Tulsi Sawlani, M.D. v. Lake County Assessor
This text of Tulsi Sawlani, M.D. v. Lake County Assessor (Tulsi Sawlani, M.D. v. Lake County Assessor) is published on Counsel Stack Legal Research, covering Indiana Tax Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.
Opinion
ATTORNEY FOR PETITIONERS: ATTORNEYS FOR RESPONDENT: GEROLD L. STOUT MARILYN S. MEIGHEN STOUT LAW FIRM ATTORNEY AT LAW Lowell, IN Carmel, IN
BRIAN A. CUSIMANO ATTORNEY AT LAW FILED Indianapolis, IN Jul 24 2024, 3:32 pm
CLERK AYN K. ENGLE Indiana Supreme Court Court of Appeals ATTORNEY AT LAW and Tax Court
Indianapolis, IN
IN THE INDIANA TAX COURT
DR. TULSI AND KAMINI SAWLANI, ) ) Petitioners, ) ) v. ) Case No. 21T-TA-00044 ) LAKE COUNTY ASSESSOR, ) ) Respondent. )
ON APPEAL FROM A FINAL DETERMINATION OF THE INDIANA BOARD OF TAX REVIEW
FOR PUBLICATION July 24, 2024
MCADAM, J.
This case presents a question of first impression. The Indiana Constitution limits
a taxpayer’s property tax liability to 1%, 2%, or 3% of the property’s gross assessed
value depending on the type of property. IND. CONST. art. 10, § 1(f). These limits,
commonly referred to as “tax caps” or “circuit breakers,” are implemented by statute. See IND. CODE § 6-1.1-20.6-7.5(a) (2024). The Constitution requires the one percent
cap to be applied to all “[t]angible property, including curtilage, used as a principal place
of residence by an . . . owner of the property[.]” See IND. CONST. art. 10, § 1(c)(4), (f)(1).
The homeowners in this case challenge the constitutionality of a provision of the
statutory tax caps that limits the application of the one percent cap to the one acre of
land surrounding their home. They contend that the constitutional one percent cap does
not permit a one-acre limitation like the one imposed by statute and assert that they
were entitled to the one percent cap for the additional 2.981 acres of land adjoining their
home during the 2019 tax year. After careful review, the Court concludes that the
Constitution does not permit a fixed one-acre limitation on the amount of land eligible for
the one percent tax cap. The Court reverses the final determination of the Indiana Board
of Tax Review (the “Indiana Board”) and remands the matter for further proceedings to
determine whether the homeowners’ contested acreage is entitled to the one-percent
tax cap in light of this decision.
FACTS AND PROCEDURAL HISTORY
Dr. Tulsi and Kamini Sawlani own a two-story home situated on 3.981 acres of
land in Crown Point, Indiana. For the 2019 assessment, the home and the one acre of
land surrounding it were classified as residential real property subject to the one percent
tax cap. The other 2.981 acres of land were classified as nonresidential real property
subject to the three percent tax cap.
Believing that the Indiana Constitution requires the one percent tax cap to also
be applied to their additional 2.981 acres of land, the Sawlanis appealed their
assessment first to the Lake County Property Tax Assessment Board of Appeals and
2 then to the Indiana Board. The Indiana Board rejected the Sawlanis’ claims, concluding
that it lacked the authority to resolve the constitutional question presented by the
Sawlanis’ appeal. The Sawlanis then initiated this original tax appeal.
STANDARD OF REVIEW
The Court’s review of Indiana Board decisions is governed by Indiana Code
section 33-26-6-6, the provisions of which closely mirror those controlling judicial review
of administrative decisions governed by Indiana’s Administrative Orders and
Procedures Act (“AOPA”). Compare IND. CODE § 33-26-6-6(e) (2024) with IND. CODE §
4-21.5-5-14(d) (2024). Under Indiana Code section 33-26-6-6, the party seeking to
overturn a final determination of the Indiana Board bears the burden of demonstrating
its invalidity. I.C. § 33-26-6-6(b). Accordingly, the challengers must demonstrate that
they have been prejudiced by a final determination of the Indiana Board that is arbitrary,
capricious, an abuse of discretion, or otherwise not in accordance with law; contrary to
constitutional right, power, privilege, or immunity; in excess of or short of statutory
jurisdiction, authority, or limitations; without observance of the procedure required by
law; or unsupported by substantial or reliable evidence. I.C. § 33-26-6-6(e).
DISCUSSION
In 2010, Indiana voters overwhelmingly approved an amendment to the Indiana
Constitution limiting property tax liability for real and personal property. These limitations
added language to Article 10, Section 1, capping the amount of property tax at 1%, 2%,
or 3% of a property’s gross assessed value, depending on the type of property. These
tax caps impose strict limitations on the ability of the state to tax property, setting a
ceiling on the amount of tax that can be levied (i.e., the 1%, 2%, and 3% tax caps) and
3 a floor on the types of property entitled to their benefit (i.e., the assignment of each type
of property to a cap). These tax caps are not self-executing, however. Article 10 styles
them as a mandate to the General Assembly, directing it to enact legislation effectuating
the constitutional limitations. IND. CONST. art. 10, § 1(f) (requiring the legislature to
establish the property tax caps “by law”). The current version of these statutory caps is
set forth in Chapter 20.6 of the Indiana Code, which establishes a system of property
tax credits equal to the amount that a taxpayer’s property tax liability exceeds the 1%,
2%, or 3% limit. See IND. CODE §§ 6-1.1-20.6-0.3 to -13 (2024).
At issue in this case is the one percent cap on property used as a principal place
of residence by its owner, specifically the difference between the constitutional mandate
and the statutory language. The Constitution requires the one percent cap to be applied
to all “[t]angible property, including curtilage, used as a principal place of residence by
an . . . owner of the property[.]” IND. CONST. art. 10, § 1(c)(4), (f)(1). The statute,
however, uses different words to describe the type of property eligible for the one
percent cap. It applies the one percent cap to “homestead” property which, among other
things, “consists of a dwelling and the real estate, not exceeding one (1) acre, that
immediately surrounds that dwelling.” See IND. CODE § 6-1.1-20.6-7.5(a)(1) (2019); IND.
CODE § 6-1.1-12-37(a)(2) (2019) (amended 2024).
Seizing on the variation between the two articulations, the Sawlanis contend that
the statute unconstitutionally limits the one percent cap by restricting its application to
one acre of land surrounding a taxpayer’s dwelling. They point to the fact that the
Constitution does not use the term “homestead” and does not contain any explicit
limitation based on acreage. The Assessor disagrees, arguing that the statutory one-
4 acre limitation flows from the term “curtilage” used in the constitutional definition and is
consistent with the legislative history.
The question presented to the Court is whether the one-acre limitation restricting
the one percent cap to the Sawlanis’ house and the one acre of land surrounding it can
be applied consistent with the constitutional mandate. If it cannot, the one-acre limitation
in the statutory one percent cap must yield to the Constitution to the extent that the
additional 2.981 acres of land otherwise satisfies the statutory requirements. The
Sawlanis have not challenged any other aspect of the statutory scheme and have not
asserted that, absent the one-acre limitation, the statute is inadequate to effectuate the
constitutional mandate as applied to their additional 2.981 acres of land.
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ATTORNEY FOR PETITIONERS: ATTORNEYS FOR RESPONDENT: GEROLD L. STOUT MARILYN S. MEIGHEN STOUT LAW FIRM ATTORNEY AT LAW Lowell, IN Carmel, IN
BRIAN A. CUSIMANO ATTORNEY AT LAW FILED Indianapolis, IN Jul 24 2024, 3:32 pm
CLERK AYN K. ENGLE Indiana Supreme Court Court of Appeals ATTORNEY AT LAW and Tax Court
Indianapolis, IN
IN THE INDIANA TAX COURT
DR. TULSI AND KAMINI SAWLANI, ) ) Petitioners, ) ) v. ) Case No. 21T-TA-00044 ) LAKE COUNTY ASSESSOR, ) ) Respondent. )
ON APPEAL FROM A FINAL DETERMINATION OF THE INDIANA BOARD OF TAX REVIEW
FOR PUBLICATION July 24, 2024
MCADAM, J.
