with cuts.
But on nearly every major provision, lawmakers sided with homeowners.
"They made clear that this is a property-tax bill for homeowners and that others will have to take second place to that," said Dennis Costerison, executive director of the Indiana Association of School Business Officials. "It's definitely a homeowners' session."
However, Costerison said lawmakers didn't dismiss outside concerns entirely. Fiscal leaders made some technical changes to the bill that his group recommended and added to the plan $120 million for schools from the state to help offset losses in property-tax revenue.
Still, it wasn't easy.
When representatives of businesses and schools and local governments complained early on about provisions of the bill, Senate Tax Chairman Luke Kenley, R-Noblesville, had little patience, telling many to come back when they had their own plan to help homeowners.
In the closing days of the session -- a time when lobbyists in the Statehouse hallways often know the details of key legislation before many legislators do -- most were looking for any scrap of information they could find.
"We were left out of the process," said one lawmaker-turned-lobbyist who did not want to be named because he had a client with an interest in the tax bill. "It's because we were not providing answers. We were just complaining."
The stage was set for the homeowner-focused session last year, when huge increases in property-tax bills in
Voters, frustrated by high bills and Peterson's push for an income tax increase, chose instead little-known Republican Greg Ballard.
Peterson's stunning defeat left its mark on lawmakers, most of whom are on the ballot for re-election this year.
Then, taxpayer groups organized and held rallies to remind legislators that they were paying attention.
One particularly vocal group from Clark and Floyd counties was unsuccessful in its fight for a total property-tax repeal, but state Rep. Paul Robertson, D-Depauw, said the taxpayers made an impact on the debate.
"The special interest has been the homeowner," said Robertson, who voted for the tax bill. "The biggest numbers of people I've heard from by far are homeowners. They've been very well-organized all across the state because of what they've seen happen to their property-tax bills."
House Democrats tried to give local governments and schools more voice in the process, holding special hearings that were designed solely so they could say publicly how the bill would hurt their budgets.
But significant changes to lessen those impacts would have cut into the relief for homeowners. So in most cases, they were forgotten.
Lawmakers did, in the end, loosen the limits on bills in two counties --
"I think it has some reasonable flexibility and there's some transition mechanism" to help as the caps go into place, Daniels said. "But because of this bill,
Reporter Lesley Stedman Weidenbener can be reached at (317) 444-2780.
Legislators deliver a sound property tax relief package
March 15, 2008
The property tax legislation that finally cleared the Indiana General Assembly is, on whole, a sound package.
Under the plan, which awaits Gov. Mitch Daniels' signature, property taxes within two years should fall about 38 percent below what was previously projected.
Even more important, the plan should end the sharp spikes in taxes that have wrecked homeowners' budgets in recent years. The package includes a 1 percent cap on residential property, based on assessed value, and 2 and 3 percent caps on rental and business property.
A few of the compromises that altered the final version of the bill are worthwhile, including an increase in the earned income tax credit for low-income Hoosiers.
But other changes weakened the package. Township assessors, for instance, will stay in place for now in
Creation of a referendum system on major construction projects survived final negotiations. Voters will be given a more direct voice on whether to proceed with expensive proposals. However, the high threshold for triggering a referendum (a high school project, for example, must cost at least $20 million to merit a vote) could limit the effectiveness of that tool.
Those criticisms aside, the magnitude of what legislators and the governor have accomplished this session on this issue shouldn't be overlooked.
The General Assembly had promised for years to fix
The political climate shifted last summer, however. Thousands of
Lawmakers entered this winter's session knowing they had to deliver on tax reform or face voters' well-earned wrath.
The General Assembly, albeit after a couple of false starts, has come through with a solid plan. Taxpayers should be pleased.
Property tax reform bill finally passes
March 15, 2008
Months of political wrangling over property taxes ended Friday as lawmakers approved a major relief and restructuring plan that will give more tax cuts to homeowners this year and cap future bills for most property owners.
The Democrat-controlled House approved the plan 82-17, while the Republican-ruled Senate passed it 41-6. A separate measure that would begin the process of amending the tax bill caps into the state constitution passed the House 79-20 and the Senate 40-7. Both chambers later gaveled out the session.
