The Herald Bulletin

Afternoon Update

State News

March 22, 2014

State’s local leaders fear business tax cut signals more to come

INDIANAPOLIS — Local officials who opposed Republican Gov. Mike Pence’s proposal to get rid of a tax on business are gearing up for another round in the fight.

They’re fearful that a partial measure to reduce the tax – passed by the Legislature in the final hours of its 2014 session – is just the beginning of the eventual end of a revenue source that provides $1 billion a year to schools, libraries and other public services.

“This is the camel’s nose under the tent,” said Matt Greller, executive director of the Indiana Association of Cities and Towns. “We’re going to have to be vigilant on this issue for years to come.”

They won’t wait long. Greller’s group and the Association of Counties both plan on raising their voices loud enough in coming months to make sure a commission created by the Legislature to study the tax knows exactly where they stand.

“Our legislators have seemed confused about why we’re so apprehensive of what may come next,” said Rushville Mayor Michael Pavey, a Republican and one of the many local officials who opposed Pence’s plan to roll back the tax. “We have a duty to make sure they understand.”

At issue is Senate Bill 1. Passed late last week, it falls far short of Pence’s oft-repeated call for a statewide end to the tax that businesses pay on machinery, equipment and other personal property.

The final bill instead creates options for counties to reduce or repeal the tax after July 1, 2015.

Even as a small measure, it’s gotten pushback from local officials and some legislators.

They warn the approach will pit communities against each other in unhealthy competition. And they fear it will further drain local coffers, adding to the $800 million yearly loss in local revenues chalked up to the residential and commercial tax caps imposed in 2008

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