As Hoosier communities tally up ever-rising property values, they’re increasingly eligible to ask the state to double-check their pre-determined tax limits.
And they’re taking advantage, citing growing funding pressures on the services they provide.
“New population growth creates more need for new construction such as roads, bridges and drainage, or more services such as police patrols, courts and election precincts,” said David Bottorff, the executive director of the Association of Indiana Counties.
A statewide formula, he said, is designed to account for inflation-related revenue growth, not “unusually high” growth.
Indiana restricts how much money local units of government can collect in property taxes. The Indiana Department of Local Government Finance calculates a maximum levy for every unit annually. Units set property tax rates that they think will come in under their maximums.
But they also have an out: a list of reasons they can use to appeal. That includes annexation, consolidation, error correction, emergency, service extension, shortfall and three-year assessed value growth above a minimum.
Dozens of local taxing units — from libraries and townships to cities and counties — submitted 95 requests to review their maximum levies last year, according to DLGF records. About 80% were based on a three-year growth in assessed value.
Clarksville Clerk-Treasurer Aaron Stonecipher called Indiana’s property tax restrictions — like the maximum levy and the circuit-breaker property tax caps enshrined in the state’s constitution — a “great deal for the taxpayer” but a continued “challenge” for municipalities making do.
The number of petitions was up 11 requests from 2022 and was more than three times the number of requests made in 2019.
DLGF approved maximum levy boosts worth $40 million across 84 partially or fully granted requests. That means taxpayers in those areas are on the hook for more.
The agency denied an additional 11 appeals worth $10 million. But even those who failed say they’ll try again.
More people, more work
As fast-growing Hoosier communities add more buildings, their net assessed values rise too.
Carmel Mayor Sue Finkam said via email that “natural growth” leads to increased demand for public services.
Hancock County Auditor Debra Carnes said growth in the county’s northwestern area meant more emergency calls, straining the fire and sheriff departments.
Carnes said the county council wanted to “capitalize on some more of that revenue to be able to assist with our public safety.” Local fiscal bodies must approve the appeal submission to DLGF.
Bottorff, from the Association of Indiana Counties, noted that assessed value growth doesn’t always translate into more tax revenue.
“More (assessed value) lowers the tax rate and the county receives the same growth quotient as a unit that does not have higher than normal growth,” Bottorff said.
To qualify for the three-year assessed value growth appeal, the growth must exceed a statewide average growth quotient by at least 2%.
“The number of appeals has grown largely based on the general assessed value growth throughout the state, which means more local units of government would be mathematically eligible,” DLGF spokeswoman Jenny Banks told the Capital Chronicle over email.
When units submit their petitions, they need to back it up.
Clarksville’s Stonecipher said the town “had the data to justify the growth and need.”
DLGF approved about $730,000 – nearly all of the town’s request.
Stonecipher, who came into office this month, said that if the town has a “strong argument” during the next filing cycle, he’d pursue another appeal.
When high inflation collides with the state’s levy growth quotient and tax caps, he said, “We just can’t rely on property taxes anymore to fund public services.”
‘We’ll make it’
Not all communities got approvals back.
DLGF’s Banks said appeals were denied for a variety of reasons: pursuing the wrong appeal category, not meeting the statutory requirements for an appeal type, and so on.
Hancock County had the second-highest denial, at about $900,000. It was made on the basis of three-year assessed value growth.
Auditor Carnes said that meant the county would have to draw more from its general fund to add more public safety officers or pull more from a tax increment financing (TIF) district to help out one of its townships.
“We do have to have a healthy budget but we never know what the economy’s going to bring,” Carnes said. “So you want to make sure that you’re covered.”
The county was told it didn’t provide enough evidence for its appeal, according to Carnes. She expected the council to try again in the future, but said the county would double down on documenting its additional fire and police runs and other side effects of growth.
That township, Buck Creek, won approvals of $5,000 and $280,000 for its fire services based on assessed value growth, but a denial of $500,000 based on service extension.
Trustee Micki Simunek said the majority of her township is “TIF’ed” and that there are “lots of other things tugging on the TIF money.”
