Friday, October 30, 2009

What Rising Property Values?

Last week, I told you about how my tax bill showed an increase of nearly 60% over last year's bill, due largely to a 30% increase in my assessment. Everyone who lives in my neighborhood knows that property values have generally been falling since 2007. So why the spike in assessments? The Star's Andrea Neal had a column on this phenomenon earlier this week that I neglected to mention and discusses how the assessors are permitted to use sales data that is several years old to arrive at assessments. As she explains this unusual rise in property values:

Expect property taxes to be back in the headlines now that November bills are due. Some homeowners are understandably dismayed their property values are rising at a time when the housing market is struggling.

One Indianapolis resident saw his assessed value jump by nearly $66,000, accompanied by a tax increase of $1,600. His story was not unusual in his historic neighborhood, where some experienced assessment increases of 10 percent or higher. The value of a $470,800 home on Broadway Street rose to $521,800. Another valued at $695,400 jumped to $775,200. "Anyone who has not been hiding under a rock knows property values certainly did not increase in the past year," one homeowner said.

In Allen County, more than 13,000 property owners received notices that their assessed value had gone up 10 percent or more, which will mean higher tax bills on their spring installments, The News-Sentinel reported. Assessed value rose for 31 percent of county residents. County Assessor Stacey O'Day said the increases were the result of several factors including a change in law that allowed assessors to update property values every year based on sales prices for comparable homes. Also, the sales data used to compute new assessments preceded the worst of the recession.
Such stories almost guarantee that property taxes will be back on the radar screen of the 2010 Indiana General Assembly. First on the agenda is SJR 1: the proposed constitutional amendment to cap property taxes at 1 percent of a home's value, 2 percent of a farm's value and 3 percent of a business' value.
Neal goes on in her column to advocate for the need to enact a constitutional amendment to make a state law capping property taxes permanent, a proposal that has so far been blocked by House Speaker Pat Bauer. But as I pointed out in my post, the property tax cap did not protect me from getting a record-breaking property tax increase bill. If the assessor's office can use sales data that is several years old as an excuse to raise my property tax assessment higher than my home's actual value, the tax cap will never protect me. The legislature needs to change the law to prevent assessors from using dated sales data as an excuse to increase property tax assessments during the worst economic downturn in modern times. Assessors are simply using this approach as a way of avoiding the economic impact of the property tax caps on local governments. According to the Marion Co. Treasurer's Office, only 1,200 Marion County homeowners benefitted from this year's property tax cap.

18 comments:

HOOSIERS FOR FAIR TAX said...

We told you that the CAPS wouldn't protect you back in 2007. The people fell for the politicians' trick.

How many more times will they fall for the lies?

What you can do NOW is vote against that referendum for Wishard.

Wishard can still build its hospital. It just can't use property tax to do it.

HOOSIERS FOR FAIR TAX said...

My assessment went up $47,000. I'm fighting it. If anyone else wants help to fight your assessment, please email me. melyssa.donaghy @ gmail.com

Guy said...

I like Robert Heinlein's idea -- everybody assesses his own house for tax purposes. BUT, any private individual is allowed buy it for twice the price you chose.

artfuggins said...

The other side is that during boom times an an increase in value would not be assessed for a few years. I have to admit that although my assessment increased this year that it is still below market value even in this slow market.

Advance Indiana said...

So what's your point, art/wilson? Democratic political hacks get lower assessments than the rest of us?

Downtown Indy said...

You'd think with the advent of computerized data systems, the availability of data would give them a better datum than 'several years old.'

But then I recall the IBM debacle with FSSA.

The problem is really one of they try to cram in every conceivable feature, losing sight of the core requirements. And they can't do any better with the computer than they could without.

Anyway, this is just another bullet point on the Powerpoint presentation of 'Reasons why property taxes need to be scrapped.'

Paul K. Ogden said...

HFFT, the caps are still better than no caps at all. You're right that they can get around them by raising the assessments. However, you can challenge assessments if they get too far out of whack with fair market value. So there is some limitation built into the system, although not as strong as any of us want.

