Gov. Mitch Daniels took some time during this week’s Kokomo visit to discuss property tax caps and the upcoming legislative session.

Expect Daniels to push hard for the tax caps to be made permanent, through a constitutional amendment.

“The average property tax bills in Howard County have dropped 55 percent from 2007 to 2009; there’s not a place in the state where our tax cuts delivered more. And wasn’t it a good time for it, when people are under financial pressure?”

Daniels has already laid down the gauntlet for Indiana House Democrats, saying he has no doubt Senate Joint Resolution 1 has weight of popular support.

“If it goes on the floor of both houses, it will pass,” he said.

Opposition could come from several quarters, but the loudest opposition could come from big business and owners of rental properties.

Tuesday, at a local tax caps forum sponsored by Citizens United for Tax Reform, local landlord and businessman Mike Imbler said the new property-tax structure is overly generous to homestead properties.

“The homeowners are really benefiting from this, but that pendulum went too far, at the expense of landlords, farmers and businesses,” Imbler said at the meeting.

At the same time, he said he suspected the homeowner relief had a political backing that would be hard to overcome.

“I think the homestead credit could be reduced; I also know there’s more homeowners that vote than businessmen. It’s a numbers game,” Imbler said.

Daniels has heard the criticism from landlords, but said the property-tax relief has helped more than just homeowners with homestead credits.

Advocates for the caps believe making them permanent will result in more and more properties hitting the caps over times.

Rental property taxes may not decrease drastically, as in the case of homestead properties, but they will at least be protected from future increases, advocates say.

“An awful lot of landlords have been protected by the caps,” Daniels said. “They ought to think twice before chucking them overboard ... they’re unlikely to get a better deal if the caps don’t pass.”

In many ways, the caps are intended to promote home ownership, Daniels said.

“I think it’s appropriate we look out for senior citizens and the young person trying to buy their first home.

“But almost everybody got a cut. Property taxes dropped by one-third overall,” he added.

The other group most vocally represented at Tuesday’s CUTR forum were city employees, a group hit almost as hard by the current recession as Kokomo’s private sector employees.

In particular, the members of Kokomo Firefighters Local 396 have seen 16 of their fellow firefighters laid off. Tuesday, Local 396 president Rick Daily laid part of the blame on the tax caps.

Kokomo Mayor Greg Goodnight said without the caps, the city could have expected an additional $2.1 million in revenue by the end of next year.

To balance the budget, he’s trimmed more than 70 full-time employees from the city payroll, including the firefighters.

Daily told the state legislators at the forum that he saw increases in local income taxes or new fees as inevitable, given the reductions in public safety manpower.

State Sen. Jim Buck, R-Kokomo, an advocate of the caps, said there is some irony in the situation.

Two years ago, local officials demanded the Legislature pass property tax relief.

“Now they’re saying, ‘What did we ask for? Maybe we shouldn’t have asked for what we got,” Buck said.

Matt Greller, executive director of the Indiana Association of Cities and Towns, said there’s “no way we can support placing tax caps in the constitution until the Legislature gives cities and towns full home rule, so they can raise the revenues they need.”

But the Daniels administration is wary of giving local government more options for raising revenue.

A state tax-control board — with a majority of Daniels appointees — has killed several school and library bond issue requests in recent years. Daniels also supports school funding referendums.

The feeling among fiscal conservatives in the state is that controlling local spending is the key to maintaining the state’s competitive business environment.

Daniels said he’s heard the concerns from locals, particularly those hit worst by the recession.

He said if anything, the tax caps have pushed locals toward more efficiency and consolidation of services.

“First, the sky has not fallen, the way the doom-sayers said it would,” Daniels said. “A lot of places are now doing things they should have done a long time ago.

“Second, most of the cuts aren’t anything compared to what we’ve had to do in state government,” he said. “I’m empathetic with the way towns have had to restrain spending, but they shouldn’t feel lonely.”

• Scott Smith is a Kokomo Tribune staff writer. He may be reached at 765-454-8569 or via e-mail at scott.smith@kokomotribune.com