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Hoosier politicians are talking about various methods of controlling property-tax bills. When candidates talk about freezing property taxes and local government officials brag about keeping property taxes flat, beware – it all depends on which tax numbers they’re referring to.
Most homeowners care about the property-tax bill they receive. But politicians generally refer to the tax rate and the tax levy. And they use whichever one suits them best under the circumstances.
Keep in mind the basic formula for property taxes: Levy divided by total assessed value times 100 equals the rate.
Say the town of Happyville decides to raise $100,000 to run its offices. That $100,000 is the levy – the total amount property taxes will bring in. All the assessed property in the town totals $5 million. $100,000 divided by $5 million is .02. Multiply that by 100, because tax rates are calculated on a per-$100 basis, so the rate would be 2.0. If your home is worth $75,000, your tax bill would be $1,500. ($75,000 divided by $100 times 2.0.)
When bragging about flat taxes, politicians tend to look at the rate. The owner of a property in Aboite Township within the city limits and in the Southwest Allen County Schools district pays a rate of $3.454 – the highest rate in the county. For a $150,000 home, that equals a tax bill of $5,181. (150,000 divided by 100 multiplied by 3.454.) The actual bill, though, is much less due to various credits and exemptions.
Of the many government units included in the rate, the largest is SACS’ – 1.6428. Fort Wayne is next at 1.0195.
After assessed value grows this year, city and school officials can keep their
rates
the same but still raise
more
money – the same rate multiplied by higher assessed values gets a higher number. And if the value of your home rises while rates are flat, your tax bill would go up – yet officials can claim they kept taxes flat. If the assessed value of your home in Happyville went from $75,000 to $80,000, for example, your tax bill would increase from $1,500 to $1,600 – even while officials claimed taxes didn’t go up.
The other number – and the truer one – is the levy. That is the total amount of money property taxes will bring in to a unit of government. A true property tax freeze – or a true flat change from the previous year – would mean that Happyville would raise $100,000 next year as well as this year.
Many Hoosiers are saying governments need to spend less. Salaries are the biggest part of most local government budgets. Assuming workers should get at least some raise most years that means when a levy is frozen, either workers are laid off or something else has to be cut. Yes, government has room for cutting back. But it wouldn’t take many years under a tax freeze for the knife to cut through the fat and start hacking away at services many citizens consider vital.
Most politicians try to downplay any negative news about them or possible bad news in the future. But in announcing that Congressman Mark Souder endorsed him, Matt Kelty’s Web site proclaims at the very top: “Republican mayoral candidate Matt Kelty picked-up a key endorsement, despite the possibility of a grand jury indictment weighing on his candidacy.”
Allen County Democratic Party Chairman Kevin Knuth says he will meet his Friday deadline to appoint a candidate for 4th District City Council. Republican council candidate Mitch Harper “will not get a free ride,” Knuth said. The ballot vacancy occurred when Democratic primary winner Charles Langley withdrew.
