Property Tax Caps Amendment Debate - Indiana

The Times features an opinion piece on the upcoming referendum to make the 1/2/3 property tax caps permanent in the Indiana Constitution:

Indiana voters are expected to vote resoundingly in November to approve a constitutional amendment requiring property taxes to be capped at their current levels. That could prove to be a big mistake.

The caps themselves are not the issue. It's the inability to respond to fiscal emergencies that could be troublesome at some point in the future.

Currently, property taxes are capped at 1 percent of the property's value for homeowners, 2 percent for rentals and 3 percent for commercial properties. That provides needed tax relief for a growing number of property owners each year and forces governments to cut expenses each year.

Gov. Mitch Daniels, one of the biggest proponents of the constitutional amendment, wants this fiscal pressure on local governments to force them to consider efficiencies they might otherwise ignore. That's not such a bad thing. There is much to be done to make local governments more efficient.

Many local government officials are concerned about the caps because of the squeeze they're already putting on those governments. Those officials are being forced out of their comfort zones.

Having the tax caps in place makes Indiana more attractive for economic development, which could boost a community's tax base and in turn drive down its tax rate.

But what if a fiscal disaster occurs that requires a short-term funding infusion? If that happens with a constitutional amendment locking the property tax caps in place, where will the money come from to provide essential -- truly essential -- government services in that emergency?

Already, communities across Indiana are asking for fiscal home rule, the ability to generate revenue through means not already approved by the state.

A local sales tax on gasoline and fireworks, for example, could raise money along the state line that would primarily be paid by Illinois residents who cross the state line to buy cheaper products in Indiana.

Open the door to those taxes, however, and who knows how high they would go?

Putting the property tax caps in the Indiana Constitution could prove to be a huge mistake somewhere down the line. The caps are already in place by state law. Leave it at that and allow an escape clause in case the worst, whatever that might be, happens someday. Otherwise, don't be surprised if a number of other taxes pop up and defeat the purpose of the tax caps anyway.

Your opinion, please

Should Indiana voters approve a constitutional amendment locking in the current property tax caps?