Indianapolis - Indiana lawmakers are beginning the hard job of finding a solution to skyrocketing property taxes.

Organizational Day at the Statehouse is normally an opportunity to set the agenda for the session, but this year, it marks the beginning of the property tax debate, one the entire state will be watching.

The debate can be broken down into a tale of two cities. Representative David Orentlicher believes he has a solution that will equalize property taxes in Hamilton and Marion Counties.

“We all pay the same state income tax and state sales tax rate, but we pay very different property tax rates,” Orentlicher said.

The Indiana Chamber highlighted that problem Monday, comparing two homes only six miles apart. Under the old assessment system, which depreciated property, a Marion County home built in 1931 was assessed at $227,200, while the Hamilton County home was assessed at $706,700. In 2002, under real market value, the Hamilton County home jumped to $1.4 million, while the Marion County home triples its value, which is still below market value at $756,000. By 2006, trending equalized both homes at $1.2 million, but the net taxes in Marion County at $33,861 doubled the Hamilton County home at $16,940.

“Medco last week said they were going to come to central Indiana,” said Chamber President Kevin Brinegar. They narrowed it down to three counties, and Marion wasn’t one of them.”

Orentlicher says he will introduce a bill capping homeowners 2007 property tax increase at 1.5%, then cut 60% off the 2008 bill. He accomplishes that by cutting spending by $400 million at the state level, shifting all school operating costs to the state and implementing a 1% increase in state sales and income taxes.

Governor Mitch Daniels said he likes the fact that Orentlicher’s plan works from the same framework he established of cutting and capping, but still believes his proposal is better.

“Ours represents a true tax cut,” Daniels said. “It would not only use the sales tax proceeds but also part of the surplus and also the new race track revenues so it would be cutting taxes more than the sales tax increase.”

Under the Governors plan, according to the Chamber, property taxes on the Marion County home mentioned earlier would drop to $22,000 and the Hamilton County home would drop to $15,000, but Democrat Orentlicher says it doesn’t solve the problem.

“The people who have high property tax burden will now have a high income tax burden,” Orentlicher said.

Representative Larry Buell, a Republican from Indianapolis, announced that he will not run for re-election. He’s decided to bow out after 25 years.

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