Mayors oppose Indiana move to end business personal property tax
Several mayors across Indiana are speaking out about plans to cut and eventually phase out the business equipment tax.
Governor Mike Pence has made it a top priority, saying eliminating the tax will make Indiana more competitive; attract more jobs and businesses to the state, but the mayors say its revenue they can't afford to lose.
Tuesday morning, mayors from Indianapolis, Kokomo, South Bend, Evansville and Angola shared their concerns at a news conference organized by the Indiana Association of Cities and Towns.
At issue are the taxes businesses pay on personal property. That includes everything from heavy equipment and machinery to furniture and computers.
Two bills being debated by lawmakers call for reducing the tax. But the mayors worry that's the first step toward getting rid of it altogether.
A recent report estimated that elimination of the tax could result in a loss of more than $1 billion in tax revenue for local government.
Indianapolis Mayor Greg Ballard said, "I support efforts to make the state more competitive in attracting business, but not at the cost of local services and the quality of life in our cities."
He and other mayors argued that eliminating the tax, without any replacement revenue from the state, would mean huge cuts to city services.
"State leaders on this one have said since day one, they did not want the elimination of the business personal property tax to negatively impact or unduly burden local units of government. However, to date, we have not seen any proposals that would not result in severe cuts to local schools, police and fire protection, economic development and neighborhood improvement efforts," Ballard said.
A study shows if the tax is eliminated, city-county government in Indianapolis would lose more than $25 million a year in tax revenue. Of that, police would lose $2.5 million and the fire department more than $5 million.
Schools would suffer, too, with IPS losing about $14 million. The Indianapolis library would receive $4 million less.
"We are concerned not only because it makes it harder to do our job, but because communities where we are gutting our schools, closing libraries, laying off police and firefighters, will be uncompetitive in the economy," said Mayor Pete Buttigieg (D-South Bend).
The mayors also warned that eliminating the tax would hit homeowners as tax rates would likely increase, with more homeowners reaching property tax caps sooner.
Evansville Mayor Lloyd Winnecke said, "We all get the fact that businesses want to pay less in taxes, but at end of day there has to be value and we have to have a vibrant city with a great quality of life."
The mayors also oppose a plan that would let counties decide whether to eliminate the tax. They say that would pit one county against the other.
Late Tuesday afternoon, a couple of the mayors met with Governor Pence. A news release from the governor's office said he was "open to full state replacement revenue for Senate Bill 1."
That bill calls for eliminating the equipment tax on small businesses with less than $25,000 in equipment.