Indiana business tax changes still worry some mayors

Some local-government officials around the state remain worried about changes Indiana lawmakers are considering to the state's property tax on business equipment.

That tax now brings in about $1 billion a year for local governments and schools. Legislators have scaled back Republican Gov. Mike Pence's proposal to eliminate the tax, countering with plans to exempt small businesses or give counties an option to waive the tax on new investments.

Terre Haute Mayor Duke Bennett, a Republican, said even those proposals concerned him because they could leave local governments with less money. Many are still struggling five years after the enactment of statewide property-tax caps.

"I've not heard anything about replacement revenue," Bennett told the Tribune-Star.

The state Senate's tax committee this week approved a package of business tax cuts that includes eliminating the equipment tax for small businesses. Republicans in the House, meanwhile, are working on a proposal that would let counties eliminate the tax on new equipment purchases.

Supporters of eliminating the tax say such a move would spur business investment in the state, creating more tax revenue overall.

Bill Waltz, a vice president the Indiana Chamber of Commerce, said the group doesn't believe all the tax revenue lost from scaling back the equipment tax needed to be replaced.

"This tax is actually more detrimental than others," he said.

Evansville Mayor Lloyd Winnecke, a Republican, is among the city leaders who've testified before legislative committees against eliminating the tax.

Winnecke said the city governments need the money to provide services and amenities in order to attract business investment, the Evansville Courier & Press reported.

"Communities who invest in their selves and residents are the ones who will ultimately thrive," Winnecke said.

Some counties with numerous factories have high levels of property tax revenue coming from the equipment tax, such as more than 40 percent in southwestern Indiana's Gibson County and about 35 percent in central Indiana's Howard County. Largely rural Brown County in southern Indiana, however, has a level of about 3 percent.

The Indiana Association of Cities and Towns will oppose both the House and Senate proposals as long as replacement revenues aren't included, said Matt Greller, the group's executive director

The association is not opposed to reducing the equipment tax, but "on the flip side, we've got to keep local government whole," he said.