Don Villwock may be president of Indiana Farm Bureau, Indiana's largest general farm organization, but he's also a farmer himself. And he's not thrilled with the prospects that could result from the circuit breaker concept for property tax regulation being introduced into the Indiana state constitution. While adding a constitutional amendment is a long process that could only be started in this legislative session, not finished, Villwock believes that it could lead to 'unintended consequences,' some of which may be not good, if not disastrous, for agriculture. And once incorporated into the constitution, it would be equally as hard to turn back the clock and reverse the amendment as it would be to add it in the first place.
Villwock's main objection boils down to the circuit breaker caps that would limit property tax increases to a certain percentage. Since last fall, Indiana Farm Bureau has attempted to spread the message that the organization believes a circuit breaker system, with limits on how much property taxes can rise in any one year, ought to be based on an individual's ability to pay, if they're going to be used at all. Homeowners, the group making the loudest noise and be far the largest block of voters for this next fall's general election than any other block in the fray, would see a 1% cap. But at this point, farmers and other small businesses would face a 3% cap. Earlier at one point in the process, a 2% cap was suggested for farms. Right now, the language includes a 2% cap only for rental property, and a 3% cap for farms and other small businesses.
The assessed valuation, on average, for homeowners in Indiana went up 23% last year, according to Indiana Farm Bureau statistics. What bothers Villwock, is that farmers are looking at a 29% increase on bare farmland in '08 alone. It will be showing up in bills they receive this spring, assuming that property tax notices finally go out on time. "Yet that farmland doesn't require much in the way of local government or education services," Villwock says.
The adept leader from southwest Indiana realizes it's late in the game. But he's still trying to get Indiana Farm Bureau's point across. He testified before the legislative conference committee last week. This committee is charged with overcoming large differences between the version of property tax relief passed by the two separate bodies, both the Indiana House and the Indiana Senate.
Indiana Farm Bureau proposed its own plan late last fall, cutting deeper into property tax levies, but increasing both sales tax and the state income tax. Governor Daniels plan only includes a sales tax increase. Farm Bureau analyst Bob Kraft, who lobbies on Indiana Farm Bureau's behalf at the legislature, has expressed concerns that increasing the sales tax alone may not generate enough money to replace as many levies now served by property tax as the Governor has proposed.
The goal is to eliminate levies, not just reduce them, Kraft has told Indiana Prairie Farmer in the past. Otherwise, property tax levies, like any other tax, has a way of increasing and growing. Taxes are good at swelling over time. But they are strike-outs when it comes to decreasing or drifting off into the sunset.