Monday, April 30, 2012

Board Finds County Failed to Show Property's Value was Correct for 2008 and Taxpayer Failed to Show Property's Value was Incorrect for 2009

[B]ecause the property’s assessed value for 2008 increased more than 5% over the property’s assessed value in 2007, the assessor has the burden to prove the assessment was correct in 2008. See Ind. Code § 6-1.1-15-17.2.  For the 2009 assessment, however, … the Petitioners have the burden to show that their property’s assessment is incorrect and the burden to prove the property’s market value-in-use.

The Respondent’s representative admitted that the Petitioners’ property was over-valued for 2008, but she contends the correct value for the property was $483,600 based on the average sales price of properties located on the golf course in the Petitioners’ neighborhood...

Here, the Respondent presented no evidence to show that her offered properties were comparable to the property under appeal. In fact, based on the Respondent’s evidence that sale prices for properties in the Petitioners’ neighborhood ranged from $133.93 per square foot to $217.81 per square foot in 2006 and 2007, the Board can infer that the homes in the Petitioners’ neighbor varied a great deal. Because the Respondent’s representative made no attempt to identify or value the differences between the properties, the Respondent’s sales comparable analysis has little probative value. …

[For 2009] the Petitioners argue that their property is over-valued based on the property’s appraised value.   But the Petitioners omitted key portions of Ms. Lewellen’s appraisal report. For example, the page offered did not certify that Ms. Lewellen followed Uniform Standards of Professional Appraisal Practice (USPAP). More importantly, the report’s missing pages appear to contain key information about Ms. Lewellen’s analysis. For example, in performing her sales comparison analysis, Ms. Lewellen adjusted the sale prices of her three comparable properties. Yet the summary of Ms. Lewellen’s sales comparison analysis, in which she presumably explained her adjustments, is contained in an “Attached Addendum” that the Petitioners did not submit.

Also, the appraiser estimated the subject property’s value as of March 27, 2009. Jacobsen testimony; Petitioner Exhibit 1. However, the valuation date for the March 1, 2009, assessment date was January 1, 2008. The Petitioners failed to show how the March 27, 2009, estimate of their property’s market value was relevant to the January 1, 2008, valuation date for the March 1, 2009, assessment date. See Long, 821 N.E.2d at 471 (holding that an appraisal indicating a property’s value for December 10, 2003, lacked probative value in an appeal from a 2002 assessment because the taxpayer did not explain how it related to the relevant valuation date). Thus, in light of the Petitioners’ decision to omit key portions of Ms. Lewellen’s appraisal report, the Board gives little to no weight to Ms. Lewellen’s valuation opinion.

Fountain County Property Tax Bills Out

From the Lafayette Journal-Courier:

Fountain County personal property taxes went out April 16, officials announced Friday.

Treasurer Susan Coffing said anyone who has not yet received their statement should call 765-793-3691.

Taxpayers who received pink homestead verification forms with their statements must fill out that form or risk losing homestead credit. The form is due by the end of the year.

Tax due dates are May 10 and Nov. 13.

State Approves Budget for Sunman-Dearborn Schools

From the Batesville Herald-Tribune:

Sunman-Dearborn Community School officials recently received their approved 2012 budget from the state of Indiana.

The $40.6 million budget was about $5.6 million more than what was received in 2011. However, it was $2.4 million less than what was requested this year, but Charles Blake, SDCSC financial operations director, reports, “It is acceptable, and we will gladly make it work.”

To make up the difference, “We will have to go back and re-evaluate all of our requests for equipment, personnel and products and eliminate some of them from the budget for this year.”

Since the school district covers portions of Dearborn and Ripley counties, assessed values and tax rates have to be determined for both counties. In Dearborn County, the assessed value increased by $1.4 million for 2012, but in Ripley County, it decreased by $4.6 million.

The director reveals the large decrease in Ripley’s assessed values won’t have a great effect on the budget because about “90 percent of our district is in Dearborn County, so when ... (it) stays level or increases in value, any change in Ripley County is not really noticeable.”

The tax rate for Dearborn County is $1.26 per $100 of assessed valuation. That’s .0589 cents more than last year’s rate. Ripley County’s rate is $1.19 per $100 of assessed valuation, which is an increase of .0591 cents.

Blake explains, “The tax rate is a part of the formula used to determine how much property tax each landowner will pay.” For example, a tax rate of $1.26 and a property with an assessed value of $100,000 would mean a tax bill of $1,260.

He says there are no big surprises in the budget. Five of the funds increased from 2011: General Fund, $24.6 million, an increase of $3.6 million; Debt Service, $7.1 million, up $217,067; Capital Projects, $3.9 million, up $1.2 million; Transportation, $3.2 million, up $213,963; and Bus Replacement, $539,593, up $431,669.

The Pension Fund received $1.1 million, a decrease of $4,674.

White Pigeon Community School District Seeks Approximately $1 Million in May Ballot Initiative

From the Elkhart Truth:

The White Pigeon Community School District is asking voters to approve a millage renewal proposal on May 8.

The request is a millage renewal of 3 mills for five years, which will continue the current sinking fund to provide for construction and repair of school buildings and sites. The current sinking fund expired with the 2011 tax levy. It is estimated the additional revenue will allow the school district to collect approximately $1,024,106 for 2012. This is $3 on each $1,000 of taxable valuation.

The millage request is the only ballot proposal. School board candidates will be elected in November due to state regulations.

Polls will be open from 7 a.m. to 8 p.m. Voters will cast ballots at their own township offices.

