Opponents of a plan to cut the property tax on business equipment told lawmakers Monday they should study the issue over the summer before moving forward with the measure.
"We really are in favor of is sitting down and taking the time and doing a comprehensive study and doing a comprehensive tax reform," said William Konyha, president of the Economic Development Group of Wabash County.
But supporters say that Indiana can't compete with other states unless it eliminates or substantially cuts the personal property tax.
"For Indiana to be competitive, the personal property tax has to change," said Brian O'Connell, regional director of state government relations for General Motors.
The comments came at a meeting Monday of the House Ways and Means Committee, which is considering Senate Bill 1
, which would cut the corporate income tax rate and exempt smaller companies from paying the personal property tax.
The bill already has passed the Senate. But the Ways and Means Committee and then the House has passed a separate bill that would give counties the authority to exempt companies that invest in new equipment from paying the tax.
Both bills remain alive. But Senate and House negotiators are working with the governor's office to find a compromise on the legislation before the General Assembly adjourns on March 14. Gov. Mike Pence has advocated a total elimination of the tax, which generates more than $1 billion for local governments and schools.
On Monday, O'Connell said the bills are both a "step in the right direction." GM has six locations, nearly 8,000 employees and 42,000 retirees in Indiana. But he said the company's decisions about future investments will be made based on a number of issues, including taxation.
Currently, GM has significant investments in Ohio and Michigan as well. Ohio doesn't have a personal property tax and Michigan is phasing its out.
"Personal property tax is essentially an investment, job-creation and job retention tax," O'Connell said. "It does not help us make investments. It's a tax where we want to create jobs and make investments."
The Ways and Means Committee did not vote on SB 1 on Monday. Chairman Tim Brown, R-Crawfordsville, said the committee will have a second hearing on the bill and consider amendments before voting.
But local officials say they'd like to see lawmakers wait even longer before acting.
David Bottorff, executive director of the Association of Indiana Counties, said the bills don't currently eliminate the personal property tax. But he said they could start a process "that could get out of control and be much more expensive than anybody could anticipate."
"We should study the whole tax structure before we start making decisions about" changing individual pieces, Bottorff said.
And Evansville Mayor Lloyd Winnecke said the state should guarantee "full replacement" funding for all tax revenue local officials lose under the legislation to cut or phase out the personal property tax.
That prompted a reaction from Brown. "I'd like to know what that guaranteed source is."
"I guess the source would be the state of Indiana," Winnecke said.
But Brown said Indiana's revenues sources - primarily income and sales taxes - aren't guaranteed either.
Lesley Weidenbener is executive editor of TheStatehouseFile.com, a news service powered by Franklin College journalism students and faculty.