Rep. Ed DeLaney: Can we do two things at once to boost homeownership?

The issue of home affordability has risen to the forefront of consumer concerns. Homeowners’ tax bills have, on average, doubled since 2011. Young people wanting to buy a first home face high interest rates along with the property tax problem.

The Indiana General Assembly cannot lower interest rates. But we can do two things: We can limit the growth in property taxes for homeowners, and we can lessen the impact of down payments, one of the obstacles facing first-time buyers.

1. Taking the pressure off property taxes

I rarely agree with Sen. Travis Holdman, who chairs the Senate Committee on Tax and Fiscal Policy. But he has figured out that trying to reduce property taxes could harm the local governments, which rely on that revenue. We really don’t want to defund police, fire and other local services. So the senator rightly suggests that we use income taxes to cover legislated reductions in local property taxes.

But he goes off the rails when he suggests that local units of government raise the income taxes they levy. He is quiet about the fact that the state is already set to lower the state’s income tax rate twice under legislation passed earlier in this decade. Does he propose to delay bragging about his income tax cuts until the locals have raised theirs? Why would they ever fall into that trap?

The answer to our dilemma is clear. If the state forces a reduction in the property taxes imposed solely by local governments, the state needs to make up for that revenue. That seems fair. Republican proposals for lower property taxes seem to focus on public schools. Schools, unlike local police and fire, are a responsibility of the state, which pays most of their costs. Schools have become the whipping boy. This must stop.

There are solutions. First, stop the planned reductions in state income taxes and use state income tax revenue to reduce schools’ reliance on property taxes. Second, freeze the transfer of state revenue being diverted to private education and use it for schools we are obligated to fund. While doing this, we can reduce the pressure on property taxes for both existing and future homeowners.

2. Helping first-time homebuyers

When I was newly married, veterans (including me) had a major opportunity to buy their first home. We were given the option of buying a home without a down payment at the cost of a slight increase in interest rates. We had already given several years to the military and had been paid modest amounts. It was hard to save for a down payment. So the government guaranteed our debt.

As a result, we had a chance to build equity and stability in our lives. The reasons for the difficulty in accumulating a down payment have changed, but the impact of delayed homeownership has not. Indiana should create its own special plan for first-time homebuyers. We are smart enough to figure out how to do this. Our home builders, construction workers and lenders would benefit along with our young people.

The question then is whether Indiana can do two things at once. Can we both moderate the pressures on property taxes and increase the rate of homeownership among our young people? I would rather work on this opportunity than on playing beggar-thy-neighbor with local government or public schools. We have found many ways to encourage investment by businesses. Can’t we find a way or two to build up homeownership?•

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DeLaney, an Indianapolis attorney, is a Democrat representing the 86th District in the Indiana House of Representatives. Send comments to ibjedit@ibj.com.

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