and Justin Schneider
July 28, 2007 10:11 pm
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Across the state, property owners are protesting 2006 tax bills that reflect increases as high as 50 percent over 2005 rates. In response, Gov. Mitch Daniels has called for sweeping property tax reform and is considering a special session of the General Assembly to accomplish it.
Here in the Madison County area, property owners are still waiting to receive their bills for 2006 taxes payable this year. In fact, the state has yet to establish a tax rate for the county. But many Madison County residents are anticipating that their bills will rise beyond their ability to pay them.
What, exactly, is going on here? To find out, read our answers to 20 Burning Questions About Property Taxes.
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The Herald Bulletin tackles complex local issues with the 20 Burning Questions series. Suggest issues for the series by contacting Managing Editor Scott Underwood by:
Phone: (765) 640-4845
E-mail: scott.underwood@heraldbulletin.com
Mail: The Herald Bulletin, P.O. Box 1090, Anderson, IN 46015
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Be heard
To join the discussion about property taxes:
• Attach your comments to these stories online
• Look for Property Taxes in Forums. To get there, log on to www.theheraldbulletin.com, then click on Forums, then on Local Issues in Anderson. Look for the Property Taxes string.
• Write a letter to the editor. Letters can be e-mailed to letters@heraldbulletin.com or mailed to Letters to the Editor, The Herald Bulletin, P.O. Box 1090, Anderson, IN 46015.
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Local tax rates payable 2006
Madison County taxing districts and their rates for 2005 taxes payable in 2006, with rank of tax rate among all taxing units in Indiana (with 1 being the highest rate in the state) are listed below. Elwood-Pipe Creek Township had the highest rate in the county, $4.7142, ranking as the 23rd-highest rate in the state. Rates for Madison County taxing districts for 2006 taxes payable in 2007 have not yet been released by the state. Rates are per $100 of assessed value.
District District Name Rate Rank (in state)
001 ADAMS TWP. 2.4164 1009
002 MARKLEVILLE TOWN 2.7241 634
003 ANDERSON CITY - ANDERSON TWP. 4.2115 49
004 COUNTRY CLUB HEIGHTS 2.9328 490
005 EDGEWOOD TOWN 2.9561 470
006 RIVER FOREST TOWN 2.9590 464
007 WOODLAWN HEIGHTS TOWN 3.0116 420
008 BOONE TWP. 2.4206 1001
009 DUCK CREEK TWP. - MADISON 2.4539 953
010 DUCK CREEK TWP. - ELWOOD SCHOOLS 2.9752 448
011 ELWOOD CITY - DUCK CREEK TWP. 4.7130 24
012 FALL CREEK TWP. 2.7224 635
013 PENDLETON TOWN 3.1778 332
014 GREEN TWP. 2.5257 865
015 INGALLS TOWN 3.3788 243
016 JACKSON TWP. 2.3756 1075
017 LAFAYETTE TWP. - W. CENTRAL SCH. 2.5483 836
018 LAFAYETTE TWP. - ANDERSON SCH. 2.6735 684
019 ANDERSON CITY - LAFAYETTE TWP. 4.2432 46
020 FRANKTON TOWN - LAFAYETTE TWP. 2.9420 481
021 MONROE TWP. 2.2060 1367
022 ALEXANDRIA CITY 3.7566 116
024 ORESTES TOWN 2.3802 1068
025 PIPE CREEK TWP - W. CENT. SCH. 2.5831 795
026 PIPE CREEK TWP. - ELWOOD SCH. 2.9753 447
027 ELWOOD CITY - PIPE CREEK TWP. 4.7142 23
028 FRANKTON TOWN - PIPE CREEK TWP. 2.9281 497
029 RICHLAND TWP. 2.5754 806
030 ANDERSON CITY - RICHLAND TWP. 4.1979 52
031 STONY CREEK TWP. 2.5743 810
032 LAPEL TOWN 3.0512 388
033 UNION TWP. 2.7955 587
034 ANDERSON CITY - UNION TWP. 4.1954 53
035 CHESTERFIELD TOWN 3.5187 171
036 VAN BUREN TWP. 2.6159 765
037 SUMMITVILLE TOWN 3.2012 317
038 ANDERSON - ADAMS 4.0344 70
039 ANDERSON - FALL CREEK 4.0333 71
040 ANDERSON LAF. WC. 4.0894 67
Source: stats.indiana.edu
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QUESTION NO. 1:
• Who decides my local property tax rate?