This case presents a question of first impression. The Indiana Constitution limits
a taxpayer’s property tax liability to 1%, 2%, or 3% of the property’s gross assessed
value depending on the type of property. IND. CONST. art. 10, § 1(f). These limits,
commonly referred to as “tax caps” or “circuit breakers,” are implemented by statute. See IND. CODE § 6-1.1-20.6-7.5(a) (2024). The Constitution requires the one percent
cap to be applied to all “[t]angible property, including curtilage, used as a principal place
of residence by an . . . owner of the property[.]” See IND. CONST. art. 10, § 1(c)(4), (f)(1).
The homeowners in this case challenge the constitutionality of a provision of the
statutory tax caps that limits the application of the one percent cap to the one acre of
land surrounding their home. They contend that the constitutional one percent cap does
not permit a one-acre limitation like the one imposed by statute and assert that they
were entitled to the one percent cap for the additional 2.981 acres of land adjoining their
home during the 2019 tax year. After careful review, the Court concludes that the
Constitution does not permit a fixed one-acre limitation on the amount of land eligible for
the one percent tax cap. The Court reverses the final determination of the Indiana Board
of Tax Review (the “Indiana Board”) and remands the matter for further proceedings to
determine whether the homeowners’ contested acreage is entitled to the one-percent
tax cap in light of this decision.
FACTS AND PROCEDURAL HISTORY
Dr. Tulsi and Kamini Sawlani own a two-story home situated on 3.981 acres of
land in Crown Point, Indiana. For the 2019 assessment, the home and the one acre of
land surrounding it were classified as residential real property subject to the one percent
tax cap. The other 2.981 acres of land were classified as nonresidential real property
subject to the three percent tax cap.
Believing that the Indiana Constitution requires the one percent tax cap to also
be applied to their additional 2.981 acres of land, the Sawlanis appealed their
assessment first to the Lake County Property Tax Assessment Board of Appeals and
2 then to the Indiana Board. The Indiana Board rejected the Sawlanis’ claims, concluding
that it lacked the authority to resolve the constitutional question presented by the
Sawlanis’ appeal. The Sawlanis then initiated this original tax appeal.
STANDARD OF REVIEW
The Court’s review of Indiana Board decisions is governed by Indiana Code
section 33-26-6-6, the provisions of which closely mirror those controlling judicial review
of administrative decisions governed by Indiana’s Administrative Orders and
Procedures Act (“AOPA”). Compare IND. CODE § 33-26-6-6(e) (2024) with IND. CODE §
4-21.5-5-14(d) (2024). Under Indiana Code section 33-26-6-6, the party seeking to
overturn a final determination of the Indiana Board bears the burden of demonstrating
its invalidity. I.C. § 33-26-6-6(b). Accordingly, the challengers must demonstrate that
they have been prejudiced by a final determination of the Indiana Board that is arbitrary,
capricious, an abuse of discretion, or otherwise not in accordance with law; contrary to
constitutional right, power, privilege, or immunity; in excess of or short of statutory
jurisdiction, authority, or limitations; without observance of the procedure required by
law; or unsupported by substantial or reliable evidence. I.C. § 33-26-6-6(e).
DISCUSSION
In 2010, Indiana voters overwhelmingly approved an amendment to the Indiana
Constitution limiting property tax liability for real and personal property. These limitations
added language to Article 10, Section 1, capping the amount of property tax at 1%, 2%,
or 3% of a property’s gross assessed value, depending on the type of property. These
tax caps impose strict limitations on the ability of the state to tax property, setting a
ceiling on the amount of tax that can be levied (i.e., the 1%, 2%, and 3% tax caps) and
3 a floor on the types of property entitled to their benefit (i.e., the assignment of each type
of property to a cap). These tax caps are not self-executing, however. Article 10 styles
them as a mandate to the General Assembly, directing it to enact legislation effectuating
the constitutional limitations. IND. CONST. art. 10, § 1(f) (requiring the legislature to
establish the property tax caps “by law”). The current version of these statutory caps is
set forth in Chapter 20.6 of the Indiana Code, which establishes a system of property
tax credits equal to the amount that a taxpayer’s property tax liability exceeds the 1%,
2%, or 3% limit. See IND. CODE §§ 6-1.1-20.6-0.3 to -13 (2024).
At issue in this case is the one percent cap on property used as a principal place
of residence by its owner, specifically the difference between the constitutional mandate
and the statutory language. The Constitution requires the one percent cap to be applied
to all “[t]angible property, including curtilage, used as a principal place of residence by
an . . . owner of the property[.]” IND. CONST. art. 10, § 1(c)(4), (f)(1). The statute,
however, uses different words to describe the type of property eligible for the one
percent cap. It applies the one percent cap to “homestead” property which, among other
things, “consists of a dwelling and the real estate, not exceeding one (1) acre, that
immediately surrounds that dwelling.” See IND. CODE § 6-1.1-20.6-7.5(a)(1) (2019); IND.
CODE § 6-1.1-12-37(a)(2) (2019) (amended 2024).
Seizing on the variation between the two articulations, the Sawlanis contend that
the statute unconstitutionally limits the one percent cap by restricting its application to
one acre of land surrounding a taxpayer’s dwelling. They point to the fact that the
Constitution does not use the term “homestead” and does not contain any explicit
limitation based on acreage. The Assessor disagrees, arguing that the statutory one-
4 acre limitation flows from the term “curtilage” used in the constitutional definition and is
consistent with the legislative history.
The question presented to the Court is whether the one-acre limitation restricting
the one percent cap to the Sawlanis’ house and the one acre of land surrounding it can
be applied consistent with the constitutional mandate. If it cannot, the one-acre limitation
in the statutory one percent cap must yield to the Constitution to the extent that the
additional 2.981 acres of land otherwise satisfies the statutory requirements. The
Sawlanis have not challenged any other aspect of the statutory scheme and have not
asserted that, absent the one-acre limitation, the statute is inadequate to effectuate the
constitutional mandate as applied to their additional 2.981 acres of land.
Constitutionality of the Statutory One-Acre Limitation
It is well-established that “all laws come before [the courts] clothed with the
presumption of constitutionality[.]” Holcomb v. Bray, 187 N.E.3d 1268, 1277 (Ind. 2022)
(quoting Meredith v. Pence, 984 N.E.2d 1213, 1218 (Ind. 2013)) (internal quotation
marks omitted). The challenger seeking to overturn a statute on constitutional grounds
carries a high burden to show the law is unconstitutional. Id. The courts must resolve
any doubts against the challenger and in favor of finding the law constitutional. Id.
“Interpretation of the Indiana Constitution is controlled by the text itself,
illuminated by history and by the purpose and structure of our constitution and the case
law surrounding it.” State v. Katz, 179 N.E.3d 431, 443 (Ind. 2022) (quoting Price v.
State, 622 N.E.2d 954, 957 (Ind. 1993)) (internal quotation marks omitted). Courts look
to the history surrounding the key constitutional text and “examine the state of things
existing when the constitution or any part thereof was framed and adopted, to ascertain
5 the old law, the mischief, and the remedy.” Horner v. Curry, 125 N.E.3d 584, 600 (Ind.
2019) (quoting Bayh v. Sonnenburg, 573 N.E.2d 398, 412 (Ind. 1991)) (internal
quotation marks omitted). Courts must approach the words of the Constitution with
“particular deference, as though every word had been hammered into place.” Meredith,
984 N.E.2d at 1218 (quoting Embry v. O’Bannon, 798 N.E.2d 157, 160 (Ind. 2003))
(internal quotation marks omitted).
A. History of Indiana’s Property Tax Caps
Before delving into the constitutional analysis, it is helpful to survey the history
and development of the property tax caps, beginning with a review of the events
precipitating their adoption and then proceeding through the period of adoption.
