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Tax cut negotiations begin as Indiana legislative session winds down

INDIANAPOLIS (WISH) — GOP senators on Monday said they’re still not completely sold on a tax cut package endorsed by their House counterparts and the governor.

Negotiations between the two chambers are now underway on the proposal, which a Senate panel gutted on Feb. 15 over debt concerns. Last week, Gov. Eric Holcomb published an op-ed calling for tax cuts similar to what House lawmakers approved on Jan. 20. Holcomb told reporters his office had run numbers that included scenarios with zero economic growth and concluded the state’s finances would still be fine.

Monday morning’s conference committee hearing reset the debate by using the House’s version of the tax cut package as a starting point.

The House’s version would eliminate the 30% minimum on the business personal property tax and lower the personal income tax rate from 3.23% to an even 3% by 2026. It also would repeal the utility receipts and utility services use taxes. State budget analysts estimate it could cost the state a little over $1 billion in lost revenue by 2025.

Most of the morning’s discussion centered on the business personal property tax issue. Business advocates told the committee it’s unreasonable to continue to pay a 30% tax on old capital equipment when its assessed value is much lower.

Doug Hass, of Jasper-based Kimball Electronics, says his company has lost deals due to Indiana’s business personal property tax floor.

Advocates for municipal and county governments said it would cut off a vital source of revenue.

Jenna Knepper, government affairs director for Accelerate Indiana Municipalities, says some cities depend on the tax more than others, so lawmakers should consider offsetting eliminating that tax with an increase elsewhere to minimize the effects.

Sen. Ryan Mishler, R-Bremen, says his primary concern remains paying down debt, a concern fellow Senate Republicans Travis Holdman and Linda Rogers echoed. Mishler says he still would prefer to wait for budget negotiations next year before cutting taxes.

“I would rather do something transformative when, instead of guesstimating on that billion, I would rather wait until we have that billion to make some of these cuts,” Mishler said.

Rep. Tim Brown, R-Crawfordsville, says the state’s consistent revenue growth show the state is in a good position to revise its tax code. He says the measure could put Indiana on a much more competitive footing when it comes to attracting businesses.

Rep. Gregory Porter, D-Indianapolis, says if lawmakers want to cut taxes, they should do so in a way that benefits all Hoosiers instead of just businesses.

For that reason, Porter says he would support cutting personal income taxes but not the business personal property tax. He also said lawmakers should consider raising the state income tax exemption from $2,000 to $3,000 for married couples.

Any legislation that comes out of the conference committee would be subject to a final up-or-down vote in both chambers before heading to the governor’s desk.

Lawmakers have until next Monday to adjourn and leaders in both chambers have said they hope to wrap up by the end of this week.