Property Tax Effect Here Unclear
July 28, 2016 at 4:25 p.m.
By Gary [email protected]
I am worried for our county. I am worried for our schools.
Here's a rundown of Governor Mitch Daniels' proposal:[[In-content Ad]]n Caps residential property taxes at 1 percent of a home's assessed value; rental property taxes at 2 percent; and business and farm properties at 3 percent. (Fully phased in from 2009 to 2010.)
n Puts the property tax caps in the state constitution so they'll be harder to overturn later.
n Increases the state sales tax to 7 percent from 6 percent.
n Eliminates township assessors and makes county assessors appointed instead of elected.
n Limits the growth in local spending to a county's six-year average in personal income growth.
n Gives oversight of all county budgets to a county control board, whose members would be appointed by local governments.
n Creates an additional 35 percent homestead deduction on top of the current maximum of $45,000.
n Requires referendums for all major local building projects.
n Requires the state to pick up the remaining school general fund and school transportation costs paid by local governments.
Now, the Indiana House and Senate have proposed changes and additions that must be worked out before anything gets sent to the Governor.
The main difference deals with the issue of referendums on building projects. The House scaled Daniels' proposal back to just recreational projects like stadiums and pools - not classrooms.
The Senate bill says referendums wouldn't be required as long as a school district had an average growth of 4 percent over the past five years and the county council gave its OK. Referendums would be required for other controversial projects with a cost of at least $7 million, or which total one-half percent of the assessed values of all properties in a government unit. Referendums also could be triggered by opponents of a project who gather the signatures of 100 voters, or 5 percent of the registered voters in a taxing unit, whichever is lower, according to the Senate version.
Other differences deal with keeping the assessors as elected, keeping township assessors, giving oversight to the county council instead of a control board, and placing the homestead deduction on a sliding scale.
There are several other differences, too, that the lawmakers must work out, but the main provisions of capping property taxes at 1, 2 and 3 percent are etched in stone. So is the sales tax increase.
This is what worries me.
Statewide, the Legislative Services Agency reports the caps would reduce property taxes by about $600 million by 2010.
That's about 10 percent of the $6 billion the state takes in each year in property taxes.
And schools stand to lose $150 million statewide.
But those are statewide numbers. How will those caps translate to our county?
The LSA says the effect here will be minimal, in the range of $180,000 in the county and $65,000 in the City of Warsaw.
But I am a bit skeptical about that assessment.
Seems to me our county would be hit harder than average. We're in a unique situation because of all the lake property around here.
As an example, here's a random lakefront house on Winona Lake. It's assessed value was $483,000. The owner paid $9,334 in property taxes (2007 pay 2006.)
Let's apply the 1 percent of assessed valuation cap. The owner would pay $4,830, a savings of $4,504.
This particular house was in the city of Warsaw. So how's the city going to make up the difference? How are the schools going to make up the difference? Are they going to have to jack up the assessments?
I heard a report on one of the South Bend TV stations the other day. The mayor of Elkhart was bemoaning that the city - just the city, not the schools - stood to lose $3.8 million in funding.
And they don't have lots of lakefront homes with out-of-whack high assessments.
I realize Winona Lake, with much of its lakefront property in city or town taxing units, is an extreme example, but there are lots of other lakes in the county.
The LSA's rosy assessment aside, I am more than a little concerned that taxing units in our county - schools, police, municipalities - stand to lose quite a bit under this property tax plan.
*****
Some dismal economic news this week shows unequivocally that the economy is slowing down.
Gross domestic product in the fourth quarter of 2007 limped along at a 0.6 percent rate of growth.
The median estimate of economic gurus predicted a growth rate of 1.2 percent for the fourth quarter, so the actual number was about half of what the experts expected.
At the same time, the Commerce Department reported this week that consumer spending edged up only 0.2 percent in December. That's December, when consumers are supposed to be spending lots of money.
This is not positive news, by any stretch of the imagination, but it's still not a recession.
And all the economic news isn't bad. There was a surprising uptick in orders for durable goods - big-ticket items - that took economists by surprise.
Unemployment isn't horrible at 5 percent, December payroll numbers were up, real personal income was up, real sales were flat and industrial production was slightly down.
So last week I wrote that the media was overplaying the idea that the country is in a recession. After, that, one reader called me a "fruitcake" in an e-mail.
I am undeterred.
A recession is defined as "a period of general economic decline; specifically, a decline in GDP for two or more consecutive quarters."
In the second quarter of 2007, GDP was up 3.8 percent. In the third quarter, it was up 4.9 percent.
In the fourth quarter it was down. That would be the first quarter of a decline. Now, if after the first quarter of 2008, there is another decline, then the media can report on the recession.
Those numbers will be out around the end of April.
