A former head of the Indiana Department of Local Government Finance says some Marion County homeowners soon could see property-tax increases of as much as 50 percent—far higher than government officials previously estimated.
In part, that’s because of Indiana’s decision five years ago to abolish the inventory tax across the state. While some counties already have phased it out, Marion County didn’t eliminate it until this year—shifting what had been a huge tab shouldered by businesses onto homeowners.
Residential taxpayers also are poised to take a hit as assessors update property-tax values for the first time since 2003, when the state first tried to set assessments based on actual market values. Homeowners are expected to receive their bills in about a month.
“What’s distressing is we don’t know what is going to happen in Marion County,” said Beth Henkel, who served as commissioner of the Department of Local Government Finance from 2003 to 2005. “Property tax is not rocket science, but I wish it were. We’d slow down and not make so many changes.”
Henkel, now a tax consultant with the Indianapolis-based law firm Schuckit & Associates PC, expects a concentration of problems in Marion County because it has more older neighborhoods, where properties are harder to assess. Some older properties haven’t changed hands in decades. As a result, hard data on their true market value is unavailable.
Indiana has long struggled to move to a market-based property-value system. The old method updated property values just once every 10 years. Assessors hope to eventually make it an annual event.
The first go-around at reassessment, four years ago, touched off a political tempest. Assessors tagged property values—particularly for many older homes in historic neighborhoods—with market values far exceeding what owners anticipated. Retirees complained that the higher tax bills were pushing them toward insolvency.
Property-tax experts like Henkel see the same dark clouds looming again.
Anticipated problems with the marketvalue-adjustment process, known colloquially by assessors as “trending,” already have startled state elected officials into action.
When the Legislative Services Agency reported this spring that trending might spur a 24-percent average increase in residential tax bills statewide, the General Assembly raced to blunt the impact, ultimately approving a plan to provide $550 million in rebates.
Lawmakers came up with the money by authorizing a total of 4,000 slot machines at the state’s horse tracks in Anderson and Shelbyville. Most lawmakers went home from the Statehouse satisfied that they’d averted property-tax disaster, believing the rebates would offset most of the tax hike.
But not so fast, Henkel warns. She thinks that trending, the elimination of the inventory tax and several other technical factors suggest that a number of Marion County homeowners still will see brutal tax increases. Even factoring in the rebates, she said the hikes could reach 50 percent for some homes.
I appreciate Marion Co. Assessor Greg Bowes' candor in the story about one of the causes of the rising property taxes. He surprisingly points the blame at the appropriators. The IBJ writes:
Marion County Assessor Greg Bowes pointed out that higher assessments aren’t the only cause of increases in property-tax bills. Just as important is the amount of spending that local governments approve.
If local officials can keep their costs in check, Bowes said, there’s less need to increase property-tax payers’ bills. “It’s not the assessment process that’s the source of your burden. It’s the increase in the appropriations,” Bowes said.
“If you want to change the property-tax process, your recourse is voting for legislators and councilors.”