A Paradigm Shift in Property Taxation: 1993 to 2002
Though some commentators trace the origins of Indiana’s modern property tax
reform efforts, including the tax caps, to the “Bowen Tax Package” of 1973, the primary
catalyst for the tax caps did not emerge until the 1990s with the seminal decision in the
Town of St. John case. 1,2 See, e.g., Cecil Bohanon, Dagney Faulk & Michael Hicks,
Property Tax Restructuring in Indiana: The Role of Tax Rate Variability, Nat’l Tax Ass’n
Proc. 101st Ann. Conf. on Tax’n 241-42 (Nat’l Tax Ass’n 2008); Craig L. Johnson &
Justin M. Ross, A Fiscal History of Indiana Local Government, 11-13, Ind. Fiscal Pol’y
Inst. (2018). 3 Initially filed in 1993, the Town of St. John case spanned more than five
1 The “Bowen Tax Package” of 1973 refers to a set of tax reforms supported by then Indiana Governor Otis Bowen. 2 For ease of reading, the Court has provided the full citations for documents and legislative materials available online in the footnotes. 3 Cecil Bohanon, Dagney Faulk & Michael Hicks, Property Tax Restructuring in Indiana: The
6 years and generated six opinions between 1996 and 1998 by this Court and the Indiana
Supreme Court. See State Bd. of Tax Comm’rs v. Town of St. John (St. John VI), 702
N.E.2d 1034, 1035-36 (Ind. 1998). See also Dagney Faulk, How We Got Here from
There: A Chronology of Indiana Property Tax Laws, 79 Ind. Bus. Rev., at 2 (Summer
2004). 4 At that time, the cost schedules used to assess real property were not based on
objectively verifiable data, resulting in non-uniform and unequal assessments. See St.
John VI, 702 N.E.2d at 1042-43. Studies conducted around the time revealed that
residential property was assessed at 62% of market value, commercial property at 81%,
industrial property at 72%, and agricultural property at 54%. Id. at 1042.
Against that backdrop, the Indiana Supreme Court invalidated the state’s
assessment system under Article 10, Section 1 of Indiana’s Constitution. See id. at
1037-43. It found the assessment system inconsistent with the constitutional guarantee
of a uniform and equal rate of assessment and taxation, holding that assessments must
be based on “objective measure[s] of property wealth[.]” See id. This Court responded
by ordering the now-defunct State Board of Tax Commissioners to implement new
constitutional assessment regulations by June 1, 2001, and to use these regulations for
a general reassessment of all Indiana real property for the March 1, 2002, assessment
Role of Tax Rate Variability, Nat’l Tax Ass’n Proc. 101st Ann. Conf. on Tax’n 241-42 (Nat’l Tax Ass’n 2008), available at https://ntanet.org/wp-content/uploads/proceedings/2008/028-bohanon- property-tax-restructuring-2008-nta-proceedings.pdf (last visited July 19, 2024); Craig L. Johnson & Justin M. Ross, A Fiscal History of Indiana Local Government, 11-13, Ind. Fiscal Pol’y Inst. (2018), available at https://indianafiscalpolicyinstitute.wildapricot.org/resources/Documents/Fiscal%20History%20of %20Indiana%20Local%20Government%20-%20IFPI%202018.pdf (last visited July 19, 2024). 4 Dagney Faulk, How We Got Here from There: A Chronology of Indiana Property Tax Laws, 79 Ind. Bus. Rev., at 2 (Summer 2004), available at https://www.ibrc.indiana.edu/ibr/2004/summer04/summer04_art1.html (last visited July 19, 2024). 7 date. See Town of St. John v. State Bd. of Tax Comm’rs, 729 N.E.2d 242, 251 (Ind. Tax
Ct. 2000).
The Town of St. John Era Begins: 2002 to 2007
In the wake of the Town of St. John decisions, various changes were
implemented to manage the evolving property assessment landscape and the
anticipated shift in property tax burdens from businesses to homeowners. It was
anticipated that “a move to a more objective measure of assessed value would
inevitably shift [the] property tax burden from business entities to homeowners[,]”
potentially increasing residential property tax bills by 31% to 39% and decreasing
business property tax bills by 22% to 27%. Bohanon et al., supra at 242. As part of the
effort to align the new assessment system with broader tax policy goals, the General
Assembly adopted a proposal during the 2002 regular session to amend the
Constitution to expressly permit the Legislature to exempt residential property and
business inventory from property taxation. See Pub. L. No. 189-2002, 2002 Ind. Acts
2715, 2715-16; see also Bohanon et al., supra at 242. The amendment was approved
again in 2003 and ratified in 2004 by the electorate with a margin of 71% to 29%. See
Pub. L. No. 278-2003, 2003 Ind. Acts 2968, 2968-69; 2004 Hist. Election Results -
Referendums, Ind. Sec’y State (2004). 5
Following the conclusion of the 2002 regular session, Governor Frank O’Bannon
called the Legislature back for a special session to address, among other things, the
shifting property tax burden from businesses to homeowners. See H. Journal, 112th
5 2004 Hist. Election Results - Referendums, Ind. Sec’y State (2004), available at https://indianavoters.in.gov/ENRHistorical/ElectionResults?year=2004 (last visited July 19, 2024). 8 Gen. Assemb., 1st Spec. Sess. 1 (Ind. 2002). 6 Several additional measures were
adopted during that special session to shield residential property owners from bearing a
disproportionate share of the property tax burden, including additional funding for
property tax relief financed by a one percent increase in the state sales tax, expanded
authority for local income taxes to provide property tax relief, and an increase in the
standard homestead deduction from $6,000 to $35,000. See Pub. L. No. 192-2002 (ss),
§§ 32, 49, 121, 2002 Ind. Acts 2727, 2755-56, 2805-06, 2864-68; see also Faulk, supra
at 2; Johnson & Ross, supra at 14. The measures were strategically timed to coincide
with the general reassessment of properties in 2002, which would start impacting
property tax bills in 2003. Johnson & Ross, supra at 14.
Nevertheless, “[s]ome taxpayers saw big tax hikes anyway[,]” particularly
“[o]wners of older homes, owners of rental housing and owners of farmland[.]” Larry
DeBoer, What Do We Know About Indiana’s Property Tax Caps?, 4, Ind. Fiscal Pol’y
Inst. (2015). 7 At the same time, business property taxes generally declined. Id. In
response, the General Assembly continued to refine the property tax assessment
system during the 2003 and 2004 legislative sessions. It established a four-year cycle
for property tax assessments to begin in 2007 and directed the Department of Local
Government Finance to create a system of annual adjustments starting in 2005 to
capture incremental changes in the intervening years between reassessments
6 H. Journal, 112th Gen. Assemb., 1st Spec. Sess. 1 (Ind. 2002), available at https://archive.iga.in.gov/special_session/2002/bills/combined_journals.pdf (last visited July 19, 2024). 7 Larry DeBoer, What Do We Know About Indiana’s Property Tax Caps?, 4, Ind. Fiscal Pol’y Inst. (2015), available at https://indianafiscalpolicyinstitute.wildapricot.org/resources/IFPI%20Property%20Tax%20Report %20FINAL.pdf (last visited July 19, 2024). 9 (commonly referred to as “trending”). See Pub. L. No. 245-2003, §§ 3-4, 2003 Ind. Acts
2433, 2435-36; Faulk, supra at 2. These annual adjustments were intended to stabilize
property taxes over time and avoid sharp increases in property taxes every four years.
See DeBoer, supra at 5.
Leading into 2007, several events combined to threaten a substantial increase in
residential property taxes again. Id. The annual adjustments for property assessments
mandated in 2003 took effect, a recession led the state to reduce the amount of
property tax relief provided to local governments, an error in the application of the
homestead credit reduced tax relief, and the elimination of the inventory tax further
shifted the property tax burden to homeowners. Id.; Bohanon et al., supra at 243.
Anticipating the pressure on property tax bills, the General Assembly passed various
measures in 2006 in an attempt to dampen the expected tax increases. DeBoer, supra
at 5. It raised several property tax deductions and credits and, for the first time on a
statewide basis, introduced the concept of a circuit breaker or tax cap, although it never
took effect. See Pub. L. No. 224-2007, §§ 3, 38, 2007 Ind. Acts 3870, 3870-71, 3919-
21; DeBoer, supra at 5. The tax caps would have limited the amount of property taxes to
2% of assessed value for homesteads and 3% for all other property. See Pub. L. No.
