(WSBT) Debate over property tax relief kicks into high gear, after a group of Indiana lawmakers released a new plan Tuesday they say would cut some bills in half.

The bi-partisan Indiana Tax and Financing Policy Commission passed the plan unanimously after five months of debate. The commission's plan is similar to the one offered by Governor Mitch Daniels in October, with a few key differences.

Both would shift some local expenses like child welfare and school funding off of property taxes and onto the state. Both eliminate all elected township assessors, though the commission's plan would keep one elected assessor per county for public accountability. Both increase the state sales tax by 1 percent, from 6 percent to 7 percent, to pay for it.

The commission's plan allows for an expansion of the sales tax itself, that could keep the increase lower. It also expands another local tax, and that has some crying foul.

State Senator John Broden (D-South Bend) serves on the commission, and says the plan's goal is a 50 percent reduction in homeowners' bills. Governor Daniels plan calls for a 33 percent reduction, using the one cent per dollar increase in sales tax.

The commission's report says the drastic reduction can be accomplished by boosting the state's Homestead Tax Credit to $60,000, eliminating local government expenses, and capping the amount property owners can pay.

The governor's plan sets those caps at 1 percent for homeowners, 2 percent for rentals, and 3 percent for businesses.

But the commission's plan doesn't set specific percentages for the caps. Senator Broden says that's because the governor's figures aren't realistic.

"Looking at the numbers for St. Joseph County, I don't see how local government would be able to withstand a 1 percent, 2 percent, 3 percent circuit breaker."

And on that, county leaders agree.

But not on another aspect of the plan.

"We certainly hope there will be some replacement revenue provided by local municipal government," said Sen. Broden.

"That continues to give us heartburn," responded St. Joseph County Commissioner Mark Dobson (R-Granger). "A local option income tax is continues to be a part of the equation, and no other taxes."

The commission's plan depends on a boost in local income taxes to balance out the loss in property taxes. Right now, St. Joseph County is taxing at .08 percent of the 1 percent allowed under the local option income tax law passed by the legislature last year in response to concerns about the current circuit breaker caps.

The commission's report shows, as of November 1, only 10 of the state's 92 counties have adopted the full 1 percent income tax allowed under the new law.

"It's the legislature again saying we didn't raise your taxes. Those lousy people on county government raised your taxes," said St. Joseph County Commissioner Steve Ross (D-South Bend).

Local landlords are also concerned about the new plan, because it doesn't include language specifying the specific amount at which rental properties would be capped.

Instead, it sets a goal of a 25 percent reduction in their property tax bills.

"A 25 percent reduction would still leave non-owner occupied property with a tax increase for this year," said Real Estate Association of North Central Indiana President Edi Mathis. "They're making the disparity between homeowners and rental properties worse, rather than better. Our goal is eliminate the disparity. The 1,2,3 plan would bring us more relief and make it more bearable. It would allow more people to stay in this business."

Mathis says some landlords have gotten "out of the business" because of rising property tax rates. She says if the 2 percent cap on rental properties isn't passed many more could be forced out of business.

But Commissioner Ross says there is an even bigger concern for all taxpayers.

"[Neither plan] will give the citizens of St. Joe County or any other county in this state any relief for the next three years," he said.

Sen. Broden agrees neither plan is intended as a short term fix, but says other bills will be introduced to provide immediate property tax relief.

House Speaker B. Pat Bauer says he plans to introduce a "hybrid version" of the governor's plan at Wednesday's House organization day. That will allow lawmakers to debate the plan before the legislature reconvenes in January.

Sen. Broden says he hopes the report serves as a "road map" that will spark discussion on what changes should be made.

You can view the entire document and hear testimony that contributed to it by clicking on the link in the Related Content box.