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."