224-2007, § 38.
Even so, the arrival of tax bills in 2007 brought large increases and several
homeowners saw their property taxes increase substantially with the average home
facing a 24% increase in property taxes. DeBoer, supra at 5; Bohanon et al., supra at
243; Comm’n on State Tax & Fin. Pol’y, Final Report of the Commission on State Tax
10 and Financing Policy, 12, Ind. Legis. Servs. Agency (2007). 8 This led to protests,
including a taxpayer march on the state capital and even an Indianapolis Tea Party with
protesters tossing a giant teabag in the Broad Ripple Canal. DeBoer, supra at 5;
Bohanon et al., supra at 243. The General Assembly responded by charging the
Commission on State Tax and Financing Policy with studying the property tax system
and recommending potential solutions. Comm’n on State Tax & Fin. Pol’y, supra at 2.
The Commission conducted a series of hearings on a wide range of topics in the
summer and fall of 2007, including the repeal and potential replacement of the property
tax, existing measures to control property taxes, limits imposed in other states, state
assumption of local obligations, and additional controls on property taxes. Id. at 3-4.
In its November 2007 report, the Commission made forty-four recommendations,
many of which were adopted in 2008, including a recommendation to “ensure tax relief
is permanent with a constitutional amendment establishing a circuit breaker program[.]”
Id. at 16-20 (capitalization omitted). Governor Mitch Daniels echoed the Commission’s
recommendation regarding a constitutional amendment two months later in his State of
the State address, urging the General Assembly to adopt “permanent protection[s]
against the return of unaffordable taxes, through a permanent, constitutional cap of one
percent of a home’s value, an absolute ceiling beyond which no homeowner would ever
pass.” See H. Journal, 115th Gen. Assemb., 2d Reg. Sess. 45 (Ind. 2008). 9
8 Comm’n on State Tax & Fin. Pol’y, Final Report of the Commission on State Tax and Financing Policy, 12, Ind. Legis. Servs. Agency (2007), available at https://archive.iga.in.gov/interim/2007/reports/STFPAB1.pdf (last visited July 19, 2024). 9 H. Journal, 115th Gen. Assemb., 2d Reg. Sess. 45 (Ind. 2008), available at https://archive.iga.in.gov/2008/bills/2008%20Journals.PDF (last visited July 19, 2024). 11 Adoption of the Tax Caps: 2008 to 2010
The angst about property tax increases culminated in the eventual adoption in
2008 of a sweeping set of property tax reforms, which included many of the
recommendations from the Commission on State Tax and Financing Policy and the
proposal put forward by Governor Mitch Daniels. See DeBoer, supra at 5; Johnson &
Ross, supra at 15. The response adopted by the General Assembly was far-reaching
and multi-faceted. It shifted financial responsibility for various locally funded programs to
the state, including elementary and secondary schools, child welfare, juvenile
incarceration, state fair and forestry, indigent health care, and police and fire pensions.
See Pub. L. No. 146-2008, 2008 Ind. Acts 2307, 2307; see also Johnson & Ross, supra
at 15-16. It funded this increase in state spending by increasing the state sales tax from
six to seven percent, redirecting gaming taxes, and eliminating property tax replacement
credits. See, e.g., Pub. L. No. 146-2008, §§ 18, 310, 2008 Ind. Acts 2307, 2330-35,
2620-21; see also Johnson & Ross, supra at 15-16. It expanded local income taxing
authority for counties and eliminated 1,100 assessors primarily in townships,
transferring their duties to the 92 county assessors. See, e.g., Pub. L. No. 146-2008, §§
693-698, 830-834, 2008 Ind. Acts 2307, 2924-28, 3094-98; see also Bohanon et al.,
supra at 244. It added a new 35% supplemental homestead deduction on top of the
existing standard homestead deduction, increased the renter deduction by $500, and
capped increases in tax bills for eligible low-income seniors at 2%. See, e.g., Pub. L.
No. 146-2008, §§ 116, 318, 2008 Ind. Acts 2307, 2415, 2627; see also Bohanon et al.,
supra at 244; DeBoer, supra at 5. It also required referenda for new school and other
local government projects over a certain size. See, e.g., Pub. L. No. 146-2008, §§ 193-
12 199, 2008 Ind. Acts 2307, 2515-26; see also Johnson & Ross, supra at 16. Finally, and
most relevant to this case, it introduced new statewide property tax caps for all types of
property. See Pub. L. No. 146-2008, §§ 222-223, 2008 Ind. Acts 2307, 2536-39; see
also DeBoer, supra at 5.
The statutory caps were phased in over a two-year period. See Pub. L. No. 146-
2008, §§ 222-223; see also DeBoer, supra at 5. In their first year, 2009, the caps were
set at 1.5% for “homestead” property, 2.5% for agriculture and “non-homestead”
residential property, and 3.5% for business property. See Pub. L. No. 146-2008, § 222;
see also DeBoer, supra at 5. Then, beginning in 2010, the caps were tightened to 1%,
2%, and 3% respectively, which are the levels they remain at today. See Pub. L. No.
146-2008, § 223; see also DeBoer, supra at 5.
The General Assembly also began the process of amending Article 10, Section 1
of the Indiana Constitution. There were two competing joint resolutions proposed to add
property tax caps to the Constitution – one by the Senate and one by the House.
Compare H.J. Res. 1, 115th Gen. Assemb., 2d Reg. Sess. (Ind. 2008) with S. Journal,
115th Gen. Assemb., 2d Reg. Sess. 4 (Ind. 2007). 10 The Senate joint resolution, Senate
Joint Resolution 1, ultimately prevailed, eventually reflecting the language found in the
Constitution today:
(f) This subsection applies to property taxes first due and payable in 2012 and thereafter. The General Assembly shall, by law, limit a taxpayer’s property tax liability as follows:
(1) A taxpayer’s property tax liability on tangible property described in subsection (c)(4) may not exceed one percent (1%)
10 H.J. Res. 1, 115th Gen. Assemb., 2d Reg. Sess. (Ind. 2008), available at https://archive.iga.in.gov/2008/bills/PDF/RES/HJ0001.2.pdf (last visited July 19, 2024); S. Journal, 115th Gen. Assemb., 2d Reg. Sess. 4 (Ind. 2007), available at https://archive.iga.in.gov/2008/bills/2008%20Journals.PDF (last visited July 19, 2024). 13 of the gross assessed value of the property that is the basis for the determination of property taxes.
(2) A taxpayer’s property tax liability on other residential property may not exceed two percent (2%) of the gross assessed value of the property that is the basis for the determination of property taxes. (3) A taxpayer’s property tax liability on agricultural land may not exceed two percent (2%) of the gross assessed value of the land that is the basis for the determination of property taxes. (4) A taxpayer’s property tax liability on other real property may not exceed three percent (3%) of the gross assessed value of the property that is the basis for the determination of property taxes. (5) A taxpayer’s property tax liability on personal property (other than personal property that is tangible property described in (c)(4) or personal property that is other residential property) within a particular taxing district may not exceed three percent (3%) of the gross assessed value of the taxpayer’s personal property that is the basis for the determination of property taxes within the taxing district.
Compare S.J. Res. 1, 115th Gen. Assemb., 2d Reg. Sess. (Ind. 2008) with IND. CONST.
art. 10 § 1(f). 11 The House joint resolution, by contrast, closely mirrored the statutory
one percent cap. Compare H.J. Res. 1 with Pub. L. No. 146-2008, §§ 115, 215, 223,
2008 Ind. Acts 2307, 2413-15, 2533, 2538-39. It specifically tied the one percent cap to
the concept of a homestead and incorporated an explicit one-acre limitation:
(e) As used in this section, “homestead property” means real property improvements or a mobile or manufactured home that is owned (or is being purchased on contract) and used by an individual as the individual’s principal residence. The term includes land on which the improvements or mobile or manufactured home is situated not exceeding one (1) acre. The term includes a principal residence that is owned by a trust in which the individual has a beneficial interest.
