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Sunday, September 02, 2007

Ind. Gov't. - Indiana property taxes: Who benefits from taking property off the Center Twp. tax rolls?

Karen Eschbacher of the Indianapolis Star has a front-page story on the impact of tax abatements and tax increment financing districts in Marion County. A side-bar explains "How tax abatements, districts work."

Earlier, on August 19th, the Star ran this story on property tax exemptions, including this quote:

All told, Marion County exempts more than $2.7 billion worth of property. And that doesn't include Marion County's many government buildings, which are exempt, and breaks offered to prospective new businesses.
So we in Marion County, and particularly Center Township, have the quadruple whammy: tax abatements, TIFs, permanently tax-exempt not-for-profit properties, and permanently tax-exempt state and local governmental properties. The properties remaining on the tax rolls after all these carve-outs finance the governmental operations and schools in the County.

The ILB resides in Center Township in a historic district and over the years has talked about the tax situation with a number of different residents who have moved into the downtown area from out-of-state to take prestigious jobs downtown at our major sports NFP, our university system, and our Fortune 500 pharmaceutical company, all of which benefit from major property tax breaks. In every case, she has heard that the strong advice these newcomers received from their recruiters and/or real estate agents was to purchase homes in the counties to the north of Marion, where "the schools were good, crime was not an issue, property taxes were lower," etc. These few people who did end up locating near the downtown did so only by ignoring such advice and acting on their own.

And to the ILB, that states the problem in a nutshell. Yes, there is much to be said for all these programs. But how on earth can it be reasonable to put the burden for them upon the taxpayers in one county, and one township, when the benefits are so much more diverse?

Eschbacher's story today makes the same point:

A big chunk of property value in Downtown Indianapolis doesn't help fill the public kitty: 14.5 percent of assessed value in Center Township was diverted in 2006.

That translates into more than $35 million in property taxes that was siphoned off.

The situation there is magnified because of additional abated and exempted properties such as hospitals and churches.

Among the tax districts, abatements and exemptions, 28 percent of all assessed value in Center Township either is not taxed, or the revenue generated from it is diverted.

That chiefly affects Indianapolis Public Schools, the core of which is in Center Township and which relies on property taxes to pay for capital expenses and some operating costs.

The result: Other taxpayers must chip in more than they would have to if that revenue were on the rolls and available.

And unlike abatements, which last up to 10 years and require businesses to pay a growing portion of their tax bill each year, the tax districts can remain in place for up to 30 years. They used to be limitless, and some are grandfathered in under that rule. * * *

Incentive programs for businesses are unlikely to go away, but some are suggesting more oversight or spreading the burden.

As the General Assembly looks to ease the burden on property owners, abatements and special tax districts are certain to be discussed. Already this summer, a bipartisan legislative panel studying the property tax problem held a session mostly about the topic.

Rep. Craig R. Fry, D-Mishawaka, would like both incentive programs done away with.

"TIFS and tax abatements are a direct shift of responsibility from businesses to homeowners," Fry said. But he concedes that view puts him in the minority.

Others said they want to look at tweaking the programs.

Rep. David Orentlicher, D-Indianapolis, said the state could consider modifying the programs so homeowners in areas heavy with abatements and the tax districts -- such as the IPS taxing districts -- don't have to bear so much of the burden.

"If these (incentives) are appropriate for the region, we shouldn't put all of the burden on the taxpayers in IPS," Orentlicher said. "We need to figure out a way to make sure the costs are shared."

See also this Star editorial from August 23rd, including this list of questions:
What might be done to help offset the disproportionate tax exempt property load carried by Center Township? Almost 22 percent of its land is tax exempt, and that does not include government buildings. It is the hub of our region, and its residents must pay for services used by all who visit, shop, work and use government services based Downtown.

Is it time to review all nonprofit exemptions to make certain they qualify for a break? Many states are looking at charging nonprofits fees for police, fire and other basic services. That's especially relevant to Indianapolis, where public safety has been chronically underfunded. The Town of Cumberland, for example, bills nonresidents for police services in an effort to shift some of the expense off property taxes.

Should nonprofits be required to pay for various public services in the same way they pay for other business expenses such as legal and banking fees?

Could user fees be charged to nonprofits on a sliding scale, or based on their ability to pay? Those with robust revenues and extensive resources cited in The Star would pay one rate, and those operating on a smaller scale would pay less. Those that showed a loss could be exempted from the fees.

Lesley Stedman Weidenbener of the Louisville Courier Journal has a useful article today, complete with a number of links, on how the homeowner can have input in the current property tax crisis.

Posted by Marcia Oddi on September 2, 2007 12:00 PM
Posted to Indiana Government