It looks like Indiana lawmakers are defusing a ticking tax time bomb.

As Indy Politics first reported, Indiana’s tax court ruled that local stormwater fees are actually taxes.    That ruling sent shockwaves through local and county governments. Local officials argued it could blow holes in their budgets because the fees would put many of them up against the property tax caps.

The Indiana House last week amended as passed legislation on to the Senate which stated that stormwater fees are not taxes and therefore challenges must go through the circuit and superior courts rather than the tax court.

“The Association of Indiana Counties appreciates the work legislators have put into Senate Bill 582.  We have worked with legislators and other local government partners to clarify that local circuit and superior courts have jurisdiction over user fees,” said David Bottorff of the Indiana Association of Counties.  “Ratepayers maintain the right to challenge a local user fee through the judicial process but not through the property tax appeal process. The bill clearly delineates that user fees are not taxes and that fees have a distinct and direct service benefitting the user.”

That sentiment was shared by Matt Greller of the Accelerating Indiana’s Municipalities.  

“We continue to work with lawmakers to ensure there is no gray area between user fees and property taxes.  Failing to correct the situation will upend decades of precedence, upon which local governments have relied to finance critical infrastructure.  The leadership of Rep. Mike Karickhoff and Sen. Ed Charbonneau has been instrumental and we’re hopeful the matter will be resolved this session,” he noted

The Senate could vote on the measure as early as Monday.