*****
11 S.J. Res. 1, 115th Gen. Assemb., 2d Reg. Sess. (Ind. 2008), available at https://archive.iga.in.gov/2008/bills/PDF/RES/SJ0001.4.pdf (last visited July 19, 2024). 14 (h) The maximum amount of property tax on homestead property may not exceed one percent (1%) of the property’s value as last assessed.
H.J. Res. 1. The House version was originally adopted by the House and offered to the
Senate for consideration, but the Senate declined to take it up during the second half of
the session. See Action List: H.J. Res. 1 of the 2008 Sess., 115th Gen. Assemb.
Archives. 12 The House did not attempt to add the language from the House joint
resolution to Senate Joint Resolution 1 when it was under consideration in the House.
Id.
Two years later, during the 2010 legislative session, the proposed amendment,
reflecting the 2008 Senate joint resolution, was offered and approved again. See Pub.
L. No. 116-2010, 2010 Ind. Acts 1630, 1630-32. In conjunction with the passage of the
amendment language itself, the Legislature adopted regular legislation framing the
public question to be placed on the ballot for consideration in the November election.
Pub. L. No. 113-2010, § 185, 2010 Ind. Acts 1342, 1553-54. The amendment was
ratified by a majority of the voting electorate during the 2010 general election by a vote
of 72% to 28%. 2010 Hist. Election Results - Referendums, Ind. Sec’y State (2010). 13
Since their adoption, the constitutional tax caps have not been amended, and there has
been only one minor amendment to the statutory caps, which is unrelated to the
provisions at issue in this case. Pub. L. No. 205-2013, § 77, 2013 Ind. Acts 2141, 2477-
12 Action List: H.J. Res. 1 of the 2008 Sess., 115th Gen. Assemb. Archives, available at https://archive.iga.in.gov/2008/bills/billinfo7781.html?year=2008&request=getActions&doctype= HJR&docno=0001 (last visited July 19, 2024). 13 2010 Hist. Election Results - Referendums, Ind. Sec’y State (2010), available at https://www.indianavoters.in.gov/ENRHistorical/ElectionResults?year=2010 (last visited July 19, 2024). 15 78.
B. The Constitution’s text does not contain a one-acre limitation
Turning to the text of Article 10, Section 1, the Court must examine the
constitutionally prescribed one percent cap and determine whether it permits a one-acre
limitation like the one imposed by the statutory cap. The Constitution provides that the
one-percent cap applies to “property described in subsection (c)(4),” which is “[t]angible
property, including curtilage, used as a principal place of residence[.]” IND. CONST. art.
10, § 1(c)(4), (f)(1). The statutory cap does not use the constitutional language but
instead applies the one percent cap to “homestead” property “that has been granted a
standard deduction under IC 6-1.1-12-37.” See IND. CODE § 6-1.1-20.6-2(a) (2019); I.C.
§ 6-1.1-20.6-7.5(a)(1). Under the statute, a “homestead” is defined, in relevant part, as
“an individual’s principal place of residence . . . that consists of a dwelling and the real
estate, not exceeding one (1) acre, that immediately surrounds that dwelling.” I.C. § 6-
1.1-12-37(a)(2) (emphasis added). Land in excess of the one-acre limitation is assigned
to the two or three percent cap, depending on the type of property. I.C. § 6-1.1-20.6-
7.5(a)(2)-(5).
On its face, the one percent cap established by Article 10, Section 1 does not
contain any direct reference to the term “homestead” or any express limitations on the
size or acreage of the property entitled to its benefit. See IND. CONST. art. 10, § 1(f)(1).
Consequently, the Court must examine the meaning of the words used to describe the
class of property entitled to the cap to determine whether they imply a size or acreage
limitation. This requires consideration of three distinct terms: “tangible property,”
“principal place of residence,” and “curtilage.”
16 Neither party contends that the terms “tangible property” or “principal place of
residence” impose a size or acreage limitation. “Tangible property” refers to “[p]roperty
that has physical form and characteristics.” BLACK’S LAW DICTIONARY 1254 (8th ed.
2004). It stands in contrast to intangible property which is “[p]roperty that lacks a
physical existence[,]” such as stock options or business goodwill. Id. at 1253. Tangible
property is limited only by its ability to be perceived by the senses without any reference
to fixed limitations on the size or acreage of the property. See id.; WEBSTER’S THIRD NEW
INT’L DICTIONARY 2337 (2002 ed.) (defining “tangible property” as “property (as real
estate) having physical substance apparent to the senses”).
Likewise, the phrase “principal place of residence” is similarly unbounded by any
fixed limitations on size or acreage. Though no court has had occasion to define it for
purposes of Article 10, Section 1, the Court need not settle the precise boundaries of
the constitutional meaning in this case. It is enough that the ordinary meaning of the
words comprising the phrase do not, separately or in conjunction, impose any fixed
limitations on the size or acreage of land. See, e.g., WEBSTER’S THIRD NEW INT’L
DICTIONARY at 1802 (defining “principal” as the “most important, consequential, or
influential: relegating comparable matters, items, or individuals to secondary rank”),
1727 (defining “place” as a “physical environment: SPACE”), 1931 (defining “residence”
as “the place where one actually lives or has his home as distinguished from his
technical domicile”). That the term “principal place of residence” does not contain any
fixed limitations on the size or acreage of the land to which it may apply, however, is not
to say that the size or acreage of the land is never a factor in the inquiry. Limitations on
size or acreage may arise from use and will depend on the facts and circumstances of
17 each individual case, particularly a taxpayer’s ability to show that the taxpayer uses a
particular piece of property as part of the taxpayer’s “principal place of residence.” Such
limits are likely to vary depending on the person and the property.
Lastly, the precise definition of the word “curtilage” varies in several respects
depending on the source. See State v. Bonano, 284 A.2d 345, 347 (N.J. 1971) (noting
that “‛[c]urtilage’ is not a term that can in all cases be precisely defined”). It is not
necessary for the Court to ascertain a precise definition of “curtilage” in this case,
however, as all of the sources are consistent in defining the term without reference to
fixed size or acreage limitations. Some sources define “curtilage” as the land
surrounding a house or dwelling and enclosed within a fence. See, e.g., WEBSTER’S
THIRD NEW INT’L DICTIONARY at 558 (defining “curtilage” as “a yard, courtyard, or other
piece of ground included within a fence surrounding a dwelling house”). Some define
“curtilage” as the land surrounding a house or dwelling, but do not require the land to be
enclosed within a fence. See, e.g., BLACK’S LAW DICTIONARY at 411-12 (defining
“curtilage” as “[t]he land or yard adjoining a house, usu[ally] within an enclosure”).
Others define “curtilage” by reference to the use to which the land is put in the absence
of an enclosure or fence. See, e.g., MELLINKOFF’S DICTIONARY OF AMERICAN LEGAL USAGE
145 (1992) (defining “curtilage” as “the area around a house that includes grounds,
outbuildings, and fencing intimately associated with domestic life in the house” and
noting that it “has no standard limits as to square footage or size or nature of what is put
in the ground”); Jones v. Holloway, 36 A.2d 551, 553 (Md. 1944) (defining “curtilage” as
“any adjacent land which was used . . . in connection with [the house] and which is
necessary for its reasonable use and enjoyment”) (citation omitted); Hays v. Paramus
18 Borough, 28 N.J. Tax 342, 352-53 (N.J. Tax Ct. 2015) (citing McTague v. Monroe Twp.,
1 N.J. Tax 66, 71-72 (N.J. Tax Ct. 1980)) (defining “curtilage” as requiring “a natural and
necessary connection between the dwelling house and the amount of land claimed” and
confining the space “to that portion of the land which has a reasonable relationship to
the dwelling house and which is reasonably required . . . for the occupation and full
enjoyment of the dwelling”). Still others define “curtilage” as requiring both an enclosure
and a use supporting the house or dwelling. See, e.g., 8 A.L.R. 673 (citing People ex
rel. Murphy v. Gedney, 10 Hun 151 (N.Y. 1877)) (holding that “curtilage” included “the
courtyard in the front or rear of a house or at its side, or any piece of ground lying near,
inclosed [sic] and used with the house and necessary for the convenient occupation of
the house”). 14
As noted, the Court need not reconcile the differences between the varying
definitions of “curtilage” to resolve the question in this case. It is enough that none of the
definitions identified by this Court reference fixed size or acreage limitations as a factor.