Rural Counties Weather the Recession with Differing Degrees of Success

From the Bloomington Herald-Times:

Despite hard times, Greene County kept its edge. One economic indicator, the amount of sales tax collected, reflects significant growth in the county as sales tax revenue more than doubled from 2007 to 2011. A look at personal income shows that Greene County residents fared better than residents in other area counties.

Bethell attributes the county’s economic survival in part to a strong partnership between government entities and private developers with the same goal. “We have become very much more progressive in our thinking in the last few years,” Bethell observed. “Generally, there is a progressive outlook, perspective and approach to how we do things.”

She called WestGate “a classic example.”

“A few years ago, it was nothing more than a field of grass. But sometimes, it takes visionaries, and we have some of those in Greene County who grasped that notion and said, ‘This makes sense so we have to try and make it happen.’ If you keep doing things as you have been doing them all along, it’s a losing proposition.”

WestGate now employs hundreds in a bustling community of high-tech businesses associated with Crane’s war machine. And the current construction of a $3.5 million wastewater treatment facility and 250,000-gallon water tower at the site will allow the industrial zone to grow even more.

The project is a partnership between Greene County and WestGate financed from special economic development district funds and with help from an REMC rural loan and grant program. “Collectively, we could do it,” Bethell said. “Economic development is always a team effort. I was fortunate enough to come here at a time when the leadership recognized we have got to take hold of our own future.”

Brown County residents have endured tough times of late. County seat Nashville’s tourism-based economy flatlined during the recession, and the demise of several attractions — the Little Nashville Opry burned down, Indiana University axed longtime support for Brown County Playhouse productions, the Salt Creek Golf Course was in financial distress and nearly sold at auction — has made matters even worse.

Brown County depends on cash infused by visitors. And without it, as fewer people have the money for weekend getaways to quaint rural towns, the county’s sales tax income dropped 13 percent from 2007 to 2011. Sales in 2011 were down more than $62 million from 2007 and generated $645,879 less in income tax than five years before.

This week, Nashville’s redevelopment commission will consider establishing a tax increment financing district to help attract new business investment. A development plan parallels the county comprehensive plan, which has guidelines that protect the integrity of existing businesses and encourages development that corresponds with the county’s “environment and culture.”

With the end of the recession proclaimed, Brown County’s economic future looks more hopeful. The golf course owners worked out a plan with their mortgage company to keep the business afloat, and a Martinsville businessman this month bought the Little Nashville Opry site with the intent to rebuild the country music venue.

(This is a paid article)

First Gear Seeks Abatement for Expansion in Fort Wayne

From the Fort Wayne Journal-Gazette:

During the next five years, First Gear Inc. will invest $1.5 million and add eight jobs at its 7606 Freedom Way location in Fort Wayne, paperwork filed with the city shows.

The machining business will seek a 10-year abatement on equipment that includes cutting gears for various customers. The tax break would save the company $98,155.

First Gear is attempting to recover from the economic slowdown and the additional equipment would allow it to take on new customers, officials said.

The abatement request will be presented to the Fort Wayne City Council May 8.

Highland Municipal Employees Granted First Raise Since 2008

From the Northwest Indiana Times:

Full-time municipal employees will receive a pay raise.

The Highland Town Council has agreed unanimously to grant a 4 percent increase retroactive to Jan. 8.

It is the first raises since 2008 because of the property tax freeze the state imposed on Lake County in 2007, Clerk-Treasurer Michael Griffin said.

"It was a confluence of things" that was three years in the making, he said.

Without causing a major effect on town services, the council has been trimming costs wherever possible to help arrange the pay increases, Griffin said.

That, combined with new revenue from a business that rents an electric sign on a town water tower, made the raises possible, he said.

The councilmen noted the raises do not include their own salaries.

The raise does include Griffin, but does not take effect until next year, board members said.

Tax Appeals Scheduled for Hearing in May

Tax Court:

Friday, May 04, 2012 10:00 AM - 11:00 AM

This is a hearing on the parties' motions for summary judgment.

For a description on the merits of the case see the Tax Summaries at

State House, Room 413
Indianapolis, IN 46204

Hoosier Roll Shop Services, LLC v. Ind. Dept. of State Revenue
Friday, May 11, 2012 10:00 AM - 11:00 AM

This is a hearing on the parties' motions for summary judgment.

For a description on the merits of the case see the Tax Summaries at

State House, Room 413
Indianapolis, IN 46204

Supreme Court:

Thursday, May 10, 2012 9:00 AM - 9:40 AM
State House
Cause No. 82S10-1203-TA-171
The Department of State Revenue issued jeopardy tax assessments to the Garwoods in connection with the Garwoods’ business breeding and selling dogs. The Tax Court denied the Department’s motion to dismiss the Garwoods’ original tax appeal. Indiana Dep’t of State Revenue v. Garwood, 939 N.E.2d 1150 (Ind. Tax Ct. 2010). Later, the Tax Court granted summary judgment to the Garwoods, holding the jeopardy assessments were void as a matter of law. Indiana Dep’t of State Revenue v. Garwood, 953 N.E.2d 682 (Ind. Tax Ct. 2011). The Supreme Court has granted a petition for review.

Indiana Department of State Revenue v. Miller Brewing Company
Monday, May 14, 2012 1:00 PM - 1:40 PM
State House
Cause No. 49S10-1203-TA-136
The Department of State Revenue denied Miller’s request for a refund of taxes Miller paid on certain carrier-pickup sales, sales in which an Indiana customer submitted purchase orders to Miller’s headquarters in Wisconsin and the Indiana customer would arrange for and hire third-party common carriers to pick up products at Miller’s Ohio brewery. In this appeal, the Tax Court granted summary judgment to Miller after deciding that the carrier-pickup sales are not Indiana sales and therefore not allocable to Indiana. Miller Brewing v. Ind. Dep’t of State Revenue, 955 N.E.2d 865 (Ind. Tax Ct. 2011). The Supreme Court has granted a petition for review of the Tax Court decision.