Property taxes in Indiana are collected by the local county treasurers, based on assessments provided by the township and county assessors. These assessments are based on guidelines adopted by the Indiana Department of Local Government Finance.
After assessments have been done, county officials add up the assessed values of property in the county and subtract certain deductions to determine the county’s net assessed value.
The Indiana Department of Local Government Finance sets the total amount of money government units in a county can spend in a year based on the projected revenues for the county. This total allowed expenditure is divided by the net assessed value to determine the tax rate.
QUESTION NO. 2:
• What would a special session of the General Assembly seek to accomplish?
This month, Gov. Mitch Daniels floated the idea of calling a special session of the General Assembly to address the rising property taxes that many Hoosiers are seeing on their bills.
According to the state constitution, the governor can call a special session if the people’s welfare is at stake.
Local legislators generally are in favor of the session — if a bipartisan plan to attack the property tax problem could be settled upon before the session began.
It’s important to remember that the state doesn’t set or collect property taxes. It’s all done locally, though the state sets the tax rate for the 92 counties.
Any state assistance for property tax relief would come from funds awarded to tax-collecting bodies to offset what is collected in property taxes.
State Sen. Tim Lanane, D-Anderson, said he wants the next short session of the General Assembly, which begins in January, to be devoted to property tax relief.
The governor hasn’t yet called a special session but is keeping his options open, according to spokeswoman Jane Jankowski.
QUESTION NO. 3:
• How often is reassessment of my property done?
A property’s assessed value is the basis for property taxes.
In 2002, Indiana began a move to a market-based assessment system that adjusts property values on an annual basis. Local officials assess the value of real property on March 1.
Annual adjustments are calculated by comparing the prior year assessment with current sales data from a neighborhood. The difference, positive or negative, will be used to create a factor that assessing officials apply to the property’s assessed value.
QUESTION NO. 4:
• What entities receive funds from my property taxes?
In order: schools, county government, cities and towns, special units of governments, libraries, townships, tax increment replacement and the state of Indiana.
According to the Indiana Department of Local Government Finance, or DLGF, on average, 54 cents from every dollar of property tax collected fund local schools, 19 cents go to county government and 16 cents to cities and towns. An average of 5 cents goes to special units of government, 3 cents to libraries and 3 cents to townships. Just two-tenths of a cent goes to tax increment replacement, while a fraction of a cent (0.0008) goes to the state.
According to the DLGF, more than 99 percent of the revenue generated by property taxes remains in the community in which it is collected.
QUESTION NO. 5:
• Will I be getting a property-tax refund check?
In the spring, the General Assembly passed a law to use $300 million to refund property taxpayers. However, Indiana residents who didn’t file for homestead credit before last year’s deadline, June 10, 2006, will not get a rebate. Another $250 million will be available in homestead credits next year, but the due date to file for those was June 11.
The checks will be sent out separately after property taxes are paid. A date for disbursement of the checks hasn’t been set, but late fall is predicted, after the Nov. 13 property tax collection. The average amount of the checks will be about $240.
State Rep. Jack Lutz, R-Anderson, said the General Assembly applied a Band-Aid to the problem, that the rebate money should’ve been part of the homestead credits. As it stands, the counties will have to assume the expense of cutting the rebate checks and mailing them out, something Lutz said could cost Madison County, and ultimately its taxpayers, as much as $50,000.
QUESTION NO. 6:
• What shows up on my tax bill?
Madison County Treasurer Darlene Likens said her department has considered redesigning tax bills to improve legibility and adding an insert to explain all elements.
Currently, Madison County tax bills highlight the amount due with a black box indicated by a finger. Bills show the taxpayer’s name, property location and parcel number, along with the assessed value for land and any improvements.
Each bill also provides a breakdown of how much revenue goes to each taxing entity. For example, of the $3,345 collected on a rural Jackson Township property last year, $2,385 goes to schools, $900 to Madison County, $48.18 to Jackson Township, $3.38 to the state and $8.16 to other entities.
According to Likens, Madison County has 39 possible tax rates. The rate you pay depends on where your property is located and the rates of the various tax districts that draw on that location.
