SOUTH BEND — After months of intense negotiations, property tax relief for thousands of Hoosiers could be just hours away from becoming a reality. But some worry the final vote on the long awaited bill could end up being meaningless, because it would include a "bail out" clause for local governments.

That clause would allow some taxing bodies to appeal to have the new caps temporarily lifted.

Some say the caps at 1 percent for homeowners, 2 percent for rentals and agricultural land, and 3 percent for businesses could mean big revenue losses for local counties, cities and schools. It would save homeowners an average of about 25 percent on property tax bills statewide, but much of that lost funding would be taken from revenue sources created for local governments.

Mayor Steve Luecke (D) estimates the loss at $18 million per year for South Bend alone. That could mean the loss of up to 65 city police officers, 62 firefighters, and 30 parks and recreation workers. The latest estimates put St. Joseph County's loss under the plan at around $64 million.

But some homeowners are convinced there is still a solution.

Ray Flynn is one of them.

Like many of his neighbors, he watched the property tax bill on his home of 20 years skyrocket last year, and he's been pushing for change ever since.

"I'm concerned about the direction they're going," he said. "I think people are looking for some real relief, especially in this area."

But some local leaders say that change could mean disaster to counties, cities, schools and libraries, leaving them with no way to make up millions in lost revenue.

On Thursday, key state lawmakers presented their solution. It's called the "Distressed Unit Appeal Board," and it would be made of five members, appointed by the governor, as well as an appointee to represent counties, cities, towns and schools. Indiana's Speaker of the House would also appoint a member.

The new appeals board would have the ability to temporarily lift the new tax caps for any local government with revenue cuts exceeding 5 percent.

School districts that stand to lose more than 2 percent would also have money allotted by the state. $50 million would be set aside in 2009, and $70 million set aside in 2010. That money would be split among school corporations that qualify across the state.

Some state lawmakers say the plan would help local taxing bodies adjust to the new property tax system. But local leaders say it won't solve the problem because it doesn't them give any new ways to raise money.

"The legislature has failed the residents of St. Joseph County," said Mayor Luecke. "They are not providing the opportunity to replace revenues lost by the property tax caps. I don't have much faith in the Distressed Unit Appeal Board. [Legislators] could've solved this issue very simply by leaving the local income tax to replace the dollars lost, and then it wouldn't have been needed."

"It still feels like a job half done," agreed St. Joseph County Commissioner Mark Dobson (R). "This doesn't embrace or encompass any of the "Hometown Matters" basket of revenue replacement options that we have long supported, and it doesn't include any of the 27 recommendations from the Kernan-Shepherd report."

That report, issued by the so-called "Blue Ribbon Panel" commissioned by Gov. Mitch Daniels, studied ways to streamline state and local government in Indiana.

Commissioner Dobson says the legislature didn't go far enough.

"I guess they are tossing us a bone, but at the same time, they want us to be the bad guys that say, 'We can't make things happen, so we'll go appeal it."

But some taxpayers like Flynn argue it goes too far, and essentially makes property tax reform meaningless.

"It's self defeating," he said.

When asked if he's frustrated over it, he replied "of course."

Dobson says he understands why.

"I couldn't blame them if they feel that way," he said. "They're looking for significant reform, and leadership on that, and I don't feel we got that from downstate with this compromise bill. And it may be forcing the local units to go back and make that appeal."

Both Dobson and Luecke say they, and the Indiana Association of Cities and Towns, have pushed for the General Assembly to give local taxing bodies the option of using other revenue sources to raise additional funding, like a food and beverage tax, hotel/motel tax, or local option sales or income tax.

But they say lawmakers haven't listened. And because of that, some say they may have few options left.

"South Bend will lost $18 million a year. So, yes, there will be layoffs," said Luecke.

"Significant layoffs will still have to happen this year," agreed Dobson. "Unless [legislators] start significant reform in the structure of local governments, we're going to be right back in the soup a few years from now."