It’s hard to root for national retail giants as they appeal their property tax assessments in Indiana and other states. By trying to dramatically shrink the local property taxes they pay, they put at risk the budgets of schools, libraries and other local units of government that already struggle to make ends meet.
The big retailers, such as Meijer, Lowe’s and Home Depot, typically invoke the “dark sales” argument in trying to have their assessments and property tax bills slashed. The method involves using the sale prices of long-closed or vacant stores to arrive at the market values used in calculating property tax bills for newer, occupied properties.
Hoosier legislators earlier this year unanimously approved a law that put certain limitations on the use of the dark-sales method of assessing big-box stores. But a recent ruling by the Indiana Board of Tax Review has stirred new concern among cash-strapped local governments.
The IBTR, which is the ultimate state authority in property tax disputes, in August ruled that a CVS store in Bloomington had been over-assessed and overtaxed since 2009. The ruling added to worries that the legislative fix didn’t go far enough and that dark sales would be used by other categories of retailers, putting at risk millions in local property tax revenue.
By some estimates, more than 700 Marion County properties representing $1.4 billion in assessed valuation are susceptible to property tax appeals using the dark sales method. Marion County officials are so concerned that they asked, and were granted by the state, permission to raise tax rates for everyone to compensate for expected losses from property tax appeals next year.
Regardless of whether the county’s estimates are overblown, as some suggest, it’s clear there’s a problem with a system that has cash-poor counties refunding millions of dollars to national retailers, some of which rake in billions in annual profits, and raising the rates of others to compensate.
For cities and towns across the country, additional costs are associated with big-box retailers. They often locate in suburban areas where basic infrastructure is extended at taxpayer expense to make retail sites shovel-ready. And when they depart for greener pastures, they leave behind empty buildings that depress surrounding properties. Not always as obvious are the local retailers who are driven out of business by the behemoths and the car culture that big boxes perpetuate.
Local governments have been living with those costs for years. But the new threat is more aggressive, and a more direct hit on government coffers. While we appreciate the Legislature’s efforts thus far to minimize the big-box property tax appeals, it looks like lawmakers need to do more to protect local governments and those they serve.•
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