February 10, 2023
The Big Issues
- SB 219 would remove a municipality’s ability to initiate annexations. Only voluntary and super-voluntary annexations would be permitted to be initiated if SB 219 were to become law.
- Aim opposes SB 219 because it would limit the ability of municipalities to grow and extend services to new developments and economic development projects. Municipal water and sewer services have often been extended outside municipal boundaries, which was done in reliance on the ability to eventually annex them into the municipality once the area has grown enough and is dense enough to need full city services.
- SB 219, authored by Sen. Jim Buck (R-Kokomo) passed the Senate on Thursday with a vote of 34-15.
TAX INCREMENT FINANCING
- HB 1085 would require 20% of incremental revenue from TIF to be passed to school corporations in the allocation area to be used for career and technical education (CTE) programs for all new TIFs going forward. It would also add a member of the local school board to the redevelopment commission as a voting member. This bill is likely to be amended to change the passthrough to allow 10% of it to go to public safety.
- Aim nevertheless opposes this bill because it would restrict the flexibility of TIF and its ability to effectively finance large economic development projects. It would also erode municipal control of economic development in their communities. Public safety and education have dedicated funding streams but TIF should be reserved for economic development.
- HB 1085, authored by Rep. Bob Cherry (R-Greenfield), is scheduled to be heard next Monday in the House Ways and Means Committee for amend and vote.
- SB 220 would add a new compensation category to eminent domain condemnations for “going concern.” This concept is most commonly understood as the market value of business losses incurred by businesses that are taken in part or in whole by eminent domain. It was amended to clarify it applies to condemnations of all types including for utility projects and projects undertaken by the state.
- Aim opposes this bill because it will add cost to road projects, utility extensions, economic development projects, and any other municipal function that uses eminent domain. It is a significant tax policy change that will add to taxpayer costs statewide.
- SB 220, authored by Sen. Jim Buck (R-Kokomo), was passed the Senate Local Government committee on Thursday with a vote of 7-3.
RESIDENTIAL PROPERTY TAXES
- HB 1499 is the response to rising home prices and assessed values that are expected to result in higher property tax bills in 2023. This bill was amended in committee to provide additional property tax limits in most aspects of the property tax system for the next two years starting in 2024 including: lowering the 1% homestead property tax cap to 0.95%, capping levy growth at 3% per year, increasing the supplemental homestead deduction, and causing any project that pushed debt service levies over 0.4% into the controlled projects statute that triggers referendum to approve the project. It also allows counties to voluntarily provide property tax credits or rebates in 2023.
- This represents the House Republicans putting forward many different ideas on how to provide property tax relief and is the beginning of a session-long conversation about how best to do this while limiting negative impacts on local units. Aim has concerns with many of these provisions that limit property tax revenue and we will continue to work with leaders on the House and Senate side to ensure that property tax relief is not structured in a way that jeopardizes funding for vital local services.
- HB 1499, authored by Rep. Jeff Thompson (R-Lizton) was passed the House Ways and Means committee on Thursday with a vote of 18-6.
LOCAL GOVERNMENT FINANCE
- HB 1454 is the annual Department of Local Government Finance bill that includes various provisions relating to local government financial management. This week it was amended with multiple new provisions, some of which Aim supports and some of which Aim opposes. The bill is authored by Rep. Craig Snow (R-Warsaw) and passed the House Ways and Means committee on Wednesday with a vote of 24-0.
- Aim supports changes that require counties governments that control LIT in the county to notify underlying units of the change within 15 days and a provision that raises the threshold at which an redevelopment commission must get two appraisals to dispose of property from $25,000 to $50,000.
- Aim opposes changes that place the burden of proof on assessors for changes to parcel characteristics and assessment of apartment complexes as well as a change that allows counties to adopt a dedicated LIT rate for EMS that is not passed to underlying cities and towns. Currently the EMS LIT rate is only available to counties that are the exclusive providers of EMS in the county but the change in HB 1454 would include all counties which could create LIT competition even when there is adequate EMS service in the county already provided by municipalities, hospitals, or fire protection territories.
AIM LEGISLATIVE MOMENT
“We have to be careful that we don’t get fatigued. [HB 1499] will be an issue that we have conversations about from now until probably the very end…The property tax was set up to be the most stable part of local government revenue. It’s the biggest part of our general budgets and something we cannot see slip away any further than it already has.”
– Matt Greller, Aim Chief Executive Officer
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