Indiana property tax caps slice 2011 bills

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Indiana property taxpayers saw their savings grow by 32 percent this year compared to a year ago thanks to statewide tax caps on their 2011 bills, according to a state report.

The Department of Local Government Finance study found that the caps cut this year's property tax bills by $566 million, an increase of $136 million from 2010 bills. But those savings also mean less money for local governments and schools.

The large savings is largely from a decrease in property values around the state, Purdue University tax expert Larry DeBoer told The Journal Gazette .

When assessed value drops, that means tax rates rise in order for a government unit to collect the same amount of money. DeBoer said that puts more taxpayers at the caps, which are 1 percent of assessed value for residential property, 2 percent for rental properties and farmland and 3 percent for businesses.

DeBoer said the caps and accompanying property tax changes are generally doing what legislators intended.

"In terms of tax relief, it's working right on the nose," he said. "Homeowners statewide have seen about a 30 percent reduction since 2007."

The smaller bills, however, mean less revenue is coming for local governments and school districts. The state report shows that school districts saw a $200 million decline, while cities and towns received $192 million less.

The losses have caused significant tax revenue drops in some areas of the state. Fort Wayne City Controller Pat Roller said the city expected to lose $10 million to tax caps this year but will instead lose $13 million.

"We have been doing everything we can to keep our budgets low and build up a reserve so we could handle it. That's where we are right now," she said. "We will be able to tolerate the $3 million loss to our reserves but it is tough."

The savings aren't equal among the various tax-cap categories.

The latest report shows that those in the 1 percent category received about $164 million in relief and properties under the 2 percent cap saw nearly $245 million in savings. Those in the 3 percent category were billed $154 million less than what they would have been without the caps.

DeBoer said rental houses don't receive the same deductions or credits that owner-occupied homes do, pushing their tax bills higher and closer to the tax cap.

"This is the inevitable result," he said. "They receive relief well beyond their proportional share of assessed value."

State Rep. Win Moses, D-Fort Wayne, said lawmakers couldn't have planned for the assessed value drop, which means local government is getting even less money than expected.

"That is a lot for local governments to absorb. They either have to reduce services or raise income elsewhere through income taxes or fees," he said. "This might be causing more pain than expected."


  • Keep triming the fat
    I have looked at many a city and town budget and see all kinds of things that are not needed. I beg to differ, I know what I am talking about.
    Articles always state that we are saving money but they never mention that our sales tax increased in 2007 to offset the DISCOUNT on our property taxes
  • Uncle Sam ain't that fat
    These "keep trimming the fat" comments remind me of that "Horrible Bosses" movie, where he says 'just go fire the fat people'.
    That phrase is overused, because it's usually a code word for "I don't know what I'm talking about". You should not use it unless you have a very good knowledge of state and local budgets, and if you can't point to one (key word) meaningful cut.
  • What about Reassessments
    I called to check on a re-assessment I filed in October of last year. I was told that they are just now finishing up 2006 re-assessments and that I would have to continue paying the elevated assessments even though the value of my property has dropped by almost 50%! And I won't get the overage back that I paid!
  • Waste in Local Government

    Township government needs to go. It's a waste of our money. School boards need to stop building schools for a declining population of children. Times have changed, and they need to adapt to the new reality.
  • Keep triming the fat
    This cut in taxes is great. local Govt. should have started cutting waste years ago. There is a lot more cost to be cut out of these budgets. They can see what it is like for a consumer to live within their means.
  • Not quite...
    I don't find this comforting at all. Local government is the level of government that impacts us most often and in the most fundamental ways. When local funding decreases, schools get worse, police forces make layoffs, and parks are left to rot. I am all for lowering the tax burden on taxpayers, but it needs to be done on the highest level possible, not the lowest. How are we made better by taking $200 million away from schools? At some point, budget cutting for its own sake is a false god.
    • Seems Fair
      This shows that the system works. Instead of local government being reactionary about raising taxes rather than looking for fat to cut, they have to cut the fat first and then ask the taxpayers whether taxes should be raised. Before a small percentage of school board members controlled the fate of the taxpayers. Now the taxpayers control their own fate.
    • slice
      My house gets older every year, property values are down. But my house was raised 38k dollars in value? How does this happen.
    • True impact.....
      Congrats to Daniels. He passed this law and people assume he is working for them. The real issue is that it hurts the local government and schools of which he does not answer to. I know first hand the reduction in service this cap has caused to a local government and it is only getting worse. We have trimmed what little fat there was and now we are losing employees. Local politics have been shaped by this decision yet it can't be helped by them. Daniels is a master at smiling for the public eye and then passing the costs onto another entity. It will really be scary when his reign of terror is over and we find out what else he has caused us......I-69 rings a bell.

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