Friday, June 29, 2007

Making Sense Of Marion County's Property Tax Debacle

With tax bills in the mail, Marion Co. residents are trying to figure out who to blame for the mess leading Mayor Bart Peterson to call for a special session of the General Assembly. Judging by Gov. Daniels' remarks today, it appears a special session will happen if legislative leaders will go along with the idea. Ed Feigenbaum of the Indiana Legislative Insight offers the best analysis I've read of why there is such a big shift in Marion Co. taxes this year. He says residential assessments have increased 20%-25% on average. In my own neighborhood in Lockerbie (Center Township), it looks like they've gone up at least 25% on average based on a sampling of properties I checked on the Star's database. Feigenbaum notes that there are pockets, such as Meridian-Kessler, which are experiencing increases in the 150% range. He finds a big problem with Marion County business assessments which is shifting the burden to homeowners. He writes:

Unlike in 2002, however, as we told you before, business assessments have remained largely unchanged. “In Marion County, preliminary numbers suggest business assessments increasing by single-digit percentages,” we told you back then. Indeed, our estimates now are that at least 50% of business real property assessments have not changed one iota since the 2002 reassessment. This alone has forced homeowners to consume more of the property tax pie in Marion County.

Mind-boggling but true, while local assessors appear to have a fairly accurate perspective on residential property values, they have seemingly seriously under-assessed (or failed to examine altogether) the entire business property segment. These low business assessments, of course, have contributed greatly to an increase in tax rates.


Feigenbaum thinks you should keep a close eye on the disparity between residential and business/commercial assessments. He anticipates a class action lawsuit on behalf of homeowners to rectify the disparity.

Feigbenbaum also outlines a series of pro-business legislative changes which have contributed to the problem, including a reduction in the state property tax replacement credits, elimination of the business inventory tax, investment deductions for business personal property (automatic abatements) and business real estate and increased use of local tax abatements. While those things contribute to changes statewide, there also appears to be problems unique to Marion County. "A closer look at the Marion County 2006 ratio study, which was approved by the DLGF, shows that the majority of the property classes studied in Marion County failed to meet the statutory requirements for assessment accuracy and uniformity," Feigenbaum writes. "As Hoosiers would say in the vernacular, it means things are really screwed up . . . and that State conclusion is based on Marion County’s own study; an independent analysis could show even more troubling results."

Feigenbaum notes that similar problems were detected in other counties, but the DLGF stepped in to correct problems, in Marion Co. the pressure to get tax bills into the hands of taxpayers seemed to win out. "In some cases, interposing an equalization factor as statutorily required would have resolved the problem, but neither the Marion County Assessor nor DLGF opted for this resolution, which would have decreased tax rates for homeowners in at least some of the townships," Feigenbaum writes. So why didn't Marion Co. Assessor Greg Bowes insist upon applying the equalization factor to help relieve the problem? That's a good question people should be asking him.

Abdul Hakim-Shabazz adds a couple of other interesting tidbits to Marion County's situation. On those abatements for property taxes, he reports the state picked up the tab this past year for nearly $330 million in property tax subsidies for Marion Co. If the state hadn't picked up that tab, Shabazz notes Marion Co. homeowners would have been hit even harder. He also notes the failure of the city-county council to enact county economic development income tax (CEDIT) to make up for the $80 million Marion Co. was losing from the phaseout of the inventory tax. Now, Mayor Peterson is seeking a 100% increase in county option income tax to raise $90 million at the same time skyrocketing tax bills are hitting taxpayers mailboxes. So it looks like there's plenty of blame to go around for this year's property tax crisis.

26 comments:

Wilson46201 said...

"the state picked up the tab this past year for nearly $330 million in property tax subsidies for Marion Co."

This sounds like it's the property tax replacement credit system set up by the Sainted Republican Governor Otis Bowen many many years ago. That's been going on for well over 25 years now. For that matter, the state cut back on that replacement tax credit this year which further aggravated the local tax bills...

Anonymous said...

What are the claims of the class action lawsuit? I don't think the claims that Meridian Kessler residents are getting screwed will work. Washington Township in general seems to be getting hit very hard.

My taxes in Meridian Kessler tripled. It simply is not practical and people need to voice their displeasure to their representatives in the legislature and city government and to vote based on these politicians' actions or inactions. I don't know the solution, but somebody needs to figure this out. This is going to be a disaster for many, many homeowners in Marion County.

Anonymous said...

