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By MIKE SMITH
AP Political Writer | Wednesday, October 31, 2007 | (1 comment(s))
INDIANAPOLIS | An attorney for several taxpayers challenging the constitutionality of Indiana's property tax system and steps taken by the governor asked the Indiana Tax Court on Wednesday to let the lawsuit proceed.
Attorneys for the state, Marion County and Indianapolis argued primarily that the lawsuit should be dismissed because the taxpayers who sued had not exhausted administrative remedies.
John Price, an attorney for the plaintiffs, said that seeking such remedies would be time-consuming and fruitless at a time when Indiana is facing numerous, pressing property tax problems that are hitting many taxpayers hard.
"They want to exhaust our resources, they want to exhaust our time and interest and make us go away, and frankly a lot of the hoops that are set up have that practical effect because people get tired of fighting," Price said after the hearing. "We don't want to do that."
Tax Court Judge Thomas Fisher said he hoped to rule on a motion to dismiss the lawsuit within 10 days.
The lawsuit questions statewide assessment methods, the use of tax abatements and claims that the system does not comply with the state constitutional requirement of a "uniform and equal rate of property tax assessment and taxation." Multiple taxing districts can lead to vastly different bills for people living in the same county, it says.
The lawsuit also challenges the constitutionality of orders Gov. Mitch Daniels made this past summer that extended a statutory deadline of Aug. 1 for counties to adopt higher local income taxes to offset property taxes. He first extended it to Oct. 1 and later to Dec. 31. Lawmakers are expected to "ratify" the orders on an organization day Nov. 20 in hopes of eliminating any questions about their legality.
The suit also asks that an income tax increase approved by the City-County Council in Indianapolis in July be overturned because the swing vote for its passage was cast by a member who had moved out of his district. The councilman later stepped down and was replaced because of his residence change.
The lawsuit comes in a year in which a variety of factors are projected to cause average property tax bills for homeowners statewide to increase by 24 percent, although many bills issued so far have spiked much higher. The state also has ordered reassessments in 21 counties because officials suspect that commercial and/or industrial properties were undervalued, which shifts more tax burden to homeowners.
Jon Laramore, an attorney for Marion County and Indianapolis, said the plaintiffs had a right to make their claims, but they did not belong before the Tax Court -- at least not yet.
"The Legislature says these claims have to go through the administrative process first," he told Fisher. As an example, he said challenges of assessments have to be appealed locally and then go before the State Board of Tax Review before they can reach the Tax Court.
Andrew Swain, an attorney for the state, said the extensions for adopting local income tax increases were a matter between the state and counties. He said the lawsuit did not allege that any county had adopted an increase after the original deadline, and believed any legal challenge to the extensions would have to include a plaintiff from a county that had.
He later said that if there were such people, they would first have file a return showing that new local income taxes were being withheld and then make a challenge through the Department of Revenue before reaching the Tax Court.
Price said three counties had adopted local income tax increases after the original deadline, but he did not know if any of his plaintiffs were from one of those counties.
Regardless, Price says the agencies do not have the competency to address constitutional questions. Not only are many parts of the property tax system unconstitutional, he said, but the governor had no constitutional authority to extend deadlines written in state law. That power rested solely with the General Assembly, he said.
The two sides disagreed on whether the vote for the Marion County income tax increase should be able to stand on statutory grounds.
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HIGH ASSESSMENTS wrote on Oct 31, 2007 7:13 PM: