INDIANAPOLIS - Two similar bills that would allow tax reductions and county governments to exempt new businesses from personal property taxes passed both the Indiana House of Representatives and the Indiana Senate on Thursday.
The House bill, HB 1001, a key item on Gov. Mike Pence's 2014 agenda, was passed by a 63-33 vote in the House. Rep. Eric Turner (R-Cicero) authored the legislation.
In December, Pence said he was pushing for the personal property tax exemption as a means of spurring new job creation in Indiana. The tax is levied on business equipment and accounts for a large portion of local tax collections.
Pence said he planned on finding substitute dollars for the estimated $1 billion brought in annually for local governments by the tax, but offered no specifics as to how that would be accomplished.
Democrat opponents say the move could potentially jeopardize economic development projects financed by the tax.
State Senate Republicans have approved a measure, SB 1, cutting the state's business equipment and corporate income taxes in a move that has local leaders worried.
The Senate plan would cut the personal property tax for small businesses and further cut Indiana's corporate income tax. The Senate voted 35-11 Thursday along party lines to send the measure to the House.
The vote came shortly after a coalition of local government groups announced they would seek state aid to fill budget holes that would be created by the cuts.
The cuts could cost local governments and school districts hundreds of millions of dollars. Indiana Association of Cities and Towns director Matthew Greller said they've already been stretched thin because of property tax caps and a struggling economy.