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Compromise measures on soil productivity factors, personal property taxes win approval

Passage of SEA 111 seems like déjà vu all over again. In the final days of the session, there were competing ideas about how to handle the yet-to-be justified increases in the February 2012 version of soil productivity factors proposed by the DLGF. The great news is that a one-year delay was again passed, protecting farmland owners from an unjustified tax shift of about $57.4 million. SEA 111 (Sen. Jean Leising, R-Oldenburg, and Rep. Don Lehe, R-Brookston) did not receive a negative vote – in fact, delaying the factors hasn’t received a negative vote for two sessions in a row.

While the House adopted a proposal that would have put the factors back to pre-2012 levels until new ones were adopted in an open rulemaking process, negotiations held a week before adjournment resulted in the simple delay. Some legislators want to give the Purdue study more time to refine the factors they presented in November 2013.

Indiana Farm Bureau supported both House and Senate versions due to the critical nature and priority of this issue, along with the recognition that farmland taxes are already increasing at an alarming rate due to changes in the base value.

The much debated and much anticipated final personal property tax deal ended up in SEA 1 (Sen. Brandt Hershman, R-Buck Creek, and Rep. Eric Turner, R-Cicero), revealing the compromise between the Senate’s ideas for personal property tax relief vs. the House version.

The multi-faceted plan, which includes a phase-down of the corporate income tax, is heavy on local options for personal property tax. Options would be enacted by a county income tax council rather than a county council. Votes of the COIT council are divided by the population of county government, cities and towns. The county’s vote share is based on those living outside municipalities.

All personal property proposals discussed this session met considerable pushback from the local officials’ coalition, “Replace Don’t Erase.” Governor Pence offered replacement revenue for any personal property tax revenue eliminated. With the governor’s pledge and concerns about lagging state revenues, SEA 1 does not include any immediate elimination or state replacement. It remains to be seen how often local officials use the new options in SEA 1.

The bill also creates a new tax commission that will investigate business taxes and many other aspects of the property tax. Agriculture has a seat on this tax commission as requested by Indiana Farm Bureau. The bill includes a credit for sales tax paid on propane during the first three months of 2014 on prices above $2.50 per gallon.

The HEA 1046 tax incentive to preserve vintage barns is aimed at salvaging the heritage of Indiana agriculture and the state’s rural landscape. HEA 1046 (Rep. Bob Cherry, R-Greenfield, and Sen. John Waterman, R-Shelburn) permits a person to receive a 100 percent property tax deduction against the assessed value of a barn that qualifies as a heritage barn, which are those constructed before 1950. To offset public safety services, a county could impose a public safety fee up to $50 for each barn receiving a deduction. The Office of Tourism would be required to promote heritage barns, and the Indiana State Department of Agriculture and Office of Community & Rural Affairs would be required to provide assistance in developing a heritage barn tourism program.

Three bills passed that affect property tax deadlines. HEA 1234 (Rep. Jeff Thompson, R-Lizton, and Sen. Pete Miller, R-Avon), gives property taxpayers an additional week to pay their bills by changing the amount of time required from mailing to payment from 15 days to 15 business days.

HEA 1266 (Rep. Dan Leonard, R-Huntington, and Sen. Brandt Hershman, R-Buck Creek) changes the public notice requirements for adoption of budgets, tax rates and levies. Proposed by the DLGF, legal notices for budgets, currently done in newspapers, would only be available on the DLGF’s website. The DLGF would provide a hotline to answer taxpayer questions. Indiana Farm Bureau objected to converting to this system “cold turkey” so a measure was added in the Senate that would have both the newspaper and online systems operating for the next budget cycle.

SEA 420 (Sen. Randy Head, R-Logansport, and Rep. Milo Smith, R-Columbus) changes the property tax assessment timeline so that assessors can complete their work on a timely basis and so that annual budgets can be adopted with the best assessed value information possible. This bill changes the assessment date from March 1 to Jan. 1, but the filing deadline for personal property remained at May 15 to answer the concerns of IFB members and CPAs.

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