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Pence seeks tax cut for businesses, more pre-K

– Gov. Mike Pence laid out his 2014 legislative goals Thursday, focusing on a major tax break for businesses that could hit local governments and schools hard.

He also highlighted education issues, roads and family. Collectively, his proposals would spend significant dollars in a nonbudget year.

“I believe the time has come to phase out the business personal property tax in the state of Indiana to spur new investment and growth,” he said.

His remarks came at the annual Bingham Greenebaum Doll Legislative Conference in Indianapolis.

The tax brings in about $1 billion a year to local units. It is levied against business equipment and machinery, such as tractors, computers and manufacturing gear.

Pence said Indiana has the 19th-highest personal property taxes per capita. He said the tax discourages investment and growth. He said 12 states have no business personal property tax, including Ohio and Illinois. Michigan is phasing it out.

Pence also pledged to ensure his plan does not “unduly harm local government’s abilities to meet obligations” but didn’t give further detail.

Earlier in the day, Sen. Brandt Hershman, R-Buck Creek, chairman of the Senate Tax and Fiscal Policy, said the General Assembly can have a reasonable discussion “but absent finding a replacement revenue source that mitigates the impact we have to be cautious.”

Pence also wants to take a fresh look at making regional cities such as Fort Wayne more competitive. He said the state would put seed money – in the millions – into a program he hopes will attract public and private investment in regional cities of $1 billion over 10 years.

On education, the governor wants to establish a state prekindergarten program for low-income families. He said families making up to 185 percent of the federal poverty level could receive a state-paid voucher for use at public or private preschool programs.

For a family of four, the annual income could not exceed $43,576.

“I believe the time has come for Indiana to provide access to pre-K education for all the disadvantaged children in our state,” Pence said, calling it the initiative closest to his heart.

The cost of this program is unknown at this time.

It’s also unclear how much proposals to aid teachers would cost the state. Pence said an Indiana Teacher Innovation Fund would financially reward teachers who improve student scores through innovative classroom work.

And Pence wants to help cover salary costs of teachers who move to underperforming schools and charter schools serving low-income students.

Pence also pitched a $400 million highway expansion program. The legislature set aside funds in the current budget, but lawmakers would have to authorize the Indiana Department of Transportation to have access to them.

And Pence wants to support families by increasing the exemption for parents and children in Indiana’s income tax code. He thinks the exemptions should be indexed to inflation so they rise naturally. Neither has changed in decades.

Pence said the flat-rate exemptions “in effect raises taxes slowly over time. A hidden tax.”

The governor will give several more policy speeches in the coming month to flesh out his agenda.