The Indiana General Assembly will reconvene on January 5th for a short legislative session which must end by March 14th. This session comes on the heels of a special session that ended within hours of a possible shutdown of the State on July 1st. This session will focus on adding the statutory property tax caps into the State Constitution (1% property tax cap on residential property, 2% property tax cap on rental and farm property and a 3% cap on other classes of property). If the legislature approves, a statewide referendum will be added to the November 2010 elections.

The statehouse pundits are predicting that the legislature will approve the measure and send it to the voters for the final decision. As homeowners, we all appreciate the fact that property taxes will be under control. Various local government associations have opposed these caps because many vital government services may be cut or even eliminated.

In addition to the tax caps, the state budget and lobbying reform will garner attention. The state recently revised their revenue forecast and the state is expected to bring in $1.8 billion less than original projected less than six (6) months ago. As a result of this shortfall, Governor Daniels has ordered state agencies to cut their budgets. More importantly, the Governor has announced that K-12 education will receive $300 million less than the amount included in the budget that went into effect this past July. In a short budget session, the budget is typically not “opened up”. However, with this shortfall, there is some speculation that the state may have to “open up” the budget.

As far as legislation that affects aviation, AAI will be looking to add money into the state’s account that is used to match FAA grants. INDOT recently announced that they will only be matching 1.25% of the cost of the project versus the traditional 2.5% that they have been matching. As a result of this change, some airports will not be able to cover the increased match requirement and airport projects may be lost. With the loss of these projects, Indiana will lose out in jobs and tax revenue. AAI is working with legislators and the Governor’s office to make sure that Indiana is able to continue to match projects at the 2.5 % amount. For every $1 the state currently provides as a match for aviation projects, the state receives $39 federal and local dollars. Indiana cannot afford to lose these funds.

AAI is also working to create a “grace period” for aircraft that are currently legally registered out of state and allow those aircraft to be brought into Indiana without paying the state sales tax. It is important to point out that this is not an amnesty because these aircraft are legally registered in another state and the aircraft owners have made the decision to register them in another state. By allowing these aircraft to be registered in Indiana, airports will generate additional revenue from hangar rental and fuel flowage fees. Local government will benefit from increased excise fees. State government will benefit by increased jobs that are directly associated with aircraft being based in Indiana, including jobs for pilots and aircraft mechanics. In addition, jobs will be generated from additional people flying into the airport/community and spending money at restaurants and other local attractions.

As these concepts turn into legislative realities, AAI will keep you posted. In addition, bills may be tracked by logging onto www.in.gov/apps/lsa/session/billwatch/billinfo. If you have any questions, please contact AAI.