ONE PROPERTY'S BILL:
Here’s an example of the bill for one property in Madison County for 2005 taxes payable in 2006:
Taxing unit (district): Jackson Township
Taxing unit rate: $2.3756 (per $100 assessed value)
Assessed property value: $218,400
Credits: Homestead.
Taxes due
State: $3.39
County: $900.83
Township: $48.18
School: $2,385.28
Solid waste district: $8.16
TOTAL: $3,345.84
QUESTION NO. 7:
• What payment options do I have?
Madison County Treasurer Darlene Likens said property taxes can be paid through financial institutions, by credit card or by check via mail or in person.
According to Likens, the deadline for the total amount of 2006 taxes due will be Nov. 13, but the county is willing to split that amount into two payments. Tax bills will include a coupon that can be used to pay taxes at the bank and a form to complete payment by credit card.
Many taxpayers have submitted early payment based on 2005 tax bills that were paid in 2006.
“In prepayments only, we’ve gotten around $1.3 million,” Likens said.
QUESTION NO. 8:
• When will my bill be mailed?
Madison County Assessor Cheryl Heath said county officials are still waiting for the Department of Local Government Finance to return a tax rate for 2006 payable this year. After that happens, six to eight weeks will elapse before bills will be received.
Earlier, the county said the bills for 2006 taxes payable in 2007 would be mailed in August.
QUESTION NO. 9:
• When do I have to pay?
Traditionally, taxes in Indiana are due in two yearly installments, May 10 and Nov. 10. Taxpayers are normally given a 15-day grace to pay the bill.
Madison County Assessor Cheryl Heath said if things go as expected, 2006 bills payable in 2007 will be sent out in August and payment will be due on Nov. 13. But the county is willing to work with taxpayers, offering installment plans instead of strictly a single lump sum.
The county has also accepted early payments based on 2005 tax bills that were payable in 2006.
QUESTION NO. 10:
• How did we get into the mess we’re in now?
According to State Sen. Tim Lanane, D-Anderson, there are three principal reasons property taxes have risen rapidly:
- Statewide elimination of the inventory tax. The tax, which was phased out this year, collected money based on business inventory. Property tax revenue is being counted on across the state to make up the lost inventory revenue. The inventory tax was repealed primarily to make Indiana more attractive to businesses.
- In 2005, the State Legislature capped what the state could give back to counties and cities, meaning those entities had to raise their own tax dollars. The cap was designed to help the state balance its budget and pay down its deficit.
- It used to be that reassessment was done once a decade. Now it is done annually, meaning that property taxes are apt to rise yearly as property market values rise.
QUESTION NO. 11:
• How can I protest my tax bill?
Any taxpayer who feels an error has been made on his tax bill should request an informal conference with the township assessor, detailing the pertinent facts of why the assessed value is being disputed. Also include the parcel number, address and property owner’s name. The assessor will rule to either deny or approve the appeal.
Taxpayers can also submit a Petition for Correction of Error (Form 133) to the county auditor.
QUESTION NO. 12:
• What system was used to figure my tax rate before assessment?
Under the old system, real estate was generally reassessed only every 10 years. That left taxpayers with a large change in their assessments every decade. Annual adjustments curb that large lump sum change in assessments by annually adjusting values based on sales.
With annually adjusted market-based assessments, experts said, the local tax liability in a community will be more uniformly distributed.
QUESTION NO. 13:
• Other than charging me property taxes, what options do local governments have for collecting revenue?
This past General Assembly session gave counties wider latitude in raising funds through their county option income taxes to offset property tax relief. The deadline to increase those taxes was Aug. 1, but Gov. Mitch Daniels moved it up to Oct. 1. Madison County Council president Jeff Hardin has said the council has no plans to increase the county income tax.
A sales tax could be instituted. Currently the city of Anderson has its food and beverage tax, which is 1 cent per dollar.
Some lawmakers would like to eliminate the property tax altogether. According to State Rep. Jack Lutz, R-Anderson, it would take a constitutional amendment to change the property tax. Raising the state sales tax to make up for those funds could be an option.
The county could impose a wheel tax, which was proposed but failed in Madison County in 2005.
QUESTION NO. 14:
• How did dropping the inventory tax affect my property taxes?
