2007: perfect storm for Indiana property taxes

Posted by permission. A link to the original article is included.

http://www.bizactions.com/index.cfm/ba/e105/fa/80532879G1424J1063652P0P10074638T0/

2007: The "Perfect Storm" for Property Taxes By Gary Malone, CPA, Executive Partner Second in a series of articles about Indiana's property tax changes. Some characterize 2007 as the "perfect storm" for property tax. Just as colliding weather fronts stir up spring tornados in Indiana, trending, reduced property tax credits, shifting of tax burden to homeowners, elimination of the inventory tax, overall reductions in assessed value all hit at the same time - and measures enacted to provide tax relief had not yet taken effect to calm the storm. When "trending," the annual adjustment of assessed values to adjust for changing market values, kicked in with 2007 tax bills, six years' worth of market price inflation (from 1999 to 2005) increased homeowners' assessments all at once. Going forward from 2007 these adjustments will happen annually - and hopefully more gradually. But if you got "sticker shock" with your home's assessment in your taxes payable in 2007, you didn't care. You just wanted relief. At the same time trending sticker shock hit, a cap on the growth of property tax relief enacted in the 2005 General Assembly became effective. The result was a 24% increase in the average homeowner's property tax bill. What exactly made up that 24% increase? While some blame property tax increases on out-of-control spending by local governments and schools, local government increases averaged 6%, while changes enacted by the General Assembly make up the remaining 18% of the average residential property tax increase. According to analysis by Dr. Lawrence DeBoer, professor of agricultural economics at Purdue University: 10% Is due to trending from 1999 to 2005 prices (and a possible business trending error) 4% Is due to elimination of the inventory tax in 51 counties that had not already done so 4% Is due to the cap on state property tax relief 6% Is due to increases in local government tax collections 24% (TOTAL) Average increase in homeowner property taxes (before rebate) Growth in Indiana's property tax base has been stagnant since 2002, partially because of changes in property tax legislation since 2002. These changes include: automatic investment deductions, reduction in minimum assessment values for abated equipment, elimination of business inventory from assessments, reduced assessments of agricultural land and increases in homestead exemptions. As a result, total assessed values increased an average of less than 1% annually from 2003 through 2006. When property assessments do not grow as quickly as property tax levies, tax rates increase. Equally important in explaining homeowners' tax increases, the changes in the property tax base shifted the majority of the property tax burden from businesses to homeowners. While the six-year difference in tax responsibility for homeowners is "only" 12% (from 39 to 51%), in actuality it represents a 31% increase in homeowners' share of the property tax responsibility. Shift in Property Tax Responsibility Property Type 2001 2007 % Change Residential 39% 51% +31% Business Real 34% 33% -3% Business Personal 27% 16% -41% Source: Central Indiana Corporate Partnership Enacted remedies hadn't gone into effect for 2007 The General Assembly enacted legislation in 2007 allowing local governments to create new local option income taxes to reduce the dependence on property taxes, and at least ten counties have adopted some of these property tax replacement taxes. But the new local option income taxes adopted in 2007 won't reduce property taxes until 2008; too late to provide property tax relief in 2007. The General Assembly also enacted $300 million in supplemental homestead credits. Funded by "racino" payments, the credits were not distributed to counties until November 2007 and are only now being distributed to homeowners. The effect will reduce the 24% average residential property tax increase to 8%. But homeowners' were unable to enjoy that relief this past summer. The General Assembly enacted property tax caps - known as Circuit Breaker tax credits - in both the 2006 and 2007 sessions, but those caps were not yet in effect for 2007. Unfortunately, these enacted remedies may have been sufficient to address many of the public's concerns. They were simply too late in coming. What lies ahead? Can lawmakers' tax plans produce sufficient relief for property taxpayers without drastically reducing funds for local services? It is a difficult balance. The current session will change the Circuit Breaker credits yet again. Circuit Breaker credits enacted in House Bill 1001 expand the credits through 2010 to 1% for residential homesteads, 2% for residential rental property and 3% for all other property taxpayers. The expanded Circuit Breaker credits may produce more than $500 million in property tax relief for taxpayers by 2010, but they will reduce annual income for cities, towns and special units by $244 million, for school corporations by $159 million and for counties by $74 million. Also under HB 1001: Certain school funds, pre-1977 police and fire pensions, and county child welfare funds would move from local property tax to state levies Property tax replacement credits and state homestead credits would be eliminated State sales tax would increase from 6% to 7% New rules for the issuance of debt HB 1001 contains a very new approach to funding local governments and schools. It is the most comprehensive change since Governor Bowen's property tax reform efforts in the 1970's and will take all of us quite some time to fully understand its long-term effects. If you have questions or need additional information, please contact us at footnotes@umbaugh.com. In an upcoming issue: What the General Assembly passed in 2008 and what it means for local governments and schools.

Nuts!

$4.00 / gallon for gas (say some) come spring and my truck gets 10 mpg. PFUI. I'm not getting rid of it. I'll just do better in other ways like...

http://www.momadvice.com/index.aspx

http://www.frugalhacks.com/

http://cleaningrecipes.blogspot.com/ -- ALWAYS USE CARE WHEN MIXING ANY CHEMICALS

DO look at the additional links that are provided.

HEH! What'd you change now?

