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Indiana

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General Assembly

Pence vows to offset tab from biz tax

Says locales would be repaid for lost revenue if bill passes

– In a meeting with mayors Tuesday, Gov. Mike Pence for the first time said he would support the state covering lost local revenue due to a modest cut in the business personal property tax.

“After listening to local communities across our state, I have informed legislative leaders that I am open to full state replacement revenue for local governments to cover the cost of eliminating the business personal property tax on small businesses with less than $25,000 in equipment, as proposed in Senate Bill 1,” the governor said.

“This would ensure that any reform of this tax does not unduly burden local governments or shift the cost of this tax onto hardworking Hoosiers.”

The expected cost under Senate Bill 1 would be about $30 million statewide annually.

Pence has pushed overhauling the tax that all businesses pay on machinery and equipment. It nets local schools and governments about $1 billion annually, and lawmakers and local officials have been fearful what a cut would do to services.

The governor did not commit to any replacement revenue regarding a business personal property tax proposal in House Bill 1001, which would give counties the option to end the tax on new equipment.

Initially there would be no revenue loss, but over time as machinery and equipment are replaced, local units of government would have little to no collections from the tax.

Pence said both proposals together will make Indiana communities more attractive for investment that will create jobs.

“I believe that reform of the business personal property tax will mean jobs for Hoosiers,” Pence said. “In the end, Hoosiers and our local communities will benefit as business grows and companies bring new jobs to our state.”

Several mayors earlier in the day talked about the potentially hazardous conditions that could be placed on local government, libraries, schools, police and fire departments if portions of the tax are eliminated without replacement revenue.

“If this goes through, the governor’s tax decrease for business will become the governor’s tax increase on our citizens,” Angola Mayor Dick Hickman said.

nkelly@jg.net

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