Patrick Bauer, Speaker of the House in Indiana, visits Switzerland County

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Switzerland County received a visit last week from the third most powerful political official in the state – Indiana Speaker of the House Patrick Bauer. The Speaker was in Switzerland County to attend the convention of the Indiana Democratic Editorial Association – which was held at Belterra Casino Resort and Spa.

He was accompanied on his visit by State Representative Bob Bischoff, who represents Switzerland County as well as Ohio and Dearborn counties.

When asked about issues facing the state in the coming year, Speaker Bauer said that everyone is looking at property taxes, and that has to be something that the legislature needs to address during its next session.

“I think property taxes will get back under control,” the Speaker said. “I think everyone knew this is what would happen when the Supreme Court mandated going to market value on assessing property taxes a few years ago.”

Patrick Bauer said that in 2002, residential home saw their property taxes cut by 43-percent, and that’s still the case – but the market value of the property is going up. He said that in 43 counties in Indiana, steps were taken to shift some of the burden in terms of inventory tax, but, “…The ‘perfect storm’ is hitting where people didn’t do anything about inventory taxes,” the Speaker said.

He also said that education and local school levies that are in property taxes hit many communities this year, as funding continues to be shifted from the state to local units of government, but he pointed out that those hikes were a result of the 2005 budget.

“Over half of the schools in the state got funding cut,” Patrick Bauer said. “When that happened, the only salvation that schools had in order to keep the doors open and get books for the children was to raise property taxes.”

He also said that the legislature reduced the homestead credit from 20-percent down to 18-percent, and that hit property owners a little bit.

“In the next session we will need to look at some real property tax relief, not just a band aid fix,” the Speaker said. “We also need to find some real money for education.”

He reported, however, that over the next few years, the Homestead credit will be credited; and in December of this year homeowners will get a refund check of 36-40 percent. Next year, the Homestead credit rebate will come in the form of a credit on state tax.

Those credits back to property owners is coming as a result of the $550 million that the state got when it allowed slot machines to be placed in the horse racing tracks at Anderson and Shelbyville. Of that, $300 million is going back to property owners in the form of refunds.

“This way we made sure that the people got the money,” the Speaker said.

Patrick Bauer was the chairman of Indiana’s Ways and Means committee in 1993, and was the author of the bill that allowed riverboat casinos in the state. He said that the Indiana casinos are making about six times the amount of money that the legislature projected that they would make if allowed to operate here.

“The casinos are doing alright,” he said.

In the next session the Speaker also feels that the legislature will be taking a stronger look at economic development in Indiana - specifically looking at whether or not the incentives and breaks that have been given to companies to locate in Indiana and expand here are actually creating more jobs.

With the next session being a “Short Session”, meaning that the legislature will not have to pass a state budget because that is done every other year; Patrick Bauer hopes that permanent property tax relief is at the top of the agenda.

He noted that everyone should be careful about proposing an increase in other taxes in order to offset property taxes, because he said that very few Hoosiers are aware of just how much revenue property taxes generate.

“Property taxes raise about $6 billion,” the Speaker said. “If you raise the sales tax by one percent, you’re going to raise about $800-$900 million. A one percent increase in income tax would raise between $1-2 billion. We hear a lot of people say to eliminate property taxes and raise the sales tax to replace it, but in order to do that, we’d have a sales tax of about 14-percent, and I don’t think that would work.”

Patrick Bauer said that if such a high sales tax was placed on Hoosiers, many people – especially in areas bordering other states like Switzerland County – would take their buying out of state, which would be counter productive to increasing the tax in the first place.