All I'm asking is - fruitcake that I am - why doesn't the media stop calling it a recession until then?
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I am worried for our county. I am worried for our schools.
Here's a rundown of Governor Mitch Daniels' proposal:[[In-content Ad]]n Caps residential property taxes at 1 percent of a home's assessed value; rental property taxes at 2 percent; and business and farm properties at 3 percent. (Fully phased in from 2009 to 2010.)
n Puts the property tax caps in the state constitution so they'll be harder to overturn later.
n Increases the state sales tax to 7 percent from 6 percent.
n Eliminates township assessors and makes county assessors appointed instead of elected.
n Limits the growth in local spending to a county's six-year average in personal income growth.
n Gives oversight of all county budgets to a county control board, whose members would be appointed by local governments.
n Creates an additional 35 percent homestead deduction on top of the current maximum of $45,000.
n Requires referendums for all major local building projects.
n Requires the state to pick up the remaining school general fund and school transportation costs paid by local governments.
Now, the Indiana House and Senate have proposed changes and additions that must be worked out before anything gets sent to the Governor.
The main difference deals with the issue of referendums on building projects. The House scaled Daniels' proposal back to just recreational projects like stadiums and pools - not classrooms.
The Senate bill says referendums wouldn't be required as long as a school district had an average growth of 4 percent over the past five years and the county council gave its OK. Referendums would be required for other controversial projects with a cost of at least $7 million, or which total one-half percent of the assessed values of all properties in a government unit. Referendums also could be triggered by opponents of a project who gather the signatures of 100 voters, or 5 percent of the registered voters in a taxing unit, whichever is lower, according to the Senate version.
Other differences deal with keeping the assessors as elected, keeping township assessors, giving oversight to the county council instead of a control board, and placing the homestead deduction on a sliding scale.
There are several other differences, too, that the lawmakers must work out, but the main provisions of capping property taxes at 1, 2 and 3 percent are etched in stone. So is the sales tax increase.
This is what worries me.
Statewide, the Legislative Services Agency reports the caps would reduce property taxes by about $600 million by 2010.
That's about 10 percent of the $6 billion the state takes in each year in property taxes.
And schools stand to lose $150 million statewide.
But those are statewide numbers. How will those caps translate to our county?
The LSA says the effect here will be minimal, in the range of $180,000 in the county and $65,000 in the City of Warsaw.
But I am a bit skeptical about that assessment.
Seems to me our county would be hit harder than average. We're in a unique situation because of all the lake property around here.
As an example, here's a random lakefront house on Winona Lake. It's assessed value was $483,000. The owner paid $9,334 in property taxes (2007 pay 2006.)
Let's apply the 1 percent of assessed valuation cap. The owner would pay $4,830, a savings of $4,504.
This particular house was in the city of Warsaw. So how's the city going to make up the difference? How are the schools going to make up the difference? Are they going to have to jack up the assessments?
I heard a report on one of the South Bend TV stations the other day. The mayor of Elkhart was bemoaning that the city - just the city, not the schools - stood to lose $3.8 million in funding.
And they don't have lots of lakefront homes with out-of-whack high assessments.
I realize Winona Lake, with much of its lakefront property in city or town taxing units, is an extreme example, but there are lots of other lakes in the county.
The LSA's rosy assessment aside, I am more than a little concerned that taxing units in our county - schools, police, municipalities - stand to lose quite a bit under this property tax plan.
*****
Some dismal economic news this week shows unequivocally that the economy is slowing down.
Gross domestic product in the fourth quarter of 2007 limped along at a 0.6 percent rate of growth.
The median estimate of economic gurus predicted a growth rate of 1.2 percent for the fourth quarter, so the actual number was about half of what the experts expected.
At the same time, the Commerce Department reported this week that consumer spending edged up only 0.2 percent in December. That's December, when consumers are supposed to be spending lots of money.
This is not positive news, by any stretch of the imagination, but it's still not a recession.
And all the economic news isn't bad. There was a surprising uptick in orders for durable goods - big-ticket items - that took economists by surprise.
Unemployment isn't horrible at 5 percent, December payroll numbers were up, real personal income was up, real sales were flat and industrial production was slightly down.
So last week I wrote that the media was overplaying the idea that the country is in a recession. After, that, one reader called me a "fruitcake" in an e-mail.
I am undeterred.
A recession is defined as "a period of general economic decline; specifically, a decline in GDP for two or more consecutive quarters."
In the second quarter of 2007, GDP was up 3.8 percent. In the third quarter, it was up 4.9 percent.
In the fourth quarter it was down. That would be the first quarter of a decline. Now, if after the first quarter of 2008, there is another decline, then the media can report on the recession.
Those numbers will be out around the end of April.
All I'm asking is - fruitcake that I am - why doesn't the media stop calling it a recession until then?
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