You will find our adult fiction section "under construction".  We
are beginning to categorize the fiction by genre. As you wander down the
adult side of the library, on the left you will find Inspirational
fiction followed by Romance. In the coming months, other genre will
follow: Historical Fiction, Westerns, Classics, Fiction, Adventure,
Suspense, Mystery, Science Fiction, Fantasy and Horror. Each genre is
easily identified by a colorful label on the spine. We hope this will
allow you to locate your favorite type of fiction easily and explore
other authors within the genres.

The non-fiction on the adult side will begin to sport some colorful
labels, as well. In the coming months, we will highlight subject areas
such as politics, health, religion, history, literature, animals, etc.
This will allow you to quickly locate the material you are looking for
and perhaps draw attention to something that may interest you.

We are excited about these changes and hope they will make your
reading more pleasurable and your research more productive. As always,
please ask if you need any help or direction.

FREE OPEN SOURCE PROGRAMS FOR HOME!!!

Talk about saving $$$$$$$$

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Gas Buddy

http://www.fox28.com/gasbuddy/

Excellent online learning games

But you'll need to turn off the pop-blocker.

http://www.sheppardsoftware.com/

A common problem...

You are at the library and it's closing time. You have just finished the first draft of your paper and now the librarians are kicking you out? You have no money for a floppy drive let alone a flash drive. That's bad enough, but you were working with a word processor that you don't have on your home computer? WHAT DO YOU DO???????

Easy. Use Google Docs. It's an extremely easy to use word processor and spreadsheet that is available online. Work on what you need to here at the library, then go home and put those fantastic ideas to "ink" at 2:30 in the a.m. using Google Docs.

More here: http://www.google.com/google-d-s/tour1.html

You never know what you'll find here!

Protect yourself from online hazards.

http://onguardonline.gov/index.html

Read to stay in shape?

We have a "weighty" collection of weight loss and exercise books.

OR TRY

http://www.in.gov/inshape/

Saving Money $$$$$$$$$$$$$$$$$$$$$$$$$$$$$$

Are you feeling the financial pinch? If you aren't, you should feel blessed. For the rest of us rising gas prices, food prices, insurance and taxes are taking a heavy toll on the family budget.

How can YOUR library help? It is a well known fact that: "Libraries will get you through times of no money, better than money will not get you through times of no Libraries".

Did you realize that we DO NOT CHARGE for borrowing DVDs? If we do not happen to have a particular title that you would like, JUST ASK!

Looking for a book or magazine title that we don't have? JUST ASK. Why spend the money at the retail chains when you can borrow it here for FREE?

Need a different or new car? Prove to yourself that you can afford the payments or the lease payments. This GMAC affordability calculator could save you extreme pain in buyer's remorse: GMAC FINANCIAL TOOLS

Need to really cut that budget? How much are you paying for your Internet connection? We have plenty of computers and even more laptops for you to use in-house for free! You are exactly right about the convenience of your own connection, but it's at least a $40 / month savings. Plus we have FREE WI-FI.

Don't worry about the same old tired recipes, just check our COOKING section for tons of fantastic cooking ideas.

You never know what you'll find here!

What you need to know...be ready for tornadoes etc.

Tornado preparedness: http://www.nssl.noaa.gov/edu/safety/tornadoguide.html

Tornadoes and more: http://www.ready.gov/

List of our magazine subscriptions is now available.

http://ncpl.info/materials/magazines.pdf

ICE

ICE campaign - "In Case of Emergency"

We all carry our mobile phones with names & numbers stored in its

memory but nobody, other than ourselves, knows which of these numbers

belong to our closest family or friends.

If we were to be involved in an accident or were taken ill, the

people attending us would have our mobile phone but wouldn't know who to

call. Yes, there are hundreds of numbers stored but which one is the

contact person in case of an emergency? Hence this "ICE" (In Case of Emergency)

Campaign.

The concept of "ICE" is catching on quickly. It is a method of

contact during emergency situations. As cell phones are carried by the

majority of the population, all you need to do is store the number of a

contact person or persons who should be contacted during emergency under

the name "ICE" (In Case Of Emergency).

The idea was thought up by a paramedic who found that when he went

to the scenes of accidents, there were always mobile phones with patients,

but they didn't know which number to call. He therefore thought that it

would be a good idea if there was a nationally recognized name for this

purpose. In an emergency situation, Emergency Service personnel and

hospital Staff would be able to quickly contact the right person by simply dialing

the number you have stored as "ICE".

For more than one contact name simply enter ICE1, ICE2 and ICE3,

etc. Be sure it's in your kid's cell phones also. A great idea that will

make a difference!

Please forward this. It won't take too many "forwards" before

everybody will know about this. It really could save your life, or put a

loved one's mind at rest.

Let's spread the concept of ICE by storing an ICE number in our

Mobile phones today!

A "Blast from the Past"

Some have made fun of me for sticking with the cardfile.exe program that came with Windows 3.1 I liked it, it still worked and I didn't see any reason to get rid of it. BUT. Along came Windows Vista and it doesn't seem to like too many older programs.

I have searched for at least six months to find an equitable program. Some were overpriced, some weren't small enough and others failed miserably when it came time to use them with Vista (I still haven't found one that works with the IMAC yet).

Then I stumbled upon a little program called azzcardfile. It's small (doesn't monopolize system memory), does what I need and it doesn't have a ton of bells and whistles. Try it at:
http://www.azzcardfile.com/

There's also a really good help file that lets you know (that is if you read the Help files) that you need to export your current .lst file into one that is 3.0 compatible. Then create a new file in azzcardfile and select import.