Sunday, April 29, 2012

La Porte County Assessor Proposes Using Current Data for 2010 Assessment

From the La Porte Herald-Angus:

La Porte County Assessor Mike Schultz is looking to make the reconciled tax bills more accurate and reach the right people of La Porte County for his first reassessment.

Officials from La Porte County and the Indiana Department of Local Government Finance conducted a hearing Wednesday at the La Porte County Complex to address the assessor’s proposal of a different way to gather information for more accurate billing. 

“Basically we just want to make sure all the crayons are in the box before we start coloring the picture,” said Schultz after the meeting. “It is hard to color a blue sky if you're missing a blue crayon.”

Schultz has proposed to use the data from the 2012 general reassessment inspections for the 2010 pay 2011 assessment date.  He said that when he reviewed the data that had been received so far, it seemed a lot was missed.

“Now that we are nearing the end and we are doing Pictometry that is showing 11,000 changes, something is wrong,” said Schultz.  He said their conclusion to the situation is in order of having a fair tax system where everybody pays their fair share, they need to start making sure all the assessments are fair to begin with. 

“With the adaption of the request of our assessor, I believe that new data will be employed, will be used fairer and more just assessments will come out tax rates will be closer to what they should be and the public,” said County Commissioner Ken Layton.

Layton added that some people who have lived in their homes for three years have never received a tax bill and although the county has been very far behind, things have progressed considerably in the past six months.

Schultz said when the assessment misses homes and buildings, the assessment is not collected and therefore the rate is higher and people are paying more taxes because some are not paying their share.

Kokomo Tribune Calls for the Center Township Trustee to Forego Tax Levy Due to Surplus

From the Kokomo Tribune:

According to The (Auburn, Ind.) Star, Union Township Trustee Craig Bassett said he intends to give the taxpayers a break due to sizable surpluses and changes to state law.
“Now, we can lower or zero our tax levy for a fund without being locked into that levy forever,” Bassett said, estimating he’d accumulated enough money to run the township for five years with no revenue.
We wonder if that attitude will rub off here in Kokomo, where Center Township Trustee Jean Lushin was carrying a $6.3 million balance at the end of 2010.
That same year, Lushin spent $1.96 million, meaning he had more than three years worth of township spending in the bank at that point.

Fort Wayne Community Schools Seek $119 Million in Referendum

From the Fort Wayne Journal-Gazette:

In 2007, the Fort Wayne Community Schools board asked residents to approve a $500million plan to upgrade some of the district’s aging buildings.

The measure failed during a dueling petition drive, sending supporters back to the drawing board.

Now the board is coming back to taxpayers with a Plan B – a $119 million proposal they say focuses only on essential needs. Voters within the school district will be able to weigh in on the plan when they head to the polls May 8.

District staff returned to the topic of building upgrades last fall, identifying up to $242 million worth of necessary renovations in the district’s buildings, many of which were built in the 1950s and 1960s. After a series of public meetings, the board whittled the plan down to $119 million worth of renovations at 36 buildings in most need of repair.


The majority of the plan, $100 million, will address major infrastructure needs, including heating and ventilating systems, window systems, safety systems and other problems at 10 schools.

An additional $7 million will cover the cost of catching up on roof projects at 28 buildings. The rest will be used for window replacement, masonry repair and installing air conditioning in buildings that already have capacity for the systems.

The most expensive upgrade would be at Snider High School.

Officials hope to spend $40.2 million to replace heating and cooling systems, replace windows, restore masonry and bring handrails and stairwells up to current code, among other projects.

If approved by voters in May, the building project would run from 2013 through 2016 and could cost the average homeowner a property tax increase of $27 a year, according to district officials. The plan would fall outside the property tax caps, meaning the cost would be shared by all taxpayers in the district and wouldn’t increase the tax-cap loss for other units of government.

The ballot question will ask voters to decide whether the district should issue bonds or enter into a lease to finance the project. Indiana gives governments the option of pursuing both methods. District officials said they would likely enter into the lease option, since unlike bonds, entering into a lease does not limit the amount of debt the district can hold.

“It’s really not any different than doing a bond,” FWCS Chief Financial Officer Kathy Friend said. “You still borrow the money and pay it back.”

The question says the project would “increase the property tax rate for debt service by $0.1428 per $100 of assessed valuation.” But district officials said that since some of the district’s debt is set to retire, the actual amount will be closer to $0.10.

Board members hope that, after the district completes the first round of projects in 2016, the public will approve all or part of the remaining $123 million in renovations.

Flatter Enrollment Slows Schools' Growth

From the Indianapolis Star:
Like Hamilton Southeastern, Indianapolis-area districts such as Carmel Clay, Center Grove and others that boomed in the 1990s and 2000s are seeing much smaller enrollment increases. Some have experienced slight declines.

The slowing enrollment growth could be due to a couple of factors: baby boomers who flocked to the suburbs in the past decade are staying put, leaving fewer homes available for young families with children, and many popular bedroom communities such as Carmel have little land left for potential housing development.

But the driving force, school officials agree, is the struggling economy and the moribund housing market. New housing construction is down throughout the area, and many families are finding it hard to get mortgages.