The inquiry depends entirely on other factors, including the presence of a fence or
enclosure and, in some formulations, the use of the property itself. For definitions that
require an enclosure or fence, the inquiry is simply whether the land adjoining the house
is enclosed or fenced. For definitions that consider the use of the property, the inquiry
focuses on the use of the land or its connection to the use of the house. Like “principal
14 While search and seizure law and property tax law are distinct in their legal frameworks and objectives, the definition of “curtilage” used in search and seizure inquiries under the Fourth Amendment to the United States Constitution does not contain any express size or acreage limitations. See United States v. Dunn, 480 U.S. 294, 301 (1987) (defining “curtilage” with reference to four factors: “the proximity of the area claimed to be curtilage to the home, whether the area is included within an enclosure surrounding the home, the nature of the uses to which the area is put, and the steps taken by the resident to protect the area from observation by people passing by”) (citations omitted). 19 place of residence,” the size or acreage of the land may be a factor in evaluating use (or
enclosure), but it does not admit fixed size or acreage limitations.
The Court is unable to identify any foothold for the statutory one-acre limitation in
the text of the Constitution after examining each of the relevant terms used to delineate
the class of property entitled to the one percent cap (i.e., “tangible property,” “principal
place of residence,” and “curtilage”). The Court must be “mindful of both what [the text]
does say and what it does not say.” ESPN, Inc. v. Univ. of Notre Dame Police Dep’t, 62
N.E.3d 1192, 1195 (Ind. 2016) (citation and internal quotation marks omitted). It is
apparent that the constitutional one percent cap does not contain any express limitation
on the size or acreage of land. Nor does it imply such limitations. Therefore, for
purposes of the Constitution, the amount of land that may be entitled to the one percent
cap may be less than, more than, or exactly one acre. 15 The inquiry necessarily
depends on factors other than the size or acreage of the land in question. 16
15 Courts have regularly determined that the curtilage of a building is more than one acre. See, e.g., Bullis Sch., Inc. v. Appeal Tax Ct. for Montgomery Cnty., 114 A.2d 41, 42 (Md. 1955) (acknowledging property tax exemption extended to 34 acres of a 285-acre farm, which included all farm buildings and curtilage, due to its use for educational purposes); Carlisle v. Carlisle’s Estate, 252 So.2d 894, 895-96 (Miss. 1971) (interpreting “home” in testatrix’s bequest of “one-half value” to mean half of the entire 58.4 acre estate, not “only the house, outbuildings, and a curtilage of two acres” due to her unrestricted use and enjoyment of all the unfenced land); McTague v. Monroe Twp., 1 N.J. Tax 66, 71-72 (N.J. Tax Ct. 1980) (exempting two acres of a 40-acre parcel as curtilage, finding they had a “reasonable relationship to the dwelling house” and were “reasonably required by the disabled veteran for the occupation and full enjoyment of the dwelling”); Solebury Twp. Bd. of Supervisors v. Bucks Cnty. Bd. of Assessment & Revision of Taxes, 1966 WL 226518, at *1-2 (Pa. Commw. Ct. Pl. Aug. 29, 1966) (concluding that 25 acres of a 71.68-acre parcel constituted “a reasonable curtilage” of the three exempt buildings, as both the land and all the other buildings thereon were “accessory” to the religious uses of the exempt buildings). 16 The parties have focused their advocacy on the word “curtilage,” assuming that it resolves the constitutional question. However, even if the Court were to determine that “curtilage” requires a one-acre limitation, it would not end the constitutional analysis in this case. There remains a thornier interpretive issue regarding the meaning of the phrase “[t]angible property, including
20 C. The structure of the constitutional two and three percent tax caps aligns with the text of the constitutional one percent tax cap
The structure of the other constitutional tax caps supports the conclusion that the
text of the one percent cap does not contain any fixed size or acreage limitations. Within
the three separate tax caps (i.e., 1%, 2%, and 3%) set forth in Article 10, Section 1, the
Constitution defines five different classes of property to which those caps apply. See
IND. CONST. art. 10, § 1(f). The one percent cap applies only to “tangible property
described in subsection (c)(4)[.]” Id. at § 1(f)(1). The two percent cap applies to “other
residential property” and “agricultural land[.]” Id. at § 1(f)(2)-(3). And the three percent
cap applies to “other real property” and non-residential personal property. Id. at §
1(f)(4)-(5).
Each class of property assigned to the two and three percent caps is expressly
defined by the use of the property and does not contain fixed size or acreage limitations.
Two of the property classes (“other residential property” and “agricultural land”) are
expressly defined by their use. Id. at § 1(e)(1) (defining “other residential property” as
property “used for residential purposes” and not otherwise eligible for the one percent
cap), (e)(2) (defining “agricultural land” as “land devoted to agricultural use”). The other
two categories (“other real property” and non-residential personal property) are defined
curtilage.” In particular, the effect of the phrase “including curtilage” on the scope of the principal term “[t]angible property.” It is well established that the word “including” has multiple meanings: it can be a term of limitation, a term of illustration, or a term of enlargement. See BRYAN A. GARNER, GARNER’S MODERN ENGLISH USAGE 586 (5th ed. 2022) (noting that the word “include” “has traditionally introduced a non-exhaustive list but is now coming to be widely misused for consists of”); BLACK’S LAW DICTIONARY 777-78 (8th ed. 2004) (explaining that “[t]he participle including typically indicates a partial list”); Federal Land Bank of St. Paul v. Bismarck Lumber Co., 314 U.S. 95, 100 (1941) (noting that “the term ‘including’ is not one of all-embracing definition, but [may] connote[] simply an illustrative application of the general principle”) (citations omitted). 21 by exclusion, by how they are not used. See id. §§ 1(e)(3) (defining “other real property”
as property that is used for neither agricultural nor residential purposes), (f)(5) (defining
non-residential personal property as personal property that is not used for residential
purposes). The one percent cap mirrors these other four property classes by defining
the class of property eligible for it with reference to use as well. See id. at § 1(c)(4),
(f)(1) (restricting the one percent cap to property “used as a principal place of
residence”).
The parallel structure between the five property classes delineated by the
constitutional caps supports an inference that a one-acre limitation was not intended to
be implied in the one class of property assigned to the one percent cap. See Ernst &
Ernst v. Underwriters Nat’l Assurance Co., 381 N.E.2d 897, 900 (Ind. Ct. App. 1978)
(providing that courts should consider each part of a statute in relation to its entirety and
give statutory words their plain and ordinary meanings when construing statutory
language). Of course, a size or acreage limitation could have been included in the one
percent cap, but the absence of such a provision in the other four property classes
suggests that it would have been stated explicitly, had such a limitation been intended.
To hide such a concrete and consequential limitation, like one restricting the size or
acreage of land, within such broad and flexible language would defeat the stated goal of
ensuring permanent property tax relief to homeowners.