On June 22, 2002, the Indiana General Assembly made sweeping changes in Indiana’s tax structure. The Tax Restructuring Bill eliminated inventory tax statewide, beginning with assessments made in 2006 for property taxes first due and payable in 2007. Reporting of inventory is required in order to obtain proper assessed valuation data, but there is no tax.
The National Federation of Independent Business estimated that the decision to eliminate inventory tax would save Indiana taxpayers $400 million per year. Madison County eliminated its inventory tax immediately after the General Assembly’s 2002 session, lessening the shock here that many counties are feeling this tax season.
QUESTION NO. 15:
• Do I pay more property tax than people in surrounding counties?
As the accompanying table shows, Madison County had a higher median tax rate than all but one of the counties (Delaware) that border it for 2005 taxes payable in 2006. Madison County’s median rate was 41 cents (per $100 of assessed value) higher than the state median.
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COUNTY TAX RATES:
Following is the net tax rate for Madison and surrounding counties for 2005 taxes payable in 2006. A gross tax rate is figured, and the net is reached by subtracting the state property tax replacement factor. The replacement factor determines the amount on the bill.
Madison County
Highest 3.9160
Lowest 1.5321
Median 2.19
Hamilton County
Highest 2.2979
Lowest 1.2114
Median 1.75
Hancock County
Highest 2.2289
Lowest 1.2148
Median 1.73
Henry County
Highest 3.2472
Lowest 1.4923
Median 1.91
Grant County
Highest 3.2751
Lowest 1.6053
Median 2.05
Delaware County
Highest 3.3365
Lowest 1.6473
Median 2.21
STATE OF INDIANA
Highest 6.7877
Lowest 0.8357
Median 1.78
Source: stats.indiana.edu
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QUESTION NO. 16:
• What is the Circuit Breaker clause and how might it affect my taxes?
The Indiana General Assembly passed so-called Circuit Breaker legislation in 2006. It limits the amount of property tax paid to 2 percent of assessed value, by providing a credit for any amount above 2 percent. Homeowners will not see the impact of the Circuit Breaker until their 2008 tax bill, according to the Department of Local Government Finance.
The Circuit Breaker potentially represents a substantial loss of income for local units of government.
“Should there be any decrease in total property tax revenues because of the Circuit Breaker,” the DLGF Web site reports. “Local government units will have to seek other non-property tax sources of revenue or reduce spending to offset any loss.”
QUESTION NO. 17:
• Is my county late sending my tax bill?
As of Friday, an estimated 40-45 of Indiana’s 92 counties had mailed property tax bills. Madison County hasn’t but expects to in August. The bill for the entire year of 2006 taxes payable in 2007 will be due Nov. 13.
According to Stephanie McFarland of the Department of Local Government Finance, the state issues the tax rate based on how quickly the county sends out the information. After the state receives information from the county, it takes 6-8 weeks to process it and issue the tax rate.
QUESTION NO. 18:
• If I’m a business owner or a farmer, is my tax burden increasing or decreasing?
Since Indiana replaced its inventory tax revenue by increasing property taxes, the result has been both a burden and a benefit for small business owners.
John Raine, a local official of the National Federation of Independent Business, said the shift from property tax cost him money and essentially signaled a flow of wealth away from small-business owners. A representative of Smith Family Farms, however, said the effect has been opposite for many farmers who have a large inventory and small income.
Madison County Treasurer Darlene Likens said after taking a sample of 15 Anderson-area farms, she found only one that saw an increase in property tax.
QUESTION NO. 19:
• How will government services I use be made available if the tax money to fund those services is delayed?
Taxing units such as cities, towns, schools and libraries can borrow money from the Indiana Bond Bank or other financial institutions to maintain service levels. The borrowed money ultimately costs taxpayers more because of interest charged.
QUESTION NO. 20:
• Who do I talk to about any concerns I may have about property taxes?
To discuss property taxes with your elected officials, reach them via phone or e-mail at the following:
• State Sen. Tim Lanane, D-District 25: (317) 232-9534, (765) 644-4415, s25@in.gov
• State Rep. Terri Austin, D-District 36: (317) 232-9798, (765) 641-4405, h36@in.gov
• State Rep. Jack Lutz, R-District 35: (317) 232-9729, (765) 378-0476, h35@in.gov
• State Rep. Scott Reske, D-District 37: (317) 232-9798, (317) 849-5832, h37@in.gov
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