Any Meridian-Kessler lifers need to fly out of Marion Co.. Say you paid $150K for your home 30-40 years ago. Said home is now said to be worth $350K. Unless you have been living on HELOCs or home equity loans, you home is likely paid-off, or close to it. It is time to screw Marion Co. in two ways:
#1: Sell your home and take your money elsewhere.
#2: Don't worry about selling for the $350K the real estate industrial complex says the home is worth. Sell it for $250K if it means getting out. This will then give the buyers the proof they need to get the property re-assessed at the new market value.

Anonymous said...

A lot of Meridian Kessler residents simply do not want the life in the HC. While we have to suck this up now, someone has to pay for this gross injustice of a tax increase.

Anonymous said...

Feigenbaum's anlysis is dead on. Regarding increases in Meridan Kessler and Washington Township in general, increased assessed values in themselves would not be a problem if the rest of the county were keeping up in terms of real estate value.

There are two major shifts in tax burden that have occurred under the new system. 1) the shift from business to hoemowners noted by Feigenbaum and 2) a shift from the other eight townships (where home prices tend to be lower) to Washington Twp.

An analysis presented to the City-County council after the new system went into effect showed that Washington Township was supplying 25% of the city-county budget. I'm afraid to ask how much it is now.

Anonymous said...

for all those who plan on complaining.. WHY????
No one in government cares!!!!
They have their jobs that put the position to screw you over, and this is anotherway of doing it.
D or R they have you by the short and curlies and there is noything you can do except deal with it. Get a part-time job, if you can find one, thanks to Mitch outsourcing everything, so that you can pay more local income tax for Bart to give away to his already wealthy friends.
Politicins are like diapers, full of doo-doo and they should be changed often.
Mayor is "wagging the dog" by telling everyone he is trying to something, but he is distracting people from his own tax hike. Gov. is going to say that it is necessary to "fund the day to day operations of govt".
Vote them both out!!!

Anonymous said...

Dind't I warn you the Democraps flunked math!

Anonymous said...

Correction

Didn't I warn you the Democraps flunked math!

Anonymous said...

"Tax & Spend" is the motto of the Democrats...and Bart is clearly helping the rich get richer. Bart Peterson has been lying to us, telling us this is for 'public safety' but he has NOT hired the 200 new police and the merger of police has NOT saved money. Instead, the Colts get a stadium with TAX money, the Simons get a new headquarters on park property...all the RICH land developers and businessmen are getting TAX money, while we have a crime wave, DON'T have enough police, and Bart keeps on RAISING TAXES!

It is true to form for the Evil Empire (Democrats) to Tax & Spend until all the real taxpayers leave town.

Carl Drummer, uneducated Township Trustee, has 3 GIANT office buildings owned by TAXPAYERS, a patronage PAYROLL with over 100+ employees, a TAVERN in a GOVERNMENT BUILDING....and he collects $90K in salary, GOVERNMENT car (illegallly equipped with red/blue lights & siren).

What is wrong with the electorate? Indy has now become South Gary, Indiana.

Anonymous said...

Bart RAISED taxes and lied, saying it was for public safety....

I challenge anyone to dial 911 today. See if your call is answered BEFORE a burglar rapes or kills you or a loved one. The news reports that our most URGENT 911 calls go to an answering queue "Thank you for calling 9-1-1, your call is important to us, stay on the line and your call will be answered in order received...if you are under gunfire, take cover, if you are being beaten or raped, search for a weapon....Now, at the request of the Mexican Consulate which is getting FREE space in the city's Union Station, we will repeat with a Spanish message......"

Becky said...

Abdul seems to be the only one pointing to one of the biggest factors in this LOCAL GOVERNMENT WANTS MORE MONEY! Most of the levies went up from last year.

Anonymous said...

Ed has some points, but as someone who works with commercial property owners, let me add this perspective:

For over 25 years, many of them were paying a disproportionate share of taxes. Not all, but many.

The reason? Ed's right on here: assessors in this county are not sophisticated enough to understand commercial properties, their value, and their long-term pluses and minuses.

Thus, as an example: if, in 1990, the total tax dollar needed was $100, and commercial put up $55, residential put up $45.

A shift to even, 50-50, is a huge shift for homeowners.

This is precisely the point Tax Court Judge Fisher was making in his historic ruling. Which was ignored by the legislature for seven years. Their "remedy" came into place at the last possible minute.

My sense is that now, commercial owners are being assessed all over the board. Consistently inside each township, but not at all consistent township-to-township. The portion of taxes which cross township lines, therefore, is grossly screwed up.

If we needed any more proof that township assessors need to be trashed in order to have one consistent countywide system, this is it. They may be nice ladies and gentlemen, but they're wildly inconsistent in their work.

And while we're at it, the entire township government system, even if it's only 1.5% of our total tax paid, is too expensive in today's climate. Especially when the trustees line their pockets and the pockets of friends.

