As Tax Revenues Shrink, Indiana Leaders Weigh Schools' Budgets With State's Business Climate

Indiana’s property tax caps have proven fruitful for property owners, who would’ve paid an additional $704 million to local governments this year if it weren’t for the constitutionally-enshrined caps.

But property owners’ gain has also been Indiana schools’ loss — to the tune of $245 million in lost property tax revenues for districts across the state last year. (That’s up from $142 million lost to property tax caps in 2010.)

Against that backdrop, Gov. Mike Pence and top Republicans have aligned behind a proposal from the state’s business community to phase out a property tax on business equipment.

The details are still fuzzy, but without a replacement revenue source, the move would mean another hit of more than $500 million to local governments.

“I think it’s important to [phase out the business personal property tax] in a way that doesn’t disadvantage local communities or local schools,” Pence told reporters after outlining his education agenda this week.

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