The trend could be a boon to students because it gives districts some breathing room to focus on curriculum instead of construction. It also could be good news for taxpayers because schools won't be asking them to shell out extra money for construction projects.

Referendum Draws Duneland Voters

From the Northwest Indiana Times:

Voter turnout is down dramatically from four years ago throughout most of the county, despite several hotly contested county races and presidential candidates on the ballot.
An exception is the Duneland area, where voters are being asked whether they want to increase the school's tax rate by 22 cents over a period of seven years, said Kathy Kozuszek, who serves as the Democratic director at the county voter registration office. The increase is being proposed to help the district respond to state-mandated cuts and funding formula inequities.
An unusually large number of Duneland voters are requesting ballots that include just the referendum tax question and no candidates, she said. Kozuszek said she is concerned about that because she fears voters may be under the false impression they can return on election day to vote for candidates.
"They're done," she said. "One ballot, that's it. They need to be mindful of that."
In-person absentee voting continues through noon May 7, a day before the primary election.
Voting hours are from 8:30 a.m. to 4:30 p.m. Monday through Friday at the Porter County Government Center in Valparaiso, and until 3:30 p.m. at the North County Complex in Portage and Chesterton Town Hall.
The Valparaiso location will be open from 8:30 a.m. to 3:30 p.m. Saturday.

Saturday, April 28, 2012

Revenue Finds Taxpayer Failed to Show Hotel Room Rentals Exempt from Taxation

Taxpayer believes that the room rentals in question are exempt under either IC § 6-2.5-5-16, IC § 6-2.5-5-24, or IC § 6-2.5-5-25, since the hotel guests were federal government employees or were members of exempt organizations. Taxpayer states that these guests presented exemption certificates supporting their claim of exemption. However, as explained by the two Information Bulletins referenced above, sales to the exempt organizations are direct sales to the exempt organizations, not to the members. IC § 6-2.5-5-16, IC § 6-2.5-5-24, and IC § 6-2.5-5-25 all provide that the relevant exemptions apply to sales to the organizations, not individuals. If the individuals pay for the rooms, those transactions are then between the hotel and the individual. Even if the exempt organization or government later reimburses the individual, the initial transaction was between the hotel and a non-exempt person.
Therefore, each exempt hotel room rental consists of two steps. The first step is to present a properly completed exemption certificate. The second step is to present payment by the exempt organization or governmental organization and confirm that the exemption certificate is actually being used by the exempt organization listed on the exemption certificate. Both steps are necessary and are immediately verifiable. These steps are verifiable by any retail merchant, including but not limited to hotels. The Department has issued clear guidance on the treatment of the transactions at issue pursuant to the above mentioned statutes and regulations.
Taxpayer's documentation includes copies of exemption certificates (Form ST-105s), which were provided by its hotel guests. However, upon reviewing Taxpayer's documentation, majority of its hotel guests at issue selected the box of "Sales to nonprofit organizations claiming exemption pursuant to Sales Tax Information Bulletin 10." The same exemption certificates also expressly contain the language of "(May not be used for personal hotel rooms and meals.)," informing both Taxpayer and its hotel guests that "personal hotel rooms" are not exempt transactions. While some hotel guests at issue claimed to be the federal government employees, Taxpayer did not provide documentation demonstrating that the federal government paid the hotel room rental directly.
Thus, given the totality of the circumstances, in the absence of other documentation, the Department is not able to agree that Taxpayer has met its burden showing that the transactions were indeed exempt. Therefore, the Department's audit properly imposed sales tax on these transactions.

"Ineligible Deduction Fund" Pays for St. Joseph County Auditor's Upgrades

From the South Bend Times:

The Budget and Administration Committee on Tuesday granted a favorable recommendation to a plan by the county auditor to spend $132,000 on improvements and upgrades in his office and the offices of the County Council and Board of Commissioners.

Among other things, the plan calls for new ceiling tiles and lights in the auditor's office, a new broadcast and recording system inside council chambers, a new meeting management system, various hardware and software upgrades, and iPads for use by elected county officials and support staff.

The bills that make up the plan -- 33-12, 36-12, and 37-12 -- now move to the County Council for a public hearing and possible vote.

"I think we're starting to move into the 21st century," Auditor Pete Mullen said during the meeting.

Mullen, who first announced the plan back in January, plans to pay for the upgrades and improvements out of the auditor's Ineligible Deduction Fund, which contains back taxes collected as part of an effort crack down on invalid homestead de-ductions.

About $935,000 has been deposited into the fund since it was created last year, he said Tuesday.

State Finds Third Tax Error

From the Indianapolis Star:

The auditor's office said Friday that a clerical mistake resulted in Indiana counties getting erroneous excise tax distributions, with 34 counties getting underpaid by a total of $536,000 and some counties getting overpaid by that amount.

Erin Sheridan, spokeswoman for the office of state Auditor Tim Berry, said that about $20 million in excise tax money is distributed monthly to counties, though the amount each county receives varies by month.

"The girl who did the transfers used last month's information," Sheridan said.

The employee caught the error but only after the automatic cash transfers to the counties had begun. As a result, Marion County was paid $19,117.49 too much. Shelby County also was overpaid by $10,628.61, as was Boone County, by $8,898.35.

Other area counties were underpaid: Hamilton by $43,649.25, Hancock by $25,008.04, Hendricks by $22,539.32 and Johnson by $16,467.54.

"Counties that we paid too much to, we're asking them to write us a check back," Sheridan said. "Counties that we owe money to, we're going to go ahead and issue them the amount that they are owed."

That money is expected to be distributed by the middle of next week.