The package included several modified parts of a plan that Republican Gov. Mitch Daniels presented in October, including raising the sales tax from 6 percent to 7 percent beginning April 1 to help pay for part of the property tax relief.
Daniels called it a historic win for taxpayers that would end an era of "business as usual" for
"Not only are we entering a new era of taxpayer protection, but this ushers in a new era of reform in
Some lawmakers agreed with Daniels in calling the plan's passage a major victory for property taxpayers. Opponents said among other things that it would deal a severe financial blow to many school districts and local governments, and would likely result in an overall tax increase for many Hoosiers.
"It has been a busy session, with property taxes the primary focus," said Rep. Ralph M. Foley (R-Martinsville). "The legislation is for the
Some said it was simply a mixed bag.
"I want everyone to recognize that it's the good, the bad and the ugly, it's gain and it's pain," said Rep. Russ Stilwell, D-Boonville. He was among 16 Democrats and one Republican in the narrowly divided House who voted against the 662-page bill that included the statutory provisions of the plan.
It will provide additional homeowner relief this year by adding $620 million from the increased sales tax revenue to $250 million already allocated for additional homestead credits in 2008.
Homeowners' tax bills this year will be cut by about 30 percent on average statewide from last year. When fully implemented in 2010, the plan would reduce homeowners' bills by an average of nearly 28 percent statewide that year from 2007 levels.
The caps will be phased in over the next two years. Homeowners' tax bills will be capped at 1 percent of their homes' values in 2010, with 2 percent limits for rental property and 3 percent caps on property taxes. The caps could be exceeded if voters approve major bonding projects through referendums.
The tax caps are projected to save property taxpayers about $524 million when fully implemented in 2010, but that is money schools and local municipalities would not get that year. The plan would set aside $120 million for schools over the next two years to soften the caps' impact.
Proponents said the caps would give taxpayers an assurance that their bills could only be so much, but opponents said it would force many schools and local governments to cut services or raise local income taxes to offset future budget shortfalls caused by the caps.
Rep. Craig Fry, D-Mishawaka, predicted that a combination of the sales tax increase and future local income tax hikes would be "by far the largest tax increase in state history."
Lake and
Under another major component of the plan, the state would absorb all school operating costs, four child welfare levies, local juvenile detention costs, money local governments owe for pre-1977 pension plans for police and firefighters, and property taxes used to subsidize costs hospitals incur treating the indigent.
The state would begin paying for those next year by using revenue from the sales tax increase, wagering money from planned casinos at two horse racing tracks, and using $2.1 billion in subsidies the state now gives to local governments to keep property taxes lower.
Several Democrats expressed concerns that the state would be unable to afford those costs, especially when the sluggish economy is taking a hit on state tax collections. Some also said the plan provided a larger percentage of property tax relief to those with higher incomes and more expensive homes.
To help strike a compromise, Republicans agreed to include some items that Democrats wanted. They included an increase in the earned income tax credit for lower-income working Hoosiers, an increase in the renters deductions, and additional tax-increase protections for lower-income seniors.
House Speaker Patrick Bauer, D-South Bend, said the plan provided substantial property tax relief for homeowners, but said there was no question there may be some pain in the months ahead.
"We will have the next eight months to see if the governor's plan is sustainable," he said. "I worry that this grand experiment might not provide everlasting property tax relief. It could lead to income tax increase and cuts in both education and public safety."
But Republican leaders said the plan focused on the right priority - people and their pocketbooks.
"That's what in the end this is really all about: taxpayer relief," said Senate President Pro Tem David Long. "Putting the taxpayer first and government second. That's an important concept we should never forget."
Toll Road interest pleases state treasurer
March 11, 2008
Indiana Treasurer Richard Mourdock announced Monday that in 2007 the state earned more than $287 million in interest from its investment of proceeds from the $3.8 billion lease of the
Gov. Mitch Daniels pushed for the lease of the
Much of the
The Major Movers fund earned a rate of return of 6.15 percent in 2007, while the Next Generation fund earned a return of 7.63 percent.
"I am extremely pleased that the investment income from the Major Move proceeds continues to increase," Mourdock said in a news release. "By actively monitoring and fine-tuning the investments of the Major Movers Construction Fund and the Next Generation Trust Fund, we will be able to provide additional monies that can be used to improve
