Senate Joint Resolution 1

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Senate Joint Resolution 1, which contains a meaningful homeowner property tax cap amendment to the Indiana Constitution, passed the Indiana Senate 40-7 and the Indiana House 79-20 on March 14. The digest of SJR 1 is as follows:

For property taxes first due and payable in 2012 and thereafter, requires the General Assembly to limit a taxpayer's property tax liability as follows: (1) A taxpayer's property tax liability on homestead property may not exceed 1% of the gross assessed value of the homestead property. (2) A taxpayer's property tax liability on other residential property (residental rentals, apartments, mobile home land, long term care facilities) may not exceed 2% of the gross assessed value of the other residential property. (3) A taxpayer's property tax liability on agricultural land may not exceed 2% of the gross assessed value of the property that is the basis for the determination of the agricultural land. (4) A taxpayer's property tax liability on other real property may not exceed 3% of the gross assessed value of the other real property. (5) A taxpayer's property tax liability on personal property may not exceed 3% of the gross assessed value of the taxpayer's personal property that is the basis for the determination of property taxes within a particular taxing district. Specifies that property taxes imposed after being approved by the voters in a referendum shall not be considered for purposes of calculating the limits to property tax liability under these provisions. Provides that in the case of a county for which the General Assembly determines in 2008 that limits to property tax liability are expected to reduce in 2010 the aggregate property tax revenue that would otherwise be collected by all units and school corporations in the county by at least 20%, the General Assembly may provide that property taxes imposed in the county to pay debt service or make lease payments for bonds or leases issued or entered into before July 1, 2008, shall not be considered for purposes of calculating the limits to property tax liability. Specifies that such a law may not apply after December 31, 2019. Permits the General Assembly to exempt a mobile home used as a homestead to the same extent as real property. Specifies that an exemption may be granted in the form of a deduction or credit. Specifies that the general assembly may impose reasonable filing requirements to obtain an exemption, deduction, or credit.

The preceding SJR 1 digest needs some clarification regarding the constitutional homeowner property tax cap amendment. For property taxes first due and payable in 2012, 90 of Indiana's 92 counties will have a homeowner property tax cap that is 1% of the gross assessed value. Until 2020, existing debt service prior to July 1, 2008, is exempted from the 1% homeowner gross assessed value cap in Lake and St. Joseph counties ONLY. The effect of these two existing debt service exemptions is analyzed next.

Lake County SJR 1 effect: If the median-priced home in Lake County is the same as the median-priced home in Indiana, the median-priced home in Lake County is $104,833. The pay 2006 average net homestead property tax rate in Lake County is $2.9281 per $100 of assessed value. Therefore, the typical Lake County working family currently has a $3,069 property tax burden ($2.9281 multiplied by 1,048.33). The Lake County existing debt service averages 30% of total property taxes. Thus, the typical Lake County working family now pays $921 for existing debt service ($3,069 multiplied by 0.3). If the Lake County working family lived in any county other than St. Joseph County, their 1% property tax cap would lower their property tax burden from $3,069 to $1,048 ($104,833 multiplied by 0.01). However, because the working family lives in Lake County, their after-cap property tax burden will be $1,969 ($1,048 plus $921) instead of $1,048 - an 88% increase.

St. Joseph County SJR 1 effect: If the median-priced home in St. Joseph County is the same as the median-priced home in Indiana, the median-priced home in St. Joseph County is $104,833. The pay 2006 average net homestead property tax rate in St. Joseph County is $2.3105 per $100 of assessed value. Therefore, the typical St. Joseph County working family currently has a $2,422 property tax burden ($2.3105 multiplied by 1,048.33). The St. Joseph County existing debt service averages 22.5% of total property taxes. Thus, the typical St. Joseph County working family now pays $545 for existing debt service ($2,422 multiplied by 0.225). If the St. Joseph County working family lived in any county other than Lake County, their 1% property tax cap would lower their property tax burden from $2,422 to $1,048 ($104,833 multiplied by 0.01). However, because the working family lives in St. Joseph County, their after-cap property tax burden will be $1,593 ($1,048 plus $545) instead of $1,048 - a 52% increase.

What it all boils down to is that the constitutional homeowner property tax cap amendment for 90 counties is 1% of the gross assessed value while the caps for Lake and St. Joseph counties are 1.88% and 1.52% respectively. The caps for Lake and St. Joseph counties will become 1% in 2020.

Even though the beginning homeowner property tax caps are more in Lake and St. Joseph counties, the caps will result in a 2010 property tax reduction of 36% for the typical Lake County working family and a 34% reduction for the typical St. Joseph County working family.

