INDIANAPOLIS (WISH) - Is doing away with Marion County's homestead credit a tax hike, an end to a wasteful subsidy, or both?
There's no decision yet, but the debate is well under way.
The mayor's office announced Monday a bi-partisan commission will take a look at whether to eliminate the tax credit as a way to help close a multi-million dollar budget deficit next year.
The credit is different than the homestead exemption which reduces a home's assessed value by thousands of dollars.
Until property tax caps were passed by the state legislature, the local homestead credit subsidy was the primary source of property tax relief for homeowners. It uses money generated from income taxes to offset your bill.
But now, with 1 percent property tax caps in place, the Ballard administration calls this homestead credit inefficient.
In Marion County, about $13 million in local income tax money is still redirected each year to lower homestead property tax bills. But now that the caps are in place, mayor's office spokesman Marc Lotter said less than half of that is actually needed for homestead tax relief.
"It is a wasteful subsidy that made sense back before property tax caps," said Lotter. "But now that those tax caps are in place, people are protected. They know they cannot pay more than 1 percent of a home's value."
If the money remained as income tax revenue, Lotter said the city would increase its share by $9 million a year.
"All we're doing is now going to put them to use in the city budget to help support public safety, police, the fire, and other critical services that people depend on a daily basis," said Lotter.
Critics, though, say most of the homes that still get this credit are low to middle-income households.
According to data provided by the city controller, about 60 percent of Marion County homesteads still receive some sort of subsidy but only an average of about $20.
If eliminated, 81,000 homes would see an impact of up to $30 a year, 24,000 would see an adjustment of $30 to $40 more, and 34,000 would pay an additional $40 or more.
Democrat City-County Councillor Brian Mahern calls it a tax hike.
"I would consider that a tax hike and I think in these troubled times that we continue to have economically, that's the last thing we want to do is discourage home ownership in Marion County," said Mahern, who added the revenue not used for homestead relief still goes toward other services like libraries, schools and public transportation.
But Lotter said the average increase would only be between $22 and $24 per year.
"On an individual basis, it's a very small number," Lotter said. "Obviously when it means $9 million into the city coffers that we could use for police, fire protection, it makes sense."
Saturday morning, Wishard Memorial Hospital will close its doors.
Snow that moved through Central Indiana this week has wrapped up, leaving some areas with more than 10 inches of snow.
Free bags of salt will be available to the public Saturday after snow moved through Central Indiana this week.