By 2011, Allen County taxpayers could pay $29 million less in property taxes.

While that might seem like good news for individual property owners, it translates to troubling news for the local officials who will have to trim millions of dollars more from city, school and library budgets in the coming years.

Allen County Auditor Lisa Blosser organized the county’s first fiscal summit Tuesday in an attempt to prepare local taxing units for the 2010 budget process and to plan for future declines in property tax revenue.

Elected officials and government accountants filled the Omni Room in the City-County Building for the two-hour meeting.

New caps on property taxes taking effect this year link the budgets and futures of numerous local taxing units. The three guest speakers Tuesday encouraged local elected leaders to cooperate and communicate.

But officials didn’t get a chance to actually talk about upcoming capital projects or how they might work together to mitigate future property tax cuts. Instead, they listened to detailed explanations about the fall budget schedule and the tax caps’ effects.

Blosser said officials will need to meet again to tackle those bigger issues. That could happen as soon as September when the County Council meets to review 2010 budgets.

This year, the 37 local tax units in Allen County will collect $330 million in property taxes.

If the tax cap law remains in place, those taxing units could lose $23.6 million in 2010 and $29 million in 2011, based on preliminary estimates from a study that Umbaugh and Associates, an Indianapolis accounting firm, is conducting for local county governments.

In comparison, those same 37 groups will lose $4.8 million in property taxes this year because of the caps.

In 2008, the General Assembly passed a law that limits homeowners’ tax bills to 1.5 percent of a home’s assessed value this year. The cap for agriculture and rental properties is 2.5 percent; it is 3.5 percent for other business property.

The caps will shrink to 1 percent, 2 percent and 3 percent respectively in 2010.

Previous estimates from the state showed a smaller reduction in property taxes, said Todd Samuelson, a certified public accountant with Umbaugh.

Samuelson suggested several options for tackling those losses, including expanding the tax base, reducing levies, raising or tweaking the mix and use of income taxes, and cutting government costs by improving efficiency.

But making government more efficient alone won’t make up for a $29 million loss, he said.

County Councilwoman Paula Hughes, R-2nd, called the expected 2011 cuts a great thing for taxpayers.

“But it’s going to be a challenge for us,” she said of elected officials.

Rep. Win Moses, D-Fort Wayne, voted against the 2008 legislation that phased in the tax caps and also eliminated levies for schools’ general funds and child welfare and increased the state sales tax.

Moses didn’t believe those changes would help voters in his district. He said this year’s tax bill increase was “exactly what I expected.”

Homeowners in most local cities and towns can expect increased tax bills. Some property tax credits were eliminated as part of the tax cap legislation, and most properties’ taxes aren’t high enough to be reduced by the tax cap.

Unlike St. Joseph County and the city of Muncie, Allen County has been shielded so far from the pain of tax caps. But losing millions of dollars in property taxes will affect services, and Moses urged local officials to detail what services would be cut.

Otherwise, voters could support making the tax caps permanent by amending the state constitution, he said.

“People don’t understand the loss of $29 million,” Moses said. “They understand the loss of a favorite teacher.”

Moses also urged voters to educate themselves so they can decide how they want to be taxed.

“Gov. Daniels’ tax caps do not reduce taxes at all. They really shift who pays,” Moses said.

aiacone@jg.net