TIF districts are established to pay for development using the future increase in property taxes that same development is expected to generate. But entities that would normally benefit from increasing tax revenue receive the same base amount for the life of the district.
“All of our farm fields are now full of buildings. And all of these buildings are full of things and people,” Simunek said, noting that the fire services required have changed accordingly.
The township has gained about 20 million square feet of building space in four years, according to Simunek, including one of the largest Walmart fulfillment centers in the nation. For a township with two-dozen firefighters, it’s a stretch.
“In any given 24-hour period, not including some (civilian medic) part-timers, we have … eight firefighters (on duty) in the entire township for all these buildings,” Simunek said. “It’s not safe for our firefighters. You can’t roll up to an open-space fire with eight people.”
But the township’s reasoning didn’t quite match up with the requirements for a service extension appeal.
Instead, according to Simunek, the township plans to bring on six firefighters using funds from a variety of sources. But long-term financial planning is a priority: “I’m not going to hire six people and then have to lay them off next year,” Simunek said.
The city of Carmel heard the priciest denial: $8 million for an emergency-based appeal. It was also granted just $225,000 of a nearly $10 million shortfall request.
Mayor Finkam said that decision took the city’s tax rate from 0.7877 in 2023 down to 0.7783 in 2024. But she said that wouldn’t lead the city to ask for a property tax rate increase.
Finkam said she was happy that state officials hadn’t “questioned whether the City is spending efficiently and wisely,” adding, “On balance, we were not disappointed with the results of their review.”
She indicated that if Carmel continues to experience high assessed value growth, the city would “probably follow the same policy” next year in petitioning DLGF.
Longtime Covington Mayor Brad Crain said his city of under 3,000 people has recently added or is adding about 160 houses across three subdivisions. An appeal of $85,000 was intended to cover sanitation and police, and – in particular – finance some part-time firefighters for a department that’s currently all volunteer.
“I wasn’t really counting on (the appeal), you know?” Crain said. “We’ll get by, but I think sometimes, (state officials) don’t know what’s going on out here in rural Indiana.”
He said Covington would promote its volunteer fire department more and “make do” with the police officers it already has.
“We’ll make it,” he said. “You know, we’ll be okay.”
‘I’d balk at it too’
Three-year assessed value growth drove the bulk of the requests, but not all.
The city of Hobart in Lake County earned the second-largest approval from DLGF: more than $3 million for a shortfall following a court battle.
In 2021, a Hobart shopping mall won a unanimous decision from the Indiana Supreme Court overturning a higher assessed value – about $240 million – in favor of an earlier 2010 assessment of just $110 million.
That left all the taxing units hosting the mall on the hook for millions of dollars of back pay from tax year 2011 through 2014. Hobart’s share alone was more than $17 million plus the interest owed to the mall, according to Clerk-Treasurer Deb Longer.
She said Lake County made the refund upfront, then would withhold Hobart-bound property taxes over the repayment period to pay itself back.
“(The county) handed us a schedule and said, ‘This is what you’re going to have to do, and there’s no way around it. This deal is already done,” Longer recalled.
“So, the first people I call is the DLGF.”
Hobart began with two interest-laden bonds, according to the Times of Northwest Indiana, but ultimately secured state legislation last year. Local and state officials came together on House Bill 1454, which allowed Hobart to obtain a new 25-year, no-interest bond.
“I feel lucky,” Longer said. “… I spent a year and a half being worried because we had this huge bill and had to provide services to a city of 30,000 people, and we weren’t sure how we’re going to do it.”
Longer said Hobart will submit similar shortfall appeals over the repayment period. Next year’s is expected to be upwards of $7 million.
“I have absolutely no idea, next fall, what the DLGF is going to do with that,” she said. “I’ll have all of the facts and figures in front of me, but … they might balk at that. … and if I were in their shoes, I’d balk at it!”
Longer encouraged other communities to review their property tax collections for errors, omissions, refunds and more to see if they qualify for an appeal.
This story originally was published by Indiana Capital Chronicle, which is part of States Newsroom, a network of news bureaus supported by grants and a coalition of donors as a 501c(3) public charity. Indiana Capital Chronicle maintains editorial independence. Follow Indiana Capital Chronicle on Facebook and Twitter.