D. The timing of the statutory and constitutional tax cap adoptions does not indicate an intention to imply a one-acre limitation
The Assessor leans heavily on the fact that the 2008 statutory tax caps were
passed in the same year that the constitutional tax caps were first crafted. She contends
that the constitutional tax caps should be confined to the scope of the statutory tax caps
22 because both were passed in the same legislative session and because the digests of
the joint resolutions use the term “homestead property” when describing the proposed
amendment. See Digest of S.J. Res. 1, 115th Gen. Assemb., 2d Reg. Sess. (Ind. 2008);
Digest of H.J. Res. 1, 116th Gen. Assemb., 2d Reg. Sess. (Ind. 2010). 17 She argues
that the use of the statutory homestead definition in the statutory one percent tax cap
evinces a clear legislative intent to limit the scope of the constitutional one percent cap
in the same manner. 18
This argument, however, is founded on a misunderstanding of the constitutional
tax caps. While the statutory and constitutional tax caps were both established during
the 2008 legislative session, the operative language defining the class of property
entitled to the one percent cap –Subsection (c)(4) – was part of the 2004 constitutional
amendment that expanded the General Assembly’s power to exempt property from
taxation. See IND. CONST. art. 10, § 1(a)(4) (amended 2004). That amendment conferred
17 Digest of S.J. Res. 1, 115th Gen. Assemb., 2d Reg. Sess. (Ind. 2008), available at https://archive.iga.in.gov/2008/bills/billinfo1f65.html?year=2008&session=1&request=getBill&do cno=0001&doctype=SJR (last visited July 19, 2024); Digest of H.J. Res. 1, 116th Gen. Assemb., 2d Reg. Sess. (Ind. 2010), available at https://archive.iga.in.gov/2010/bills/billinfoa5bd.html?year=2010&session=1&request=getBill&do cno=0001&doctype=HJR (last visited July 19, 2024). 18 The Assessor’s written brief cites various house bills, public laws, joint resolutions, and other related source materials to support her arguments. The Sawlanis contend that these documents should not be considered by the Court because they were not admitted into evidence during the Indiana Board hearing. However, it is within the Court’s purview to take judicial notice of various laws, including the decisional, constitutional, and public statutory laws of this state, at any stage of the proceedings. See, e.g., Ind. Evidence Rule 201(b)(1), -(d); Stubbs v. State, 560 N.E.2d 528, 532 (Ind. 1990) (taking judicial notice of Indiana’s statutory laws); Roeschlein v. Thomas, 280 N.E.2d 581, 584 (Ind. 1972) (taking judicial notice of legislative enactments leading toward a constitutional amendment); In re Holovachka, 198 N.E.2d 381, 389 (Ind. 1964) (taking judicial notice of a law regarding a prosecuting attorney’s salary before the law was amended). See also, e.g., In re Denny, 59 N.E. 359, 361 (Ind. 1901), overruled on other grounds by In re Todd, 193 N.E. 865 (Ind. 1935) (taking judicial notice of election results, as shown by the returns made to the secretary of state). 23 broad power upon the Legislature to enact statutes exempting “[t]angible real property,
including curtilage, used as a principal place of residence by an . . . owner of the
property” from taxation, allowing it to specify the conditions and extent of such
exemptions. See id. It was first crafted in 2002 and ratified by the voters in 2004, well
before the constitutional tax caps were proposed. See Pub. L. No. 189-2002; 2004 Hist.
Election Results - Referendums.
The history surrounding the 2004 constitutional amendment is limited, but there
is no indication that its scope was intended to be confined in any way to the statutory
homestead definition or that any fixed size or acreage limitations were intended. The
history suggests, at most, a lingering uncertainty about the statutory property tax system
and a desire to mitigate any latent constitutional infirmity relating to homeowner
protections through the amendment. The only change that has been made to the
operative language since its adoption in 2004 is the deletion of the word “real” as part of
the 2010 amendment. See Pub. L. No. 147-2008, 2008 Ind. Acts 3118, 3118-20. That
change, however, only served to expand the language to cover both real and personal
property. See id. No changes have been made that would narrow the scope of the
operative language or confine it to fixed size or acreage limitations. The meaning of that
operative language in Subsection (c)(4), then, was fixed by 2004, at the latest, when it
was ratified by the voters.
There is significant tension between the simultaneous use of Subsection (c)(4)
for two different provisions. If Subsection (c)(4) were narrowly interpreted in response to
the 2010 amendment by limiting it to homestead property and one acre, as the
Assessor urges, it would have the effect of simultaneously curtailing the breadth of the
24 2004 amendment, thereby constraining the General Assembly’s power to exempt real
property from taxation under Article 10. The 2004 amendment uses the operative
language to place a ceiling on the extent of the Legislature’s power to exempt certain
residential property from taxation. But the 2010 amendment uses the same operative
language to establish a minimum floor on the type of property entitled to the one percent
tax cap. Each of these provisions pulls in a different direction such that the scope of one
directly impacts the scope of the other. It is settled that courts should interpret different
sections of an act harmoniously to give effect to the legislative intent expressed in the
whole act. See AlliedSignal, Inc. v. Ott, 785 N.E.2d 1068, 1078-79 (Ind. 2003) (Dickson,
J., dissenting). Because the text of the 2010 amendment gives no indication that it was
intended to narrow the 2004 amendment, this Court cannot presume that the
Legislature intended to narrow the meaning of the 2004 amendment by implication, and
therefore Subsection (c)(4), to include only homestead property and one acre of land
through a subsequent amendment several years later. To do otherwise risks
substantially limiting the General Assembly’s power to craft property tax relief under
Subsection (c)(4).
The Assessor further contends that the digests of the joint resolutions describing
the scope of the constitutional one percent cap confirm an intent to limit the
constitutional cap to “homestead property.” This argument is flawed. The digest is not
the product of the legislative process but merely a summary of the legislation provided
by the staff of the Legislative Services Agency. See, e.g., OFF. OF CODE REVISION LEGIS.
SERVS. AGENCY, DRAFTING MANUAL FOR THE INDIANA GENERAL ASSEMBLY, 41-43, 106-09
25 (2012). 19 Nothing in the text of the amendment reflects the digests’ use of “homestead.”
See Pub. L. No. 147-2008. Any intent the digests may reflect cannot overcome the clear
conflict with the original meaning of Subsection (c)(4) established when it was adopted
as part of the 2004 amendment. Nor can it be reconciled with the lack of any
subsequent modifications to the text of Subsection (c)(4) that would impose fixed size or
acreage limitations. See Rogers v. Calumet Nat’l Bank of Hammond, 12 N.E.2d 261,
264-65 (Ind. 1938); Brighton v. Schoffstall, 401 N.E.2d 84, 86 (Ind. Ct. App. 1980)
(indicating that courts are prohibited from expanding or contracting the plain meaning of
a statute by either reading into it language to correct supposed omissions or defects or
substituting language it feels the Legislature may have intended). Accepting the
Assessor’s argument would accord the digests more weight than they are due and
improperly elevate each digest to the status of a constitutional amendment, contrary to
Article 16. See, e.g., McNeil v. Anonymous Hosp., 219 N.E.3d 789, 800 n.2 (Ind. Ct.
App. 2023) (providing that synopses and digests are not a part of enacted bills).
E. The public question does not change the meaning of the text
The Assessor also points to the language of the ballot question placed before the
voters in 2010, which stated:
Public Question #1
SHALL PROPERTY TAXES BE LIMITED FOR ALL CLASSES OF PROPERTY by amending the Constitution of the State of Indiana to do the following:
(1) Limit a taxpayer’s annual property tax bill to the following
19 OFF. OF CODE REVISION LEGIS. SERVS. AGENCY, DRAFTING MANUAL FOR THE INDIANA GENERAL ASSEMBLY, 41-43, 106-09 (2012), available at https://iga.in.gov/publications/bill_drafting_manual/2022-12-12T19-42-34.089Z- DRAFTING_MANUAL.pdf (last visited July 19, 2024). 26 percentages of gross assessed value: (A) 1% for an owner-occupied primary residence (homestead); (B) 2% for residential property, other than an owner- occupied primary residence, including apartments; (C) 2% for agricultural land; (D) 3% for other real property; and (E) 3% for personal property.
The above percentages exclude any property taxes imposed after being approved by the voters in a referendum.
(2) Specify that the General Assembly may grant a property tax exemption in the form of a deduction or credit and exempt a mobile home used as a primary residence to the same extent as real property?
Pub. L. 113-2010, § 185, 2010 Ind. Acts. 1342, 1553-54 (emphasis added). The
Assessor asserts that the inclusion of the term “homestead” in the ballot question
conclusively demonstrates that the one percent tax cap was intended to extend only as
far as the statutory definition of “homestead.”