And, while we're at it, the sad truth is: Meridian Kessler folks, using today's valuation systme, you drastically underpaid for decades. You may not like hearing that, but it puts some common sense into this argument.

You may be drastically overpaying now.

Again, more reason to scrap the township assessors. Frankly, they've never gotten it right.

Anonymous said...

Anonymous 6:52
You think turning the assessments over to the county assessor will result in anything different?
I won't argue the system is flawed but turning it over the the county assessor isn't the answer. The county assessor and the DLGF approved Marion County. Those two are a big part of the problem.

Wilson46201 said...

The whole point of the County Assessor is to supervise the actual assessing done by the local assessors in the townships - the County Assessor provides the equalization across township lines.

Locally, township assessors meet weekly to discuss common problems and solutions. Assessing work is remarkably similar.

All assessing is done under regulations promulgated by the State. Local voters get to choose (or reject) the people who carry out the State procedures.

Anonymous said...

Matt Tully's Star Column

June 29, 2007
Crime hits the GOP
Posted by Matt Tully
Marion County Republican Party Chairman Tom John woke up this morning to find his garage had been broken into -- for the fourth time in the past five years.
John, who lives in Herron-Morton Place near Downtown, lost two bikes, a lawn mover and a few other items.
"You know what's funny?" he said. "My wife called the police and they just take these over the phone anymore. They don't even come out."
So does he support the mayor's plan to raise income taxes to fund public safety measures?
"I support a plan that puts police on the streets and community policing back in place," he said. "Peterson's plan just doesn't do that."
By the way, John's property taxes just jumped 120 percent.
June 28, 2007
Nothing changes
Posted by Matt Tully
Here is the headline of a press released issued by Mayor Bart Peterson today: "Mayor asks governor for special session of State legislature to protect homeowners."
Here is the headline of a Peterson release from July 12, 2003, the last time Marion County was hit with massive property tax increases: "Peterson asks governor to call special legislative session to ease burden on homeowners hit by property tax increases."
For the record, then Gov. Frank O'Bannon did not call a special session.
Peterson said he called Gov. Mitch Daniels' office 45 minutes before calling for a special session at a Statehouse press conference today. Daniels is out of town, but it sounds as if the governor's office isn't too happy with the timing.
"The suggestion from Mayor Peterson came completely out of the blue with no prior notice," Daniels' office said in a statement. "Governor Daniels has supported some elements of the mayor's proposal, but this year’s General Assembly chose a different way to assist homeowners with property tax relief. If there proves to be significant legislative sentiment for the extreme measure of a special session, the governor will give the idea consideration."
Times change
Posted by Matt Tully
In the wake of Mayor Bart Peterson's call for an income tax increase to, in part, fund police and fire pension debt, it is worth looking back to his 2000 State of the City Address.
Here's what he said at that time: "Unfortunately, the part of the city budget that goes to cover police and firefighter pensions is the same part of the budget that pays for ongoing police and fire operations, including additional resources needed for public safety. We will meet our pension obligations, and we will also find a way to pay for the additional public safety resources we need. And it is important to do both without raising taxes. Raising taxes may sound like an easy answer, but if we want to avoid the urban death spiral that so many other American cities have experienced, we cannot give individuals and businesses an incentive to leave our city."
This will undoubtedly provide Republicans with plenty of fodder. But in response to those who criticize Peterson, let's quote Republican Gov. Mitch Daniels. When attacked by Democrats, he often gives this response: "What's their plan?"

Anonymous said...

7:20--yes, I think one responsible person who can be held accountable, for the equalization, applied prrocedures, etc., would be ideal. Much moreso than oversight of 9 separate township assessors. The chances for uniformity are much stronger with one responsible person. Common sense tells us that. And voter accountability is easier, too.

I own residential rental property and commercial property in three different townships and in two other counties. I've talked to all of those township assessors. Let me assure you, there is a huge disparity in knowledge, and frankly, given what they pay their staffs, there's a disparity in mental accumen. Huge.

Wilson's only partially right: the state sets up a procedures manual. That does not gaurantee it will be followed. In fact, in my rentals, I can tell you, they weren't followed. Two of them are in Center. The former and current Center assessors are jokes.

One of my Center rentals is so under-assessed it's hilarious. My Sunday morning church silent prayer will be: "Lord give me guidance--do I turn myself in?" It is a dilemna.

And, I can't wait for the legislature's wimpy-ass solution to kick in: rebate checks in November. Now there's a disaster in search of victims. If you think mailing of these tax bills was bad, you ain't seen nothing yet. The Marion County Treasurer has already warned that he cannot physically do the rebates before March, if then. He lacks the proper calculations tables, among other things.

