Indiana mayors concerned about business tax phase-out proposal

As many local governments scramble to deal with this brutal winter weather, many Indiana mayors are also battling over how to pay for things like snow removal, public safety, and other essential city services.

In fact, some mayors are now taking on Governor Pence’s plan to phase out a tax on business equipment, saying that it could make their jobs even harder.

The governor says he thinks even more businesses would come to the Hoosier state if Indiana were to phase out the business personal property tax, a tax on business equipment and machinery.

Republican lawmakers introduced and passed dueling plans in the House and Senate last month, which Pence called a good first step.

Thursday the governor called for “improvements” to the legislation making its way through the General Assembly.House lawmakers passed a bill that would make the phase-out optional on a county-by-county basis, and apply the tax cut only to new investments.

Senators passed a bill that cut the tax for 70 percent of businesses. Speaker Brian Bosma said the House and Senate plans still have to be combined somehow, and that talks were already underway to make that happen.All along, Pence has said something needs to be done to cut the tax in an effort to attract more jobs and businesses. Many neighboring states don’t have the tax, or are in the process of phasing it out. Still, some worry the governor’s proposal would mean drastically less money for local governments, or perhaps higher taxes for homeowners if an income tax replacement were to fill the void.

“The concern is we’ve been squeezed so tightly with property tax caps, that we’re operating on a very slender budget,” said Mayor Tom DeBaun, D-Shelbyville, who introduced a resolution to formally oppose the tax phase-out. Other towns and cities, like Plainfield, have done the same.

“I’m very aware that revenues from the business personal property tax all go to our local governments,” said Gov. Pence during a Thursday media availability. “This is really about growth for me.”

“I understand the Governor’s intent, but I think his focus is too narrow,” said DeBaun. “When you look at the other states we’re being compared to, they have other replacement mechanisms.”

DeBaun said if the tax were eliminated entirely, it would cost his city $4 million, which DeBaun said amounted to more than 20 percent of his city’s budget.

Indianapolis city officials said the tax revenues brought in more than $25 million, and would need to be replaced.

“Everyone at the state has said they don’t want to hurt local government units,” said Mayor Greg Ballard, R-Indianapolis. “But none of the proposals so far has a plan to replace the lost revenue that Marion County uses for schools, police officers, firefighters and economic development.”

“This is just a bad tax in a state where you make things,” said Pence. “There’s probably a reason why Ohio doesn’t have a business personal property tax, Illinois doesn’t have one (and) Michigan just voted to phase theirs out.”

The latest debate over taxes comes the same week that the Indiana Fiscal Policy Institute released a study, saying that the reduction or elimination of the tax was no simple task.

“I’m absolutely determined to listen intently to our local leaders,” said Pence. “I don’t want to negotiate this in public.”

Pence praised lawmakers for passing most of his agenda items during the session’s first half, and said he was also closely following the General Assembly’s efforts to pass a new pre-K voucher program.

The governor did not have much to say on the issue of same sex marriage when asked if the Senate should return the controversial resolution known as HJR3 back to its original form, so voters could decide the issue on the ballot.

“I’ve made my position clear on that issue, and out of respect for the legislative process, I’m going to refrain from any further comment until the legislature completes their work,” said Pence. “I think it’s fair to say everyone knows where I stand on that issue… our focus is on our agenda.”

The Senate rules committee is scheduled to hear the issue next Monday.