On Friday, Senate Minority Leader Vi Simpson, D-Ellettsville, and House Minority Leader B. Patrick Bauer, D-South Bend, said such errors "are becoming all too common."

"This is just another example of a system lacking thorough and comprehensive oversight," they said in a joint statement.

They urged the state to broaden the scope of the audit "to all fiscal offices to ensure that local governments are given accurate, timely budgeting information." They also called on lawmakers to exercise oversight of the executive branch.

"A Bad Case of School Voucher Fever"

An Excerpt of an Editorial by John Krull, director of the Pulliam School of Journalism, in the Evansville Courier and Press:

We made a commitment, through law, to require education for all children in part to curb the big dogs' advantage. Voucher advocates say that their approach will help do that by further leveling the playing field.

But there is no real compelling evidence of that.

Studies on the subject have produced mixed results that often reflect the prejudices of their funding sources.

That is why it may be good to have Indiana's voucher law stand. Only having vouchers put into practice and struggle just as the current system does is likely to break the fever and bring otherwise clear-eyed people out of the dreamy state they're in.

Those folks see government and unions as the source of all problems. And government and unions have done some things wrong.

But it wasn't government or any union that pulled heavy industry out of many northern cities and turned them into ghost towns without vibrant and supportive neighborhoods. It wasn't government or a union that closed down factories and took away the tax base for many small towns across the country. And it isn't slow, stagnant government that routinely upends the economy in its search for more efficient ways to deliver goods and services.

No, market forces did all those things.

The moment we start meeting our educational challenges is the moment we honor our ancestors' wisdom – and acknowledge that, while the market is part of the solution, it's also part of the problem.

Clark County Judge Responds to State Board of Accounts Audit

Excerpt of a lengthy story in the Jeffersonville News and Tribune:

The spending habits of Clark County Superior Court No. 3 caught the attention of the State Board of Accounts in a recent report, which stated it improperly used funds from the Clark County Alcohol and Drug Services fund.

The court, which has been renamed Clark County Circuit Court No. 3, operated the fund for more than 20 years without being cited by the state. During that time, money collected through a fee of $18 to $50 on all moving violations in the county paid a variety of expenses, including sponsoring local Little Leagues, paying for new carpet for the Clark County Courts and paying for blacktop for the 4-H Fairgrounds.

The money spent — $2.5 million over a five-year period — came from the traffic tickets, but were not always related to cases where substance abuse had been a factor, according to the Indiana State Board of Accounts.

Agree to disagree

In a response to the State Board of Accounts, former Superior Court No. 3 Judge Steve Fleece, who was the steward of the funds from 1995 through 2008, defended his actions.

“The dispute boils down to a difference of opinion over what activities of local government and allied nonprofit institutions can be financed by Alcohol and Drug Services funds,” Fleece wrote in a response letter.

The State Board of Accounts contended that the proper uses for the Alcohol and Drug Fee Funds were limited to individuals that have “legal obligations due to alcohol and/or drug use.”

“I think the State Board of Accounts has gone off the theory if it’s not specifically authorized it’s forbidden,” Fleece said. “And I go on the theory that if it’s not specifically prohibited, then it’s allowable.”

He said in the response letter that Indiana Code allowed for the alcohol and drug program funds to be used for “accompanying services.” The accompanying services he used the funds for were often directly related to alcohol and drug programs.

Clark County Commissioners Approve Use of EDIT Funds for Health Insurance Premiums

From the Jeffersonville News and Tribune:

The commissioners also offered a plan for the county’s Economic Development Income Tax funds Thursday.

“The county has now virtually exhausted the money in its health insurance fund,” Fifer said. “In order to continue paying premiums after this month ... we now need to authorize that money to be spent from your EDIT funds.”

He said funds that will be paid out of EDIT include $860,000 for the Clark County Building Authority, of which half has already been paid; $1.2 million to cover the group health insurance for the remainder of the year; and a probate administrator salary for $41,500.

The EDIT plan — resolution 6-2012 — was unanimously approved.

Friday, April 27, 2012

Revenue Waives Penalty Finding Taxpayer's Belief Hot Tubs Exempt was Reasonable

The audit found that Taxpayer sold "hot tubs" without collecting sales tax. As explained in the audit report, "Taxpayer made sales of hot tubs and accepted either a doctors' prescription or a note from a chiropractor or physical therapist attesting to therapeutic necessity of the unit."
Taxpayer does not challenge the audit's conclusion that sales of hot tubs were taxable. However Taxpayer explains that it had "reasonable cause" for failing to charge its customers sales and use tax. Taxpayer states in part:

We did not realize the exemption was taken away, nor was any notice given to our store, corporate headquarters or any number of the medical community who continued to write prescriptions for hot tubs and told their clients they were tax exempt. We would have complied immediately had notice been sent when the law went into effect.

Thus, Taxpayer believes that it is entitled to abatement of the ten-percent negligence penalty.
In Taxpayer's case, the audit notes the following:  Indiana exempts prescriptions of medical equipment via 45 IAC 2.2-5-27; however IC 6- 2.5-1-18 no longer considers hot tubs to be medical equipment. The citation states that durable medical equipment does not include equipment that "is generally not useful to a person in the absence of an illness or injury."
Based upon the particular facts and circumstances of Taxpayer's case, the Department finds that Taxpayer has met the requirements of 45 IAC 15-11-2. Thus the penalty should be waived.

Potash Facility Project Stimulated by $10 Million in Incentives

From the Northwest Indiana Times:

It started three years ago when Indiana Harbor Belt Railroad general manager Jim Roots' phone rang and culminated Friday when a ribbon was cut to make way for a 2,100-horsepower diesel locomotive and dozens of orange Potash Corp. rail cars.

