Monday, May 07, 2001

Ind. attorney general to approve new tax rules




The Associated Press

        INDIANAPOLIS — Despite reservations, Republican Attorney General Steve Carter said Sunday he will likely approve new property tax assessment rules crafted by the administration of Democratic Gov. Frank O'Bannon.

        But Mr. Carter expressed concerns about the legality of a provision in the rules designed to soften the expected shift in property tax burdens from businesses to homeowners.

        Even with that so-called shel ter allowance provision, homeowners are expected to see an average increase in property taxes ranging from 6.5 percent to 15 percent.

        Mr. Carter, who said he expects to approve the rules once the administration reviews his office's requested changes, criticized their reliance on the shelter allowance. He called it an “unproven legal concept.”

        “Trying to guess on the front end of the reassessment process what the effect of any tax shift might be could prove disastrous for Hoosier taxpayers,” Mr. Carter said in a statement. “Hoosiers need more certainty in property tax relief than this administrative remedy provides.”

        Tax bills under the new system won't be due until 2003, but Mr. O'Bannon wants lawmakers to consider tax restructuring — raising some taxes to cover the cost of lowering others — this year because of the overhaul in property tax rules.

        Mr. O'Bannon is expected to sign the new rules in the next few weeks, ahead of the June 1 deadline.

        The changes are intended to bring assessments in line with the market values of homes, businesses and farms, which for years have been evaluated using outdated figures.

        In March, the State Board of Tax Commissioners voted to update the 1995 version of its assessment manual with current market data and more detailed and accurate tables for calculating property depreciation. But board members also agreed to allow local governments to propose their own methods, as long as the results reflect current market values.

        The shelter allowance will give homeowners a deduction based on the cost of bare-bones shelter. The tax board has reasoned that property tax is a tax on wealth, and the basic cost of shelter cannot be considered wealth.

        The controversy over property taxes stretches back to 1993, when a group of Lake County homeowners sued the state, claiming the current system violated the state constitution because it resulted in out-of-whack tax bills, even among neighbors with similar homes.

        The Indiana Supreme Court ruled in December 1999 that the assessment system was unconstitutional, and Mr. O'Bannon and the General Assembly have been trying to figure out ever since how to fix it without taking political hits for raising taxes.

       



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