INDIANAPOLIS -- Republican Gov. Mitch Daniels hinted at the possibility of a special legislative session on property tax relief Monday, days after hundreds of taxpayers staged protests outside the governor's residence.

"As governor, I will take every step I have authority to take to help Hoosier homeowners," Daniels said in a news release issued early Monday night. "I am also exploring some ideas with legislative leaders about how a special session might provide immediate relief directly to property taxpayers who have been especially hard hit."

Two top lawmakers -- Democratic House Speaker Patrick Bauer of South Bend and Senate Tax Chairman Luke Kenley, R-Noblesville -- commended Daniels for taking steps in hopes of alleviating a hit on many homeowners this year due to a variety of factors.

But both said the idea of a special session was premature.

"I don't think he has ruled it out because he's afraid to," Bauer said.

Daniels said he read and watched coverage of steep increases in property taxes during his vacation last week and decided to take action upon his return.

"There's a huge gap between what they found in residential and what they found in commercial," Daniels said. "If you take a big increase in spending, 10 percent in Marion County's case, coupled with a botched assessment, that leaves ... most that burden on some residents. You've got a big problem."

Daniels acknowledged that having a productive special session will be difficult, unless lawmakers can iron out an agreement before it is called.

According to estimates by the Legislative Services Agency, property taxes on homeowners were expected to increase an average of 24 percent this year.

Several townships in Marion County saw increases above the 24 percent average, prompting angry taxpayers to revolt, blocking Meridian Street in front of the governor's residence twice in a week.

Steps lawmakers took during the past legislative session were projected to lower the average increase to 7.7 percent. The relief is to be sent to homeowners in rebate checks after the second installment of property tax bills goes out this fall.

Indianapolis Mayor Bart Peterson said on June 28 that Daniels should call a special session to provide more relief from the increases. Jankowski said then that if there was "significant legislative sentiment for the extreme measure of a special session," the governor might consider it.

Daniels said Monday that he was "dismayed" by the size of residential property tax increases in some counties, including Marion County.

"Obviously, increases of the magnitude some homeowners are facing are unacceptable and we must look for immediate help and long-term reform," Daniels said.

Bauer said he had spoken with Daniels on Monday morning about the property tax situation. He noted that the budget bill approved by House Democrats and the Republican-controlled Senate directs $550 million in property tax relief to homeowners over the next two years, including $300 million this year. Bauer said there is little the Legislature could do in a special session that would provide more relief this year.

Bauer also noted that lawmakers gave counties or other local government taxing boards the ability to raise local income taxes to offset property tax increases and lower existing property taxes beginning with bills payable next year, moves also alluded to in Daniels' statement.

Daniels said he had directed the Department of Local Government Finance to approve any county's application to permit homeowners to pay their property taxes in installments and to extend bill due dates. He said he also had ordered the Indiana Bond Bank to facilitate short-term financing by local governments that need cash while awaiting installments.

Kenley, the Republican Senate tax chairman, said those steps would be a big help to homeowners.

"I think that's a positive step," he said.

Daniels also said he had instructed the Local Government Finance office to investigate an apparent disparity between residential and commercial reassessment in some counties, and said the state would not approve pending budget orders until those assessments had been further analyzed.

He also said the department would reject budgets that spend above the rate of inflation and would put on hold bond issues in "problem counties."

"The bottom line is there can be no solution without greater control of local spending and borrowing," he said.

Jankowski said Daniels also would speak with legislative leaders in the next few days about additional steps that might be taken in a special session.

Kenley, who heads the Commission on State Tax and Financing Policy, a bipartisan commission that meets when the General Assembly is not in session, said the panel should explore possible solutions before any special session is called. He said the group plans to start meeting later this month.

"There's no reason to go into a special session if you don't have solutions worked out," he said. "I think you have to have a game plan going into a special session."

The Associated Press left a telephone message at the home of Senate President Pro Tem David Long, R-Fort Wayne, seeking comment.