In two weeks, Potash Corp. train cars will begin coming to the yard in earnest, with Indiana Harbor Belt Railroad switching them to other rail carriers for distribution around the United States.

Robert Felgenhauer, Potash Corp. vice president for transportation and distribution, told the ribbon-cutting crowd the best is yet to come, with construction to start this summer on a $40 million fertilizer storage and transfer facility right alongside the newly laid tracks. It will be located just west of Nine Span Bridge.

"This is a rail yard our customers will love and our competitors will hate," Felgenhauer said.

Hammond beat out 41 other sites around the nation that were being considered for the project, Felgenhauer said. And Indiana Harbor Belt beat out the largest railroads in the United States for the job.

The storage and transfer facility will be the first facility of its type built by Potash Corp. in North America, giving it increased access to its customers across the U.S., he said. Completion is slated for early 2014.

Based in Saskatoon, Canada, Potash Corp. is the largest fertilizer producer in the world, responsible for 20 percent of world capacity. In addition to the more-than-two-football-fields-long storage and transfer facility at Gibson Yard, Potash will be building offices and a locomotive barn there.

An estimated 225 construction workers will build those. Once built, about 25 permanent jobs will have been created to staff the facilities and rail yard.

The project is being stimulated with $10 million in incentives from the city of Hammond, most of it payments that will be collected from Potash Corp. in lieu of taxes, Hammond Mayor Thomas McDermott Jr. said.

Allen County Library Uses State Windfall on Upgrades

From the Fort Wayne Journal-Gazette:

The Allen County Public Library will spend unexpected revenue on computer improvements, a heating and cooling system upgrade and to pay off debt.

The library will receive $844,000 as part of a state programming error that cost local units of government $206 million in local option income tax revenue in 2011 and early 2012. A total of $15.6 million will go to Allen County taxing units, including the library.

Financial Services Manager David Sedestrom told the library board Thursday the library already received some of the money and will continue to get more each month until the entire refund is paid.

Sedestrom said a computer server “virtualization” project had already been approved, but the money to pay for the project will come from the refund the library will get from the state.

He estimated the upgrade will cost about $400,000 and will make the servers easier to maintain and cheaper to fix.

The Aboite branch also will get an upgrade to its heating, cooling and air-conditioning system. ...The remaining money would most likely be saved to pay off the library’s debt service.

Tax Funds Used to Convert Former Auto Dealership to Classroom in Henry County

From the Muncie Star-Press:

The Henry County Commissioners, Henry County Council and Ivy Tech Community College had a groundbreaking ceremony Thursday for the new Ivy Tech Community College/New Castle-Henry County Campus.

The new facility is at 3335 S. Memorial Drive (Ind. 3).

The Henry County Council approved the investment of $2.2 million in local Food and Beverage tax funds to convert a former automobile dealership into classrooms and career training facilities. Muncie-based Studio Three Architects are developing plans to transform the structure.

Editorial Argues that Township's Decision Not to Collect Taxes Supports Elimination of Township Governments

From the Richmond Palladium-Item:

The township already has plenty of money in the bank.

For those who choose to continue immersing themselves in the myths about township government representing government closest to the people, small government at its best, this decision to levy no taxes will no doubt further their arguments, specious as they might be.

For our own part, we'll hold any applause. The report about Dekalb County's Union Township more likely offers more damning evidence of a layer of government lacking purpose or function. In fact, in the exhaustive look statewide at the antiquated township functions in Indiana, it was demonstrated that a great many of them had accrued huge revenue surpluses in, of all things, poor relief funds at a time when the nation was undergoing a deep recession and Hoosier counties especially were looking at some of the steepest unemployment rates.

Go figure.

Union Township ended 2011 with $257,000 in operating fund reserves and about $157,000 in its poor relief fund, according to a report from The Associated Press. That, according to the township's trustee, Craig Bassett, is a sufficient cache to last more than five years without collecting taxes.

Huh? At a time when local governments have been squeezed by the nation's bad economy and shortchanged more than a half-billion dollars by the state's bad accounting, we have local governments running surpluses, surpluses so great that they can pledge no new taxes for the coming five years?

Gov. Mitch Daniels will likely leave office at the end of this second term scoring the state's failure to achieve township government reform as his most bitter defeat.

But it wasn't for lack of trying.

The Republican governor simply found that township interests were very entrenched and very intertwined with the political parties.

Only when taxpayers become as outraged by the status quo as they should be will there be any hope of serious reform.

State Auditor Underpaid Excise Tax to More than Thirty Counties

From the Fort Wayne Journal-Gazette:

The state auditor’s office sent erroneous excise tax distributions to Indiana counties last week, a clerical mistake that is being corrected, officials said Thursday.

Excise taxes are collected by the state when Hoosiers register their vehicles. Then the state auditor distributes a portion of the money monthly to counties depending on where the people live. Counties then send it along to local units of government.

Erin Sheridan, spokeswoman for State Auditor Tim Berry, said about $19.7 million is dispersed every month.

But in the March distribution, a state employee accidentally used the individual county amounts from the prior month.

More than 30 counties were underpaid a total of $536,000.

Allen County, for instance, received $987,853 for its March distribution, about $18,491 less than it should have received.

Shelby County School System Approves a $1 Million "Concession Stand"

From the Shelbyville News:

Triton Central High School football fans will notice something new when they return to cheer on the Tigers in August.