Only in Indiana...where the legislature debates gay marriage for months, and flips off the tax system in an instant and a rebate.

We all got the finger.

The solution? Abandon the property tax, at least for school funding. It's inequitable and leads to the wrong kinds of decisions. As much as I hate them, income and sales taxes are raw, unalterable calculations. Some games are played with income, but it's more damned efficient than this ridiculously layered property tax system. Ludicrous.

Anonymous said...

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Indpls. IN 46229-9998
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Anonymous said...

Heres a thought....

Proposition 13, officially titled the "People's Initiative to Limit Property Taxation," was a ballot initiative to amend the constitution of the state of California. The initiative was enacted by the voters of California on June 6, 1978. It would eventually be upheld as constitutional by the United States Supreme Court in the case of Nordlinger v. Hahn, 505 U.S. 1 (1992). Proposition 13 is embodied in Article 13A of the California Constitution.

The most significant portion of the act is the first paragraph, which capped real estate taxes:

“ SECTION 1. (a) The maximum amount of any ad valorem tax on real property shall not exceed One percent (1%) of the full cash value of such property. The one percent (1%) tax to be collected by the counties and apportioned according to law to the districts within the counties. ”

Its passage resulted in a cap on property tax rates in the state, reducing them by an average of 57%. In addition to lowering property taxes, the initiative also contained language requiring a two-thirds majority in both legislative houses for future increases in all state tax rates or amounts of revenue collected, including income tax rates. Proposition 13 received an enormous amount of publicity, not only in California, but throughout the United States. Passage of the initiative presaged a "taxpayer revolt" throughout the country that is thought to have contributed to the election of Ronald Reagan to the presidency in 1980.

Anonymous said...

Marion County residents, don't take it personnally, I was told at the Putnam county assessor's office in May they were waiting for Marion County's assessment, and they weren't kidding, ours are showing increases of up to 35%. I am sure that alot of other counties are feeling the same effects. Sounds to me (in my opinion)as though they are trying to pass the buck, if you know what I mean. I agree that people should make noise on this one.

Anonymous said...

Seems to me that a hundred thousand or so people protesting on the steps of the capital would send a pretty strong message. I think some groups are trying to organize a protest, but don't have any specifics. If anyone has specific details please post and spread the word.

Anonymous said...

From a Washington Township resident with a 116% increase ... I am interested to know chronologically and mathematically how this increase came to happen. In many articles and posts I have seen there are bits and pieces that are most likely valid but are stated with some tone of speculation. I have not seen anything that spells out when the bills were passed and how specific dollar amounts were sacrificed in one area of revenue and therefore must be made up in another. Does anyone know of such a document?

Anonymous said...

I live in Marion County's center township and my taxes increased from $4040 to $10800 - 260%+. This is mainly because of the shift to market value being used as assessed value and the fact that I bought in the last three years. Home owners that have not bought in the past three years did not get hit nearly as hard because their assessed value was not updated. The system used to get assessed value is not fair at all. This will kill the real estate market in Marion County. Who will buy homes with such high property taxes. Compare these rates to other cities of similar size and Indy's are way out of line.

Anonymous said...

Why not eliminate all property tax deductions, credits, exemptions, and so forth? Wouldn't that result overall in lower property bills? It would certainly reduce tax shifts.

Anonymous said...

Taxes in the area of Aboite Township in Fort Wayne, IN/Allen County increased by 57%! Must have been a welcome to the neighborhood "gift" from the city since I just bought my house in May 07.

Anonymous said...

Start by Firing the school boards building schools that are beter than 4 star hotels.

Anonymous said...

I THINK WE NEED TO GO TO A CONSUMPTION TAX. THIS WAY EVERYONE WILL PAY. WE HAVE ILLEGALS IN THIS COUNTRY THAT ARE PAID UNDER THE TABLE AND THEY ARE EVERY WHERE. THIS WAY WE ALL PAY FOR OUR SCHOOLS AND WHATEVER ELES OUR VOTED IN OFFICIALS DECIDE TO LIE ABOUT. I THINK THIS WOULD TAKE THE STREES OFF HOME OWNERS. IT'S BAD ENOUGH THAT WE ARE HIT WITH GAS PRICE GOING ALL OVER THE BOARD. INCOME TAX GOING UP. NOW PROPERTY TAX WHATS NEXT. THIS IS GETTING SO OUT OF HAND. IF OUR APPOINTED OFFICALS AREN'T CAREFUL THEY JUST MIGHT BANKRUPT THIS COUNTRY.