INDIANAPOLIS - Property tax reform will be such an overriding issue in the 2008 Legislature that Gov. Mitch Daniels said he will likely forgo a lot of other big proposals on unrelated issues during his State of the State address in January.

"It being a short session and having a very large, complicated agenda item, I'm sensitive to not making the work of the Legislature any more difficult by asking for too many other measures," Daniels told reporters Wednesday. He said he will not renew his push to privatize the Hoosier Lottery.

Last session, the Republican governor had proposed leasing the lottery for $1 billion to a private operator to fund scholarships and life sciences research. The proposal passed in the Republican-controlled Senate but didn't get a hearing in the Democratic-controlled House.

Instead, lawmakers will be deeply focused on property tax reform in the 2008 session that must end in mid-March. During the Legislature's organization day Tuesday, lawmakers formally introduced one House bill and 14 Senate measures containing Daniels' detailed property tax proposal. Hearings on those bills will start in December.

Among other things, Daniels' reform plan would:

  • Reduce residential property taxes by about one-third, capping them at 1 percent of a home's assessed value.

  • Replace township-level and county-level elected assessors with one appointed assessor in each county.

  • Control local government spending through county tax boards reviewing budgets and voters approving building projects in referendums.

  • Making up the difference by increasing the sales tax from 6 percent to 7 percent.

    On Tuesday, the Democratic speaker of the Indiana House, Patrick Bauer, called raising Indiana's sales tax a "very tough" proposition because then it would be higher than sales taxes in surrounding states.

    Daniels said he interpreted Bauer's comments as "realistic" because the plan would need bipartisan support to pass.

    "I think we'll deliver a lot of support on the Republican side and I think he will have plenty on his side, too," Daniels said of Bauer. Democrats control the House 51-49.

    State lawmakers on Tuesday suspended their rules to pass one bill to ratify several property tax relief measures Daniels undertook during the summer. The governor signed that bill Wednesday.

    As state lawmakers convened, the governor met privately Tuesday with leaders of several neighborhood associations from around the state, including two members of the Vanderburgh County Taxpayers Association. David Coker, chairman of the local association, said the meeting between the governor and about 20 leaders of taxpayer groups was "a very frank and open and freewheeling conversation that was mutually respectful."

    During the meeting, Coker said, Daniels reiterated that he looked seriously at totally eliminating property taxes, but he was dissuaded by the large increases in other taxes needed to replace them.

    "He felt that would put too great a burden on the overall economy and might choke off the economic growth of the state, and he wasn't prepared to do that when he took a look at the numbers," Coker said.

    Although Coker's association wants to see property taxes eventually abolished, he said the leaders of the groups at the meeting strongly agreed with two of Daniels' proposals: to abolish township-level assessors and to require referendums on large bond issues.

    "... Our goal is still ultimately to repeal property taxes, but we have a lot better feeling for what the governor is trying to accomplish now than what we did before this meeting," Coker, an Evansville resident, said.

    Public hearings concerning Daniels' property tax proposal are scheduled on Dec. 1 at the Statehouse, Dec. 10 at the University of Southern Indiana and Jan. 9 in Fort Wayne.

    The Associated Press contributed to this story.

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