Wednesday, January 9, 2008

Bill to control local debt approved by Senate committee

Walker: Local debt is significant factor in rising property tax bills

(STATEHOUSE) –Legislation to control and manage local debt was approved today by the Senate State Tax and Fiscal Policy Committee. Senate Bill 18 is co-authored by Sen. Greg Walker (R-Columbus).

“Approximately 24 percent of the net property tax levee is used for debt service, and the average annual increase of school and local debt was about 9.5 percent per year from 2000 to 2006,” Walker said. “If we want to control property taxes, we must control government spending. This bill encourages local government to pay off debt rather than extend it.”
Other provisions of the bill include:

Prohibiting extension of bond pay-off dates;

Mandating that savings realized as a result of refinancing must be used to repay debt or reduce levies instead of starting other projects or making new improvements;

Requiring a steady level of retirement of principle throughout the financing period, ending a common practice of paying small amounts of principal early in loan period; and

Lowering the threshold that triggers County Project Review to the lesser of $7 million or .5 percent of taxable assessed valuation. Dillon said this would protect people living in smaller, less populated areas, giving them a voice in projects that may not be as large as projects in more densely populated areas but still requiring significant additional tax burdens to residents of a particular township.

According to Walker, SB 18 is a result of recommendations made by the Commission on State Tax and Financing Policy which met throughout the fall of 2007 to study ways to reform Indiana’s broken property tax system.

As part of his commitment to controlling government spending and debt, Walker introduced legislation today to require school corporations to study affordability of projects before issuing bonds or entering into rental agreements.

Senate Bill 276 would require the Department of Local Government Finance to collect, organize and publicize data regarding affordability measures that include:

· Outstanding long-term debt divided by median household income;

· The percentage change in the school corporation’s population over the last five years; and

· The percentage of mortgage foreclosures within the corporation during the preceding three years.

These bills are part of the Senate’s effort to provide property tax relief by tightening controls on issuing and retiring of debt, providing increased scrutiny of costly government projects and reforming Indiana’s overlapping layers of government, Walker said.

Sen. Greg Walker represents Senate District 41, which includes Bartholomew and Johnson Counties.

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