Churches and charities are the lifeblood of communities. They operate with tight budgets, small staffs, and rely heavily on donations to maintain vital services to those in need. Because these groups continually and selflessly contribute to others’ well-being, the government grants them certain tax exemptions.
Current state law allows churches and non-profit groups to claim to property tax exemption on land up to 15 acres. The land must be used for educational, literary, scientific, religious or charitable purposes at least 50 percent of the time. The acreage limitation was largely ignored until 2001, when an assessor in Granger, Ind., decided to enforce it. The Granger Community Church, which owns 37 acres of land, did not expect the $34,000 tax bill it received that year.
When lawmakers were alerted to this situation in the 2002 legislative session, Sen. Joe Zakas of Granger authored Senate Bill 19 in an effort to update the law by expanding the land size limitation to 150 acres. I was a co-author of this legislation. The bill passed both the House of Representatives and the Senate, but it was vetoed by the governor. The Senate overturned this decision, but the House has yet to take action. If the veto is to be overturned, the House must do so before midnight on April 29, 2003.
It does not seem likely that the House will act on SB 19; instead, a new initiative has been moving through the General Assembly this year: House Bill 2005. This bill has already passed the House with overwhelming bipartisan support by a vote of 99 to 0.
HB 2005 is more specific than SB 19. It grants property tax exemptions to churches and non-profit groups based upon how their property is used, not how much land they own. Under this legislation, a portion of a building is taxable if it is used for an activity other than one of the specified exempt purposes. For example, if a church runs a profit-generating bookstore, that piece of church-owned property would be taxed.
Another change in the law would be the elimination of the acreage limitation, even for parsonages. As long as organizations are adhering to the requirements for exemption, they can utilize as much or as little space as needed.
Our state government should encourage faith-based and charitable works. Churches and charities provide essential services upon which many of our citizens rely, such as soup kitchens and homeless shelters. They also offer safe and affordable childcare, tutoring for students, counseling for individuals in crisis, and assistance to individual families. There is a very good reason why we have provided tax relief to these institutions in the past, and why we will continue to do so in the future. I will support HB 2005 when it comes to the full Senate for a vote.
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