INDIANAPOLIS | Gov. Mitch Daniels hinted at the possibility of a special legislative session on property tax relief Monday, one day after hundreds of taxpayers staged a protest 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. "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."

Daniels' spokeswoman Jane Jankowski said the governor had read and watched coverage of steep increases in property taxes during his vacation last week and decided to take action upon his return.

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

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 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 Marion and some other Indiana counties, which prompted protests July 4 and Saturday at the governor's residence in Indianapolis.

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

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.

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

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.