January 17, 2014
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Bills of Concern
Elimination of Business Personal Property Tax – Your Action is Needed!
HB 1001 Tax Exemption for New Personal Property (Turner, R- Marion)
REPLACE DON'T ERASE! View urgent information about PPT Elimination.
HB 1001, the phase out of Indiana’s business personal property tax, was heard on Tuesday in the powerful House Ways and Means committee. The bill allows the COIT council within the county to adopt an "exemption ordinance" indicating that the county will eliminate business personal property taxes on new equipment (according to the date passed in the exemption ordinance). The equipment must not have been previously used in Indiana prior to the taxpayer acquiring it and the exemption does not apply to utility equipment. HB 1001 does not include any revenue replacement options.
IACT was very fortunate that Mayors Hickman, Bennett, Winnecke, Buttigieg, and Lewis were able to come to Indianapolis with very little notice and testify at the very lengthy committee hearing. Their testimony was diverse, powerful, thoughtful and well received. The bill is currently slated for a vote in the Committee next Thursday, January 23rd.
In anticipation of the vote in Ways and Means, we encourage all IACT members to urgently call, email or visit with members of the Committee to ask them to vote NO on HB 1001. Tell them that HB 1001 is NOT a local option as it does not give each Indiana city and town an equal voice in whether or not they want to eliminate the business personal property tax in their community. Tell lawmakers that they should vote NO because there isn’t ANY replacement revenue contemplated in this bill. Tell lawmakers, replace don’t erase the business personal property tax!
Click here for a contact list for the House Ways and Means Committee
SB 1 State and Local Taxation (Hershman, R-Wheatfield)
SB 1 exempts small businesses with less than $25,000 of personal property from the personal property tax. Like, HB 1001, there isn’t a replacement revenue source designed to offset the expected $25-$30 million in reductions to local government. The Senate plan also calls for a reduction in the corporate tax.
The Tax and Fiscal Policy Committee is expected to hear SB 1 on Tuesday, January 21.
In anticipation of the committee vote, we encourage all IACT members to urgently call, email or visit with members of the committee to ask them to vote NO on SB 1. Tell lawmakers they should vote NO on SB 1 because there isn’t ANY replacement revenue contemplated in this bill. Tell lawmakers, replace don’t erase the business personal property tax!
TIF is the Topic for Several Legislators
SB 118 Redevelopment Commissions and Authorities (Pete Miller, R-Brownsburg)
SB 367 Property Tax Matters (Hershman, R-Buck Creek)
SB 401 Tax Increment Financing (Walker, R-Kokomo)
SB 418 Redevelopment Commissions (J. Smith, R-Clarksville)
HB 1266 Local Government Finance Issues (Leonard, R-Huntington)
HB 1365 Tax Increment Financing (Pryor, D-Indianapolis)
Several TIF bills have been filed thus far by various legislators. Many of the proposed revisions to the TIF statute would severely limit cities and towns’ flexibility to drive economic development in the state. IACT is reviewing and evaluating all of the proposals at this time. We do expect to see changes made to the TIF statute this year and hope to find reasonable compromises.
IACT Position – Concerned, Opposed to Some Provisions, Continuing to Evaluate
“All Acceptable Piping Material” Must be Included in Bid Specs
SB 68 Piping Materials Used in Public Works Projects (Banks, R-Columbia City)
SB 68 passed out of the Senate Committee on Commerce, Economic Development and Technology this week and passed second reading. The bill provides that for public works projects, including design-build, the specifications must state that all acceptable piping materials that meet the recognized standards of the American Society for Testing and Materials or the American Water Works Association may be acquired for and used in the projects. It also states that in the acquisition of piping materials for the projects, the quality, sustainability, durability and corrosion resistance of the piping materials shall be considered.
Senator Jim Banks, the author of the bill, explained that it was his intention to have lower price materials quoted so that the price differential could be more transparent to the public, however, he still wanted to allow government agencies to be able to decide on a preferential material. IACT is concerned that this bill will require local governments to use a product they do not prefer to use.
IACT Position: Concerned – we think the bill needs important changes
Nursing Home Moratorium Bill Heard in Senate Health Committee
SB 173 Nursing Facility Moratorium (Pat Miller, R-Indianapolis)
IACT is opposed to SB 173 because it prevents new nursing home facilities from being established in our communities. These new, modern facilities bring economic development and jobs to cities and towns and help our tax base. SB 173 is an effort by a nursing home association to prevent new competition in their marketplace. They argue the bill is necessary so that they can secure more private-pay residents to off-set the low state reimbursement for Medicaid residents. SB 173 prohibits the state department of health from approving the licensure of comprehensive care health facilities or new or converted comprehensive care beds. It also prohibits residential nursing care facility beds from being converted to comprehensive care beds. It adds exemptions for health facilities under development as of June 30, 2014, certain replacement facilities, and continuing care retirement communities. It also specifies that the state department of health makes the final determination concerning whether an entity is under development. The bill passed out of the Senate Health Committee this week. Senator Pat Miller, the author of the bill, chairs that committee.
IACT Position – Opposed
Debt Service Reserves Would Be Limited Under SB 70
SB 70 Debt Service Reserve Funds (Pete Miller, R-Brownsburg)
Senate Bill 70 applies to all taxing units and it provides that for debt incurred after June 30, 2014, the balance in a debt service fund may only be 10% of the budget estimate for the annual debt service payments. IACT has concerns about this bill. We think that one full bond payment should be held in reserve in the event property tax collections run late, so there is not a need to engage in short-term borrowing.
Some schools, however, are currently manipulating their funds in order to lessen the circuit breaker impact on their transportation fund. They are applying the circuit breaker loss to their debt service fund and wiping it out each year and then obtaining a levy to refund it each year. This is problematic because it impacts all units in the county.
We expect more discussion on this topic. There is a similar bill being heard next week in the House.
IACT Position – Concerned -- Bill Needs More Work
Rep. McMillin Files Far Reaching Bill Attacking Home Rule
HB 1403 – Regulation of Residential Rental Property (McMillin, R- Brookville)
Under HB 1403, no city or town’s rental registration or inspection program is safe. HB 1403 prohibits a city or town from inspecting a rental unit or imposing any fee pertaining to a rental unit: (1) that is managed by a professional real estate manager; or (2) if the rental unit has been inspected during the previous 12 months by a qualified inspector and the owner of the rental unit has written verification that the rental unit meets or exceeds the standards for which the unit was inspected. This language is so broad that any city or town would be prohibited from collecting any fee from rental properties.
Rep. McMillin goes as far as to prohibit a city or town from charging the costs of the inspection when the city or town receives a complaint from a worried tenant and to cap the registration fee to a nominal $5.
This bill is being heard in the House Committee on Government and Regulatory Reform on January 21, 2013 at 10:30 am. If you are available to testify please contact Rhonda Cook or Justin Swanson.
IACT Position: Oppose
Bill Limits Increases in Assessed Value and Has Retroactive Application
SB 266 – Assessment of Real Property (Schneider, R-Indianapolis)
SB 266 places limits on changes to the assessed value of property that is, or has been, under review. For an appeal that is filed after July 1, 2014, the valuation determined in the appeal would be the base assessment. The limitations on increases would apply to the four following assessment dates. For a pending appeal that was filed within the four years before July 1, 2014, the valuation in the year before the review would be the base assessment. The limitations on increases would apply to the assessment under appeal and to the three subsequent assessment dates. The bill allows for adjustments to the assessment if the property undergoes a physical change, to assess previously omitted property, to correct a mathematical error, or if there is a change in an objective factor or feature relating to the property. IACT expects a 2nd Reading Amendment to add a change in use to this list of exceptions.
SB 266 was heard in the Senate Committee on Appropriations on January 6, 2014. Despite passing out 11-0, the committee voiced constitutional concerns with the retroactive application of the bill.
IACT Position: Concerned
Bill Would Prohibit a City or Town from Dissolving another Political Subdivision
SB 104 – Dissolution of Political Subdivision (Tallian, D-Portage)
SB 104 prohibits a county, city, town, or township from dissolving another political subdivision, except as expressly granted by statute. This bill is yet another example of a purely local matter that has been brought to the Statehouse that has far reaching consequences for our Home Rule authority.
For an example, a city or town would not be able to dissolve a board that they created such as a Park Board. As a result, we would be left with an unelected and unaccountable taxing authority. Furthermore, this limiting language would surely frustrate consolidation and streamlining efforts by cities and towns. SB 104 was heard in the Senate Committee on Local Government on January 13 and was held without a vote. IACT expects the bill to be discussed again on January 29th.
