But it also says that tax cuts “are most effective where the loss of tax revenue to governments does not reduce public services, especially on highways, police and fire protection, and perhaps education.”
Mayors like Terre Haute’s Duke Bennett say that’s their biggest fear.
“We need to slow down and take a look at all the tax changes that have already been put in place and see how they impact local communities,” Bennett said.
The bill in the Senate calls for a “blue ribbon commission” to study this issue. But it also calls for eliminating the tax only for businesses with less than $25,000 worth of equipment. That would impact about 70 percent of Indiana businesses and result in revenue losses of about $50 million for local governments.
The House proposal gives counties the option of eliminating the tax on new business equipment, but offers no mechanism for revenue replacement.
Pence seemed to rule out the option that the state, which has currently has a budget surplus, would replace revenues lost to local governments, as some mayors have requested. Pence said local governments would have to identify their own revenue replacement options.
Maureen Hayden covers the Statehouse for the CNHI newspapers in Indiana. She can be reached at email@example.com. Follow her on Twitter @MaureenHayden