Suit challenges Indiana property taxes

Legal move follows summer of discontent fueled by soaring bills

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INDIANAPOLIS | Indiana's property tax morass deepened Thursday with the launch of a broad lawsuit challenging whether the primary means for supporting local government and schools is administered fairly or competently across the state.

The lawsuit, filed in Indiana Tax Court by Indianapolis attorney John Price, addressed several issues limited to Marion County, but it represents individuals and advocacy groups across the state, including region activist Wes Miller and his Team Hammond Taxpayers Group.

The plaintiffs have requested class-action status, so that the suit could represent all of Indiana's roughly 2 million property owners.

"We've got to get this nonsense, this tax mess in the state of Indiana straightened out, bring some common sense to it," Miller said. "People are being taxed out their homes."

Like a 1993 legal challenge that emanated from St. John, the lawsuit filed Thursday challenges whether state property taxes are administrated fairly and uniformly, as required by the Indiana Constitution. But while the St. John lawsuit, ultimately decided by the state Supreme Court in 1998, focused on assessment procedures, the current challenge also alleges that property taxes support an unfair framework for financing government, particularly schools.

State government provides millions to local schools through a system that provides greater assistance to districts with large number of students from low-income families and those with special needs. The lawsuit contends this practice forces homeowners in areas that receive less state assistance to shoulder a "disproportionate share" of the cost of local government.

The lawsuit also argues it is unconstitutional to force property owners in one taxing district, such as a city or school corporation, to pay a higher tax rate than those in another district. And the suit contends some classes of property, including office towers, abated commercial and industrial tracts and casino riverboats, receive unfair breaks that shift burden to other taxpayers, including homeowners.

The legal assault on property taxes caps a summer of discontent in which tax bills soared more than 30 percent in some pockets of the state, including Indianapolis.

While Lake and Porter counties remain weeks, if not months, away from mailing tax bills, state Rep. Ed Soliday, R-Valparaiso, said he understands the unrest that ignited scores of protests in Indianapolis. But, with two state commissions now searching for property tax solutions, Soliday said he's not convinced a lawsuit is the most practical or expedient avenue for change.

"You've kind of have to ask yourself, 'What's the goal here?'" he said.

"Gov. Daniels has acted boldly to protect property taxpayers and shouldn't be included in this lawsuit," Mark Massa, the governor's general counsel, said in a statement.

In addition to the governor, the suit was filed against the Indiana Department of Revenue and the Indiana Department of Local Government Finance.

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