An additional problem is that some of these property tax referenda allows them to get around the cap. A prime example is the Wishard vote.

artfuggins said...

AI, your name calling is unnecessary. I believe it was Mitch Daniels who ordered the reassessment and that it was contracted out....For you to imply that assessments were based on some kind of political favoritism is way over the line.

Jon said...

Besides the Wishard referendum getting around the cap isn't public safety also excluded?

Advance Indiana said...

You're the one, art, claiming to live within a block of me and saying your property tax assessment changed by only $2,000 and is still under-assessed. The geographic map of my neighborhood shows general assessment increases of 10%-31% in my neighborhood.

Advance Indiana said...

Jon, I thought the tax cap only excluded larger public construction projects financed through the issuance of bonds and secured by property taxes that are approved at a referendum. I wouldn't be surprised to learn of other exceptions though.

indyernie said...

I have a property that is assisted at three times what I paid for it two years ago. I'm either the luckiest guy in Indy or I'm being screwed by Township Government.
I think I'm being screwed given that it is listed for sale at half of its assisted value and I haven't had a looker in two months.
Anyone want to buy a cute bungalow?

Assessor said...

Artfuggins...the assessment that was contracted was for 06 pay 07 and it was commercial and industrial NOT residential. The current assessed values are compliments of your county assessor.

artfuggins said...

Even though I am a Democrat, please do not expect that I would utter one word in defense of this buffoon who is our current assessor.

Stop Indiana said...

Your favorite mathematician or economist can explain that capping a variable is a political gimmick; not a calculative reality.

Caps are nothing, but an illusion. Sorry tax court judge, but four plus years to appeal assessments is disproportionate hardship or damage & not remedy (the truth is out there, not hard to find with concern & follow up). The absence of uniformity (intrinsic to the unique nature of value which is only a transaction) is contrary to remedy, relegating that idea to "notion" status.

Property tax isn't a fact of life or some great universal truth, it's an obscure, citizen hostile method, of poor policy.

Sales taxes are simple, transparent, free market & V1 (velocity of money) friendly. Hey GA, forget the distraction of abstractions, of that which "we don't have" (mountains, ocean, etc.), when what we do have is worthwhile- our people. Make Indiana an economic "sunshine state," and you will have accomplished something beyond aging & chair polishing.

Had Enough Indy? said...

The assessed values are based on sales data from 18-24 months in the past so that the data can be pooled and applied by neighborhood. It takes time to perform these functions. And before you say that is too long, the bill you pay this year is on the value assessed for last year - so the Assessor only has 6-12 months headstart on the data and a slew of deadlines for getting the information to the State Department of Local Government Finance.

The role of the caps should not be dismissed because the final bill also depends upon the assessed value. Sure, if you want to fight for the abolition of property taxes altogether - fight on. But, until we get that, caps are good. The reason so few homesteads hit the caps this year is due to the supplemental deduction provided. I know my husband and I would have hit the caps otherwise. Expect huge numbers at the 1% caps next year.

Paul K. Ogden said...

HEI,

I'd say the caps are certainly better than nothing. As an attorney, I can and have successfully challenged assessments. Sure it is frustrating how long it takes in Marion County. (Other counties do not have a delay.) But at least it is something.

As far as those who want an abolition, that's something to consider. I certainly don't like the idea though of a huge sales tax as a replacement. We're already near the top in terms of sales tax in the country. We should remember that out of 50 states, 50 have property taxes so there must be a reason. It's not a revenue source that's easily replaced.

interestedparty said...

If Indiana instituted a huge sales tax, there goes tourism, and those Hoosiers who live on the borders would go to neighboring states to stock up on everyday goods and large items like cars, except for those folks with transportation limitations. (When I lived in Southern Indiana, I found out that Kentucky was a shopping destination for my neighbors, for a variety of goods and a variety of reasons.) Even those in the middle might travel a bit for large purchases like furniture, cars, etc. So, services would have to be heavily taxed. I think this sounds self-destructive.