During the 2007 legislative session, new property tax estimates showed that Hoosiers were expected to see an average increase of 24 percent on their property tax bills. To prevent historically high increases, House Republicans made it a goal to provide immediate relief. We demanded that $300 million in property tax relief be included in the budget to keep this year's increases to the average annual increase of 5 to 6 percent. House Democrats refused to grant the request, but we stood firm and were able to gain $300 million in relief, bringing the approximated increase down to 8 or 9 percent.
While I am pleased that Hoosiers will receive some relief, I voted against the budget because it enacted relief in the form of a rebate check. I preferred to provide taxpayers with a Hoosier Homestead credit, which would have instantly granted homeowners relief. Instead, Hoosiers will be required to pay their entire property tax bill and then wait at least six months to receive a rebate in the mail. This creates an enormous burden for homeowners and there are many possible consequences that have yet to be determined.
Many Hoosiers are on a fixed income and do not have the means to wait for a refund check, and I fear they could be forced to foreclose on their homes. Those that pay their property taxes through an escrow will possibly still experience a rise in monthly mortgage bills to cover the artificial 24 percent increase. More than likely, their monthly rates will not be reduced to express the refund, and lenders are currently unsure whether local officials are to send the rebate checks to the escrow holder or the homeowner. In addition, I wonder if the rebate funds will be counted as income for federal income tax purposes. The rebate provision fails to mandate the rebate process and leaves many uncertainties.
County auditors will bear the brunt of this poorly thought out policy. They will have to spend many hours just trying to figure out how to calculate the rebate checks and to determine a process to manage the refunds. House Democrat leaders claim this will only cost 41 cents per check, but they are only accounting for the cost of a stamp, not the cost of printing and mailing checks plus training employees and establishing a process, which will cost far more than the price of a stamp. In the end, rebate checks could burden taxpayers with additional expenses costing them more money that could have been used to provide additional relief.
Although there are some serious concerns with the relief process, we were able to successfully pass legislation to adjust the procedure for property tax assessment and exception appeals. Taxpayers will now have 45 days to file an appeal after they receive their first property tax bill.
I will continue to research the possible ramifications of the rebate checks and will update you as I discover more details. Please feel free to contact me if you have any additional questions or concerns. I may be reached at 800-382-9841, e-mail me at h22@in.gov, or write me at 200 W. Washington St. Indianapolis, IN 46204.