Editorial Calls for Equal Representation of Floyd County Residents

Matthew Nash in the Jeffersonville News and Tribune:
One of the biggest misconceptions of our county council or any other in the state of Indiana is that they are not a legislative body. They are the fiscal body for the county. What this means is they do not create laws or policy, that is the job of the county commissioners. Their main responsibilities include preparing the annual budget which in turn sets our tax rate county wide and appropriating other monies that are within their authority including Economic Development Income Tax funds, River Boat and Rainy Day funds.

Another misconception of the general public, which may even be held by some members of the county council, is who they actually represent. Some people are of the mindset that the council’s boundaries begin at the city limits and extend to the edge of Floyd County. It seems that some people believe that if you live within the confines of the city of New Albany, you are not also a resident of Floyd County. In reality we are all one big happy family, or at least should be.

You see New Albany city residents pay the same Floyd County tax rate as citizens that live outside of the city limits. That means if I live in a house with an assessed value of $100,000 in the city of New Albany and you live in a house with an assessed value of $100,000 outside of the city limits [including Georgetown, Greenville, Galena or any place in between] you pay the exact same amount in property tax to the Floyd County Treasurer. That tax money is what the county council uses to pay for things like the Floyd County Jail, the Floyd County Sheriff’s department [including the salary of the Floyd County chief of Police] and the salaries of the members of the Floyd County Council.

Do the citizens of New Albany get the representation that they are indeed paying for? I believe that some members of the Floyd County Council are under the impression that they only represent those who live outside of city limits. They do not understand that citizens of New Albany are indeed also citizens of Floyd County and deserve the same consideration when they make their decisions. I believe it is time for our elected representatives to actually start representing everyone that lives and pays taxes in Floyd County.

This should not be a war between hill vs. valley people. I am not trying to start any friction between “city” and “county” people. I am a citizen of New Albany and Floyd County and in a war between city and county no matter if my team wins, my other team loses. I believe that our elected officials should begin to represent everyone that resides within the confines of our county equally, no matter what part of the county you live in.

Thursday, April 26, 2012

NantWorks Seeks Abatements for Redevelopment of Pfizer Site in Terre Haute

From the Terre Haute Tribune-Star:

NantWorks in January announced it would invest $120 million over the next five years to redevelop the former Pfizer facility.

The new company is in the process of gaining manufacturing process approval from the federal Department of Food and Drug Administration to produce critical care injectable and oncological drugs for cancer treatment.

The company will employ 234 workers by the end of 2016 under its agreement with the Redevelopment Commission.

However, for any employee below that number, NantWorks must pay back $5,128 per employee to the Redevelopment Commission. If nothing happens at the site, the company must pay the Redevelopment Commission $1.2 million, the agreement states.

NantWorks will seek real and personal property tax abatements from the county. Vigo County will also pay $160,000 to extend a 12-inch water line to the new manufacturing site.

The Indiana Economic Development Corp. is providing up to $2 million in conditional tax credits and up to $100,000 in training grants based on the company’s job creation plans.

Terre Haute Parks Budget Cut

From the Terre Haute Tribune-Star:

City park officials learned Wednesday at their board meeting that they are going to face deeper budget cuts.

Mayor Duke Bennett attended the Terre Haute Parks and Recreation board meeting, in part to explain recent state demands that the department slash another $292,000 from its budget.

State reviewers of the city’s budget determined that the park cuts, as well as another $70,000 from the cemetery budget, have to occur this year, Bennett said, to the visible disappointment of staff and board members.

“It could have been worse,” he said, noting 2012 represents the nearing end of property-tax-cap cuts. What kind of revenue and budgets will be available from here on out are still unknown, he said. The city has lost about 25 percent of its revenue due to those caps, and the parks department has been one of the hardest hit departments, he added.

Engineering Distributor Receives Tax Credits for Indianapolis Expansion

From the INside Indiana Business:

Haggard & Stocking Associates, Inc., a distributor of engineered products, announced plans today to expand its operations here, creating up to 25 new jobs by 2016.

The Indianapolis-based company, which supplies customers in the aerospace, automotive and medical industries, will invest $524,000 to expand its aerospace division at its 9,000 square-foot facility in Indianapolis. As part of the project, the company will make building renovations and information technology upgrades.

The Indiana Economic Development Corporation offered Haggard and Stocking Associates, Inc. up to $165,000 in conditional tax credits and up to $33,500 in training grants based on the company's job creation plans. These tax credits are performance-based, meaning until Hoosiers are hired, the company is not eligible to claim incentives. The city of Indianapolis supports the project through additional incentives at the request of Develop Indy.

Clark County Officials Voice Concern with Tolls

From the Jeffersonville News and Tribune:

As an organization, the Clark and Floyd counties chamber of commerce group has endorsed utilizing tolls instead of tax increases to pay for the bridges project. But that didn’t inhibit [Clarksville Town Council President] Gilkey from asserting that tolls could create a barrier for Southern Indiana commerce.

“I have serious reservations about the impact of the tolls on local businesses,” Gilkey said Wednesday during 1si’s “Lunch with the Mayors” event at the Holiday Inn Lakeview in Clarksville.

While people may become accustomed to paying tolls after they have been implemented for several years, Gilkey said it could take a generation for that adaptation to occur.

Indiana Gov. Mitch Daniels and Kentucky Gov. Steve Beshear signed a memorandum of agreement in March to finance the $2.6 billion Ohio River Bridges Project.

Under the plan, frequent commuters would pay a $1 fee each time they cross a toll bridge over the Ohio River. Cars and Sports Utility Vehicles would be assessed a $2 rate per trip, with a $5 toll for smaller trucks and $10 for semi-trucks.