Because of the unique Lake and St. Joseph situations, a General Assembly legislator representing these two counties could make a Taxpayer Friendly vote both FOR and AGAINST SJR 1. A legislator could vote FOR SJR 1 because of the significant homeowner property tax reduction it provides. A legislator could vote AGAINST SJR 1 because of the higher homeowner property tax caps. It is up to the Lake County and St. Joseph County watchdogs to decide which SJR 1 vote meets their Taxpayer Friendly threshold.

For the 90 Indiana counties that will have a homeowner property tax cap at 1% of the gross assessed value, it is easy to identify which legislators took a Taxpayer Friendly vote on SJR1 and which did not. A YES vote for the 1% constitutional homeowner property tax cap is Taxpayer Friendly. The 1% cap will enable Hoosier working families to reasonably predict their property taxes so they do not become an unaffordable burden that could lead to the loss of the family home. The 1% cap ends the legacy of failure where (1) we suffer permanent tax increases for temporary property tax relief and (2) property tax caps disappear.

SJR 1 must again pass in the General Assembly in 2009 to put the 1% constitutional homeowner property tax cap amendment on the 2010 ballot. We the people can then vote to make the 1% homeowner property tax cap a permanent part of the Indiana Constitution.

2008 General Assembly Voting Record on Senate Joint Resolution 1:

NOTE: Neither a YES vote nor a NO vote by a legislator whose district includes Lake or St. Joseph counties is Taxpayer Friendly or Taxpayer UNfriendly; legislators whose district includes Lake or St. Joseph counties are not listed below.

Taxpayer Friendly State Representative YES votes: Kreg Battles, Robert W. Behning, Matt Bell, Robert J. Bischoff, Sandra Blanton, Bruce A. Borders, Randy Borror, Brian C. Bosma, Tim Brown, Jim Buck, Lawrence L. (Larry) Buell, Woody Burton, David Cheatham, Robert W. (Bob) Cherry, William C. Cochran, William A. Crawford, Suzanne Crouch, Bill J. Davis, John J. Day, Nancy Dembowski, Tom Dermody, Richard "Dick" Dodge, Cleo Duncan, Sean R. Eberhart, Jon Elrod, Jeffrey K. Espich, Ralph M. Foley, William C. Friend, David N. Frizzell, Phil GiaQuinta, Terry Goodin, F. Dale Grubb, Eric Gutwein, Timothy W. Harris, Ron Herrell, Phillip D. (Phil) Hinkle, Sheila J. Klinker, Tom Knollman, Eric Allan Koch, Daniel J. (Dan) Leonard, L. Jack Lutz, Carolene Mays, Richard W. McClain, Joe Micon, Win Moses, Jr., Michael B. Murphy, Cindy Noe, David Orentlicher, Dennie Oxley, Phyllis J. Pond, Gregory W. Porter, Scott Reske, Kathy K. Richardson, Paul J. Robertson, William J. (Bill) Ruppel, Greg Simms, Milo Smith, Steven R. Stemler, Greg Steuerwald, Russ Stilwell, Marlin A. Stutzman, Vanessa J. Summers, Amos Thomas, Jeff Thompson, Vern Tincher, Gerald R. (Jerry) Torr, P. Eric Turner, Dennis Tyler, John D. Ulmer, David A. Wolkins.

Taxpayer UNfriendly State Representative NO votes: Terri Jo Austin, Dennis T. Avery, Jeb Bardon, John Bartlett, Dave Crooks, George Philip Hoy, Clyde Kersey, Scott D. Pelath, Phillip Pflum, Matt Pierce, Michael A. Ripley, Thomas E. (Tom) Saunders, Trent Van Haaften, Peggy Welch.
Taxpayer Friendly State Senator YES votes: Ron Alting, Vaneta G. Becker, Phillip L. (Phil) Boots, Richard D. Bray, Jean Breaux, Mike Delph, Gary P. Dillon, Jeff Drozda, Sue Errington, Beverly J. Gard, Brandt Hershman, Robert N. Jackman, Luke Kenley, Dennis K. Kruse, Tim Lanane, Connie Lawson, James (Jim) A. Lewis, Jr., David C. Long, Teresa S. Lubbers, Robert L. Meeks, James W. Merritt, Jr., Patricia L. Miller, Allen E. Paul, Marvin D. Riegsecker, Connie Weigleb Sipes, Brent E. Steele, Greg Walker, Brent Waltz, John M. Waterman, Thomas K. Weatherwax, Thomas J. Wyss, R. Michael Young, Richard D. Young.

Taxpayer UNfriendly State Senator NO votes: Bob Deig, Lindel O. Hume, Vi Simpson, Timothy O. (Tim) Skinner.

State Senators who DID NOT VOTE: Glenn L. Howard, Johnny Nugent.

This page was last updated on 08/26/08 .