IACT Position: Oppose
Other Bills
Bill Allows RDCs to Provide Aid to Commercial Properties
SB 156 Redevelopment Commissions (Head, R-Logansport)
SB 156 provides that a redevelopment commission may, subject to prior approval by the unit's fiscal body, provide financial assistance to the owner of commercial property within a redevelopment project area or economic development area designated by the redevelopment commission to assist the owner in constructing, rehabilitating, or repairing the commercial property. The bill was heard this week in the Tax and Fiscal Policy Committee, however, no vote was taken.
IACT Position – Neutral
Bill Requires Annexation Settlement Agreement to be Recorded
SB 273 Approval of Annexation Agreements (Buck, R-Kokomo)
Senator Buck filed SB 273 in response to a situation that occurred in his district. If and when remonstrators reach an agreement with a municipality regarding a proposed annexation, SB 273 requires that the agreement between the municipality and the owners of real property be recorded. The bill passed out of the Senate Local Government Committee this week, however, more work is needed on the bill with a second reading amendment to clarify how a representative of the remonstrators is appointed in order to be able to bind the remonstrators to the agreement. We have agreed to work with Senator Buck on this new language.
IACT Position – Support, but needs a slight revision
Bill Authorizes Transfer of Funds to State Highway Fund
HB 1002 – Major Moves 2020 Trust Fund (Brown, R-Crawfordsville)
The bill authorizes the Budget Agency to transfer any balance in the Major Moves 2020 Trust Fund to the State Highway Fund before July 1, 2015. The Major Moves 2020 Trust Fund consists of $200 M transferred from the state General Fund on July 1, 2013 with a second transfer from the same account of $200 M scheduled for July 1, 2014. The Major Moves 2020 Trust Fund is to be used for major highway expansion projects.
IACT Position: Support
State Study of State and Local Economic Incentives Amended
HB 1020 – Study of Economic Development Incentives (Koch, R- Bedford)
HB 1020 requires a comprehensive review of all state and local tax incentives provided to encourage economic development over a five year period beginning in the 2014 interim. The House Committee on Commerce, Small Business and Economic Development heard this bill for the second time on January 16 where it was amended and passed out of a committee with a 13-0 vote.
The amendment added the following: (1) Requires the commission to withhold confidential and proprietary information pursuant to the issuer’s expressed desire; (2) Adds a 10 years sunset to the study; (3) Requests that the study estimate the indirect economic benefits of incentives when possible; and (4) Requires the Department of Local Government Finance to conduct an annual audit of every 1% of the statement of benefits submitted by taxpayers who receive property tax abatements.
IACT Position: Neutral
Bill Repeals Requirement Requiring the State to Offer Health Coverage to Local Units
SB 225 – Various Local and State Financial Matters (Kenley, R-Noblesville)
The most relevant portion of this bill is the language that brings Indiana in compliance with the Federal Affordable Care Act (ACA). The ACA prohibits state plans from offering local government units health insurance coverage. This bill repeals the requirement that the state plan offer this type of coverage to local units. SB 225 was heard in the Senate Appropriations Committee on January 16 and was held without a vote to allow for select changes to be made.
IACT Position: Neutral
Bill Urges Study on Status of Local Pension Plans
SB 54 – Study of Local Pension Plans (Zakas, R-Granger)
This urges the legislative council to assign an appropriate body to study the status of existing local government unit pension plans, including the participation of local government units in the public employees' retirement fund, to determine whether changes are necessary or advisable. Sb 54 passed out of the Senate Committee on Pensions and Labor on January 16.
IACT Position: Neutral
Bill Delays Privatization of PERF and TRF Annuities for Five Years
HB 1075 PERF and TRF Annuities (Burton, R-Whiteland)
Early this week, HB 1075 was heard in the House Committee on Employment, Labor, and Pensions and passed out of the committee unanimously. The bill delays the privatization of PERF and TRF annuities until October 1, 2019 so that teachers and public employees who opt for an annuity and who retire in the next five years will enter the state-run annuity program rather than a new third-party system. The bill also provides basic guidelines for establishing annuity interest rates in the Indiana Public Employees Retirement System.
IACT Position: Support