February 18, 2022
The Big Issues
BUSINESS PERSONAL PROPERTY TAX
- As we have reported in recent weeks, HB 1002 is the only bill remaining that attempts to partially reduce the business personal property tax. HB 1002 proposes a tax credit on various state taxes to offset what business pay on equipment hitting the 30% depreciation floor. However, by coupling this move with a provision that eliminates the 30% floor entirely for new equipment purchases, the negative financial hit to local units of government is inevitable.
- During the Senate Tax and Fiscal policy committee, the business personal property tax changes in this bill were removed by the committee and replaced with the Food and Beverage tax sunset dates contained in SB 390. Though these BPPT changes were eliminated for now they could be added back in during the final negotiations on HB 1002 in conference committee, so it remains important to communicate our concerns to your Senators and Representatives.
- HB 1002, sponsored by Senator Ryan Mishler (R-Bremen), was heard on Tuesday in the Senate Tax and Fiscal Policy committee and was held for a vote next Tuesday.
- SB 145 allows the cost of construction to be used as the basis for assessment of large, commercial properties for their first 5 years of existence. This is an attempt to limit the dark box appeals that have resulted in large litigation costs for counties and low assessments for large retail stores throughout the state.
- Aim supports this bill because it grants clarity to the assessment process, will reduce the time and amount of property tax appeals, and works to prevent low assessments on large commercial properties that shift property taxes onto other taxpayers or result in tax cap losses.
- SB 145, sponsored by Representative Tim Brown (R-Crawfordsville), passed the Ways and Means committee on Wednesday with a vote of 23-0 and will now move to the full House for a vote.
- HB 1106 would require the county to approve the use of eminent domain by municipalities (not including municipal utilities) in unincorporated territory and place several other procedural hurdles on the use of eminent domain outside of corporate boundaries. During the hearing on Thursday language was also added to require that condemnations that result in the property title changing hands must be compensated at 120% of fair market value and all condemnations must compensate for going use, or lost business interest in the property.
- Aim opposes HB 1106 because it limits the ability to effectively manage infrastructure outside municipal boundaries and raises the cost of eminent domain for essential projects.
- HB 1106, sponsored by Senator Jim Buck (R-Kokomo), was heard on Thursday in the Senate Local Government Committee and was held for further amendment and vote next Thursday.
CONTRIBUTIONS IN AID OF CONSTRUCTION
- HB 1245 would prohibit municipal utilities from including contributions in aid of construction in connection fees, most commonly associated with new development. Contributions in aid of construction usually refers to costs associated with system-wide improvements that are necessitated by adding more properties to the system that are not specifically related to the extension of lines or connecting the new properties. It also creates a process by which these fees can be challenged and reviewed by the IURC. Another provision in the bill allows a property owner in the territory of a municipal sanitation district to be exempt from connecting to a municipality’s sewage system.
- Aim opposes this bill in its current form because it shifts the costs of new development onto existing utility ratepayers, but we are working with the bill author to attempt to narrow the impact of the bill.
- HB 1245, authored by sponsored by Senator Eric Koch (R-Bedford), was heard in the Senate Utilities committee on Thursday but was held for further amendments and a vote next Thursday.
- SB 73 would remove the ability of municipalities to initiate annexations. Only voluntary and super-voluntary annexations would be allowed were SB 73 to pass into law.
- Annexation is a valuable tool for growing communities because it allows us to grow our service footprint along with the tax base that provides for those services. Aim opposes SB 73’s attempt to further limit our ability to grow and develop through annexation. Further restricting annexation will continue to hamper development and deter growth near current municipal boundaries.
- SB 73, sponsored by Representative Dan Leonard (R-Huntington), was heard this Wednesday in the House Local Government committee but Chairman Denny Zent (R-Angola) decided not to hold a vote on the bill or move it forward this year.
AIM LEGISLATIVE MOMENT
“(HB 1002) was completely stripped this week, which was a good victory for cities, towns, local units of governments, and the Replace Don’t Erase coalition. This is a small blip in the overall discussion, but what it really does is set up a show down for next few weeks in the conference committee process.”
– Matt Greller, Aim CEO
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