Though authorization has not been received from the Federal Highway Administration, the Kennedy Bridge would be tolled under the plan. The Sherman Minton Bridge and the Clark Memorial Bridge would not be tolled.

However, there’s an assumption made in the final Supplemental Environmental Impact Statement that when the Sherman Minton is required to be replaced, it too would be tolled.

Though the Sherman Minton wouldn’t require an immediate fee for passage if the plan comes to fruition, New Albany Mayor Jeff Gahan said more commuters would loop around Southern Indiana to use the bridge creating infrastructure stress.

“It’s going to have a negative impact on the city of New Albany,” Gahan said.

Colorado Investor Buys Howard County Properties in Internet Tax Sale

From the Kokomo Tribune:

A Colorado-based investment group bought an interest in 48 Howard County properties at an Internet tax sale earlier this month, raising eyebrows among local investors.

The Howard County Auditor’s Office received just over $29,000 from Hai Minh Ventures LLC for tax certificates on the properties, officials said Wednesday.

The certificates entitle Hai Minh and other investors purchasing certificates to either a guaranteed profit or first shot at acquiring title to a property.

The county, in return, collected more than $50,000 in unpaid property taxes at the Internet auction, which ran from April 5 to 13.

Most investors purchasing tax certificates (also called tax liens) do so hoping the property owner will pay off the back taxes, said Josh Boeke, a representative of SRI Inc., Indianapolis, the realty firm the county used for the recent tax sales.

If that happens, the tax certificate holder gets their money back, plus 10 percent interest. That’s how most tax lien investors make their money.

If the current property owner doesn’t redeem the property by paying off the past-due taxes, the tax certificate holder can either try to gain title to the property or simply eat their investment, Howard County Treasurer Martha Lake said.

Mallabar said the county initially put 435 properties up for a live auction tax sale on April 3. Of those, 178 were sold at the live auction, netting the county about $269,000.

The remaining 257 properties went to the Internet auction, which was open to investors across the nation. Another 102 properties sold at the Internet sale, netting just over $50,000.

County officials called both sales a “cleanup sale” — basically an attempt to get some money back on the properties that had been delinquent the longest. Many of the properties are vacant lots, or have numerous city sewage and weed liens against them, Mallabar said.

Porter County Seeks to Curb Homestead Deduction Fraud

From the Northwest Indiana Times:

The county is granting temporary amnesty to the owners of hundreds of multi-unit residential buildings, who have been receiving a larger homestead deduction than is allowed by law.

Rather than exercise his right to go after the violators for three years worth of back taxes, Porter County Auditor Bob Wichlinski said he plans to correct the problem and have the county begin collecting the correct amount of revenue starting next year.

The violations involve owners, who live in their multi-unit buildings and have been receiving a homestead deduction on their entire structure rather than just the portion that makes up their primary residence, Wichlinski said. The violations have been occurring for many years, he said.

The county has known for a while about this problem, but the size of the situation came to light only recently as the auditor's office has pursued its wider crackdown on homestead violators, Wichlinski said. That effort, which has so far brought in about $1.5 million in back taxes and penalties, has been aimed at the more clear example of single family homes improperly benefiting from the homestead deduction.

Letters were sent out at the end of last week to the owners of the multi-unit buildings, which caused enough of a stir to convince the auditor's office to reconsider the immediate crackdown. The letters sought five years worth of back taxes and a 10 percent penalty.

Allen County Commissioner Calls for Transparency in State Accounting

Editorial By Therese Brown in the Fort Wayne News-Sentinel:

The distribution of local option income taxes has been a historic problem. Sudden changes in economic conditions have usually resulted in dramatic changes to local option income tax distributions. Evidence for these changes was not accompanied with a detailed report on exactly why a county’s distribution increased or decreased dramatically. Reasons from the state varied from less income being earned to less returns being processed in a state fiscal year. However, no matter the cause, little data was produced to verify the distributions.
How can we add transparency to the process? The answer is more detailed reporting and a better accounting process.
Counties are already receiving quarterly reports on local income tax collections, and this should be expanded to include more information. The state should include in the reports the number of processed income tax returns, attributable to the correct filing year.
The most critical change needs to be an end to the co-mingling of income tax revenue and a clearer distinction between each county’s local collections and those collected for the state’s revenue needs. When withholdings and estimated payments are reported to the Department of Revenue, the withholdings for the counties should be deposited into the proper county account. Statute already requires the Department of Revenue to segregate the money and there is no longer any reason for the state to ignore its statutory duty; this should occur immediately. We encourage the state to make each county’s account available to the local units of government and to the public on a real time basis via a posting on the state’s website. County income tax withholdings should never be co-mingled with the state general fund.
The only way to have a transparent and accountable system is if the local units of government can track the amount of withholdings and processed returns. This is not to suggest that local units receive estimated amounts because locals should still only receive that which is actually collected and reconciled after taxpayers file their tax returns. Fundamentally, more eyes need to be on this data. If the state would introduce more transparency into the process, local officials would be in a better position to compare their community’s histories and anticipate problems when collections don’t match distributions. This would be a benefit to all: the state, local governments and taxpayers.
We urge the audit of the Department of Revenue to include other revenues and accounting processes. The state collects other revenue for local units of government such as food and beverage taxes, lodging taxes, gas taxes and 911 fees. We would prefer the collection and distribution of these revenues to be reviewed as well to reassure taxpayers that due diligence on their behalf has been served. We also ask that county officials be included among the members of the audit review committee when a vendor is selected to conduct the audit.