By Larry Riley in the Muncie Star-Press:
As far as financial crises for local government go — and we have them with regularity around here — the one announced last week appears to have less impact than one would initially think. Or am I just feeling crisis fatigue?
The Delaware County Auditor’s office released figures based on property tax calculations for bills that had just been mailed out to property owners. At first blush, the information would make a bookkeeper for any unit of local government feel faint.
For example, the city of Muncie, Muncie Community Schools and Delaware County government jointly were facing additional budgetary cutbacks of $6 million, $2 million and $1 million respectively, cutbacks that could not be foreseen until tax bills were run.
While that’s one conclusion that could be drawn from one perspective, we have other ways to look at the data that make the crisis less catastrophic.
What the auditor’s office actually announced were not what had to be cut back, but what the total “local property tax credits” amounted to for each unit of local government.
These are figures not known until tax rates are final, property assessments are set, levies are calculated and Indiana’s property tax caps are added into the equation.
The system is extraordinarily complicated. Local governments go about their business and each fall, or earlier, create a budget for the following year, which has to be approved by Indiana’s Department of Local Government Finance, along with a tax rate to raise that money.
But — and this is a big but — if all those budgets, when added together, exceed what the taxpayers are cap-limited to pay, taxpayers get “local property tax credits” for any amount over the cap.
Homeowners who live in their home are capped for local property tax purposes at 1 percent of their home’s gross assessed value. If your home’s worth $150,000, you can’t pay more than $1,500 in local property taxes.
Rental residential property (and farmland) is capped at 2 percent and all remaining property — commercial and industrial — is capped at 3 percent.
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See the full article here:
http://www.thestarpress.com/apps/pbcs.dll/article?AID=2013305120021&nclick_check=1