This reading conflates the ordinary everyday meaning of the term “homestead”
with its statutory definition. When interpreting the Constitution, “[courts] look to the
understanding of the ratifiers.” McIntosh v. Melroe Co., a Div. of Clark Equip. Co., 729
N.E.2d 972, 983 (Ind. 2000) (citations omitted). While the statutory definition of
“homestead” includes a one-acre limitation, the ordinary meaning of the word
“homestead” does not. Compare I.C. § 6-1.1-12-37(a)(2) (defining “homestead” as “a
dwelling and the real estate, not exceeding one (1) acre, that immediately surrounds
that dwelling”) with WEBSTER’S THIRD NEW INT’L DICTIONARY at 1083 (defining a
homestead as “the home and land of a family”). Here, there is nothing to indicate that
the ratifiers would have understood the reference to “homestead” in the ballot question
27 as a reference to the statutory definition of “homestead.” The language of the ballot
question neither points directly to the statutory definition nor signifies that the word
“homestead” should be understood in any way other than according to its ordinary
meaning. The Court finds it more likely that the ratifiers would have understood the
reference to “homestead” in the ballot question according to its everyday usage, not its
technical or legal sense.
Aside from how the ratifiers may have understood the term “homestead,”
allowing the ballot question to add to or limit the words of the amendment itself would
contravene the constitutional amendment process in Article 16, Section 1. This process
requires ratification by voters after agreement by two different General Assemblies
separated by an intervening general election. IND. CONST. art. 16, § 1. The ballot
question is adopted like ordinary legislation using a bill passed by only one General
Assembly. See IND. CODE §§ 3-10-3-1 to -9 (2010) (amended 2011). It cannot modify
constitutional language or redefine “homestead” beyond the scope of the constitutional
amendment approved by voters. See IND. CONST. art. 16, § 1.
The bill establishing the ballot question was crafted and passed by the 2010
General Assembly – two years after the language of the 2010 amendment was crafted.
See Pub. L. No. 147-2008; Pub. L. No. 113-2010, § 185. Giving the public question
controlling effect would elevate that legislation to the level of constitutional amendment
in contravention of Article 16, Section 1, even though Article 16 does not permit one
General Assembly to unilaterally change the language of a constitutional amendment
without the consent of a second. See IND. CONST. art. 16, § 1. For that reason, courts
focus on the actual language of the constitutional amendment itself “because it tells us
28 how the voters who approved the Constitution understood it, whatever the expressed
intent of the framers in debates or other clues.” McIntosh, 729 N.E.2d at 983. The
language of the amendment itself, as approved by the voters, holds legal force, not the
ballot language. See, e.g., Holcomb, 187 N.E.3d at 1280-83 (concluding that the length-
and-frequency clause of Article 4, Section 9 does not limit the legislature to one regular
session per year despite ballot language describing the amendment as “permit[ting] the
General Assembly to meet annually instead of biennially”).
F. The one-acre limitation is unconstitutional as-applied to some taxpayers
The Constitution’s text is unambiguous regarding the narrow question presented
in this case. Article 10, Section 1 requires the one percent cap to be applied to
“[t]angible property, including curtilage, used as a principal place of residence” of an
eligible taxpayer. IND. CONST. art. 10, § 1(c)(4), (f)(1). Subsection (c)(4), which
delineates the class of property entitled to the one percent cap, contains no fixed size or
acreage limitations. That provision was adopted in 2004 as part of a different
constitutional amendment to Article 10, Section 1. It therefore acquired its meaning in
2004 when adopted and has not been narrowed since that time to include any
limitations. Limitations on the size or acreage of land may arise from the land’s use as
the taxpayer’s “principal place of residence,” but these limitations are not fixed and
necessarily vary based on the circumstances of each particular case. While the
simultaneous adoption of related statutory and constitutional frameworks might
ordinarily suggest congruence, the clarity of the constitutional text and the use of the
text from the 2004 amendment overwhelm any notion of a contrary intent.
Consequently, fixed size and acreage limitations, like the statutory one-acre limit
29 in the homestead definition, are incompatible with the Constitution. The statutory
framework implementing the constitutional one percent cap limits the cap to no more
than one acre of land surrounding a dwelling and allocates land in excess of one acre to
the other caps. See I.C. § 6-1.1-20.6-7.5(a)(1)-(5). This is less than the Constitution
requires and fails to fulfill the constitutional mandate contained in Article 10, Section 1.
The constitutional tax caps establish strict limitations on the state’s ability to tax
property, setting a ceiling on the amount of tax that can be levied and a floor on the type
of property entitled to the benefit of each cap. The Constitution does not grant the
Legislature the discretion to narrow a class of property constitutionally allocated to a
specific tax cap.
In the case at hand, the Sawlanis have challenged only the one-acre limitation
imposed by the statutory one percent cap, without contesting any other aspect of the
statutory framework’s consistency with the constitutional framework. They implicitly
acknowledge that, absent the one-acre limitation, the statute would be constitutionally
applied to their property. (See Pet’rs’ Reply Br. at 7.) The one-acre limitation, as defined
in the statutory one percent cap under Indiana Code section 6-1.1-20.6-7.5(a)(1), is not
unconstitutional on its face because it can be constitutionally applied in some
circumstances. See Meredith, 984 N.E.2d at 1218 (indicating that a statute is
unconstitutional on its face when there is no set of circumstances under which it can be
constitutionally applied). However, as applied to taxpayers like the Sawlanis with more
than one acre of land, the constitutionality of the one-acre limitation’s application will
vary depending on the specific circumstances of each case.
Applying this principle, for taxpayers with less than one acre of land, the one-acre
30 limitation poses no constitutional issue. However, for those with more than one acre, the
statutory one percent cap may be unconstitutional as applied to them if the taxpayer
establishes that land exceeding one acre, or some portion thereof, would otherwise
satisfy the definition of property eligible for the one percent cap as specified in Indiana
Code section 6-1.1-20.6-2. The statute applies the one percent cap to a person’s
“homestead,” which is defined as “a homestead that has been granted a standard
deduction under IC 6-1.1-12-37.” I.C. § 6-1.1-20.6-2(a). Therefore, where land fails to
qualify for the standard deduction solely because it exceeds the one-acre limitation, the
property may be evaluated through the existing appeal process to determine whether it
would otherwise be eligible for the deduction without the one-acre limitation. This
approach allows for a case-by-case evaluation of the one-acre limitation’s
constitutionality as applied to taxpayers with properties exceeding one acre, while
maintaining the statutory framework’s facial constitutionality.
The Indiana Board did not make sufficient factual findings to enable the Court to
determine whether Indiana Code section 6-1.1-20.6-7.5(a)(1) is unconstitutional as
applied to the Sawlanis. Given these circumstances, this matter is remanded to the
Indiana Board for further proceedings to determine whether the Sawlanis’ additional
2.981 acres of land qualifies for the one percent cap absent the statutory one-acre
limitation. On remand, the inquiry need not examine whether the taxpayers’ initial acre
of land is eligible for the one percent tax cap. Rather, the focus should be on the use of
the disputed 2.981 acres, specifically examining whether this acreage is used as part of
the Sawlanis’ principal place of residence, consistent with the statutory and
constitutional frameworks. See IND. CONST. art. 10, § 1(c)(4), (f)(1); I.C. §§ 6-1.1-20.6-
31 7.5(a)(1), -12-37. The Indiana Board may take any actions it deems necessary to
resolve the case effectively, including conducting a new evidentiary hearing to ascertain
the nature and purpose of the disputed acreage in relation to the Sawlanis’ principal
place of residence.
CONCLUSION
The Sawlanis have demonstrated that the statutory one percent tax cap may be
unconstitutional as applied to them. The resolution of this constitutional challenge
depends on whether any portion of their contested acreage would qualify for the
standard deduction under Indiana Code section 6-1.1-12-37 but for the one-acre
limitation. Accordingly, the Court REVERSES the Indiana Board’s determination that the
Sawlanis were not entitled to the one percent tax cap credit on the contested acreage
during the 2019 tax year and REMANDS the matter to the Indiana Board for further
proceedings consistent with this opinion.
Related
Cite This Page — Counsel Stack
Tulsi Sawlani, M.D. v. Lake County Assessor, Counsel Stack Legal Research, https://law.counselstack.com/opinion/tulsi-sawlani-md-v-lake-county-assessor-indtc-2024.