The Association of Indiana Counties has come out against eliminating the tax, saying it would force local communities to cut services.
Communities with large manufacturing employers could especially be hard-hit. In some communities, the personal property tax produces more than 30 percent of their local revenue stream.
“It would be just devastating to some communities,” said Andrew Berger, government affairs director for the Association of Indiana Counties, said at Monday’s luncheon . “We’re talking about a dramatic cut in services in those places.”
Senate Minority Leader Tim Lanane of Anderson said it was critical to consider the impact on local governments.
“We’re going to have to come up with replacement revenue,” Lanane said Monday. “To me it’s irresponsible to just say we’re going to abolish another revenue stream without looking at the impact on local government services.”
The idea of eliminating or reducing the business personal property tax has been floated before. But it’s been shot down because of its impact on local units of governments that contend that property tax caps passed by the General Assembly in 2008 have already forced them to operate on lean budgets.
But it’s gained more momentum in recent months because surrounding states, including Michigan, Ohio, and Illinois, have done away with the tax in an effort to lure more businesses into their states. The Indiana Chamber of Commerce has also named eliminating the tax as one of its top legislative priorities.
Sen. Brent Hershman, chairman of the Senate Tax and Fiscal Policy Committee, said legislators like the concept of creating more incentives for businesses to locate or expand in the state. “The (personal property) tax does have an impact on business, to modernize and become more productive,” Hershman said. “However, it’s a billion dollar revenue stream for local governments.”