Warfleigh Neighborhood Association

Increase in Property, Income Taxes on the Way

Jul 17, 2007

June 26, 2007

Increases in property, income taxes on the way

Jim Garrettson can't hear them yet, but he figures the howls of protest will be coming soon from his Meridian-Kessler neighbors -- and perhaps many others in Marion County.

WHAT ABOUT TAXES IN THE METRO AREA?

Other cities and towns in the metropolitan area said they were not planning to exercise their option to raise the income tax for property tax relief or public safety spending. Carmel Mayor Jim Brainard said extra revenue is always helpful, but the city's public safety services don't need enough help to warrant a tax increase. Franklin Mayor Brenda Jones-Matthews said she'd like to see how the tax works in Indianapolis.

WHEN WILL BILLS ARRIVE IN MARION COUNTY?

Officials said they hope to start mailing property tax bills at the end of next week. Payments likely would be due July 27.

WANT TO APPEAL?
If you don't agree with your property tax assessment, you have the right to appeal. The burden of proof, however, rests with you to show why your assessment should be changed. Three things may happen on appeal:

Your assessment may be raised. It may be lowered. It may remain the same.

The process

1. File a Form 130 (a letter will do just fine, too) with the township assessor within 45 days of receiving your tax notice or bill. A copy also should be filed with the county assessor.

2. The Property Tax Assessment Board of Appeals will send you its determination after reviewing your petition.

3. If you decide to appeal the board's decision, you can turn to the Indiana Board of Tax Review. File a Form 131 with the county assessor within 30 days of receiving the assessment board's determination.

Should the review board rule against you, you have 45 days to file a request for further review by the Indiana Tax Court. A copy of your appeal should be filed with the attorney general's office and your county assessor.

Source: Marion County assessor's office

The former judge and current neighborhood president follows his tax bills closely. He knows he could be facing a significant property tax increase due in part to an update in reassessments when bills are mailed out in the next few weeks. And just as he and his neighbors receive those bills, the City-County Council is expected to begin debating raising income taxes in Marion County to pay for public safety expenses.

The exact impact of both taxes is uncertain because officials are still determining the final details. But the bottom line is this: Marion County residents could get a property tax and an income tax increase when all the dust settles.
"The reason you can't hear the screams of the settlers is because the arrows are still in the air," said Garrettson, who lives in Forest Hills, a neighborhood in the northern section of Meridian-Kessler, where homes tend to be priced in the range of $300,000 to $400,000. The potential for a one-two tax punch appears for the most part limited to Marion County. Other cities and towns in the metro area either weren't aware of the income tax option that passed the legislature or reported no interest in raising income taxes. But for many Marion County residents, it could be the most taxing summer since a new property assessment system led to protest meetings across the city in 2003.

Residential property taxes are expected to increase by an average of 9 percent statewide, but property owners across Indiana will initially face an average increase of 24 percent until they get a rebate through the state later this year.
The potential increase is the result of several factors, including the elimination of a state tax on business inventory and a statewide update of property assessments.

A special provision approved by the legislature allows cities to raise the income tax by 0.5 percentage point to pay for public safety and ease the impact of any property tax hikes.
As a result, income taxes in Marion County are expected to increase by up to 65 percent to pay for Mayor Bart Peterson's plan to bolster public safety and the criminal justice system. The mayor says he can't balance the city budget and fight crime without an income tax increase.

"Two-thirds of our budget is public safety, and we won't cut that," said Peterson, a Democrat who is up for re-election this year. "Our options are limited. I could cut the (Indy Parks and Recreation) department out of the budget twice and we'd still have a deficit."

Legislation has been submitted to the City-County Council for an income tax increase. The amounts have been left blank, though, as officials await final tax information from the state.
To reach the $85 million in spending Peterson said is necessary for public safety, the income tax rate in Marion County would have to jump from 1 percent to about 1.65 percent.
If the maximum tax rate is approved, it would mean a Marion County resident earning $50,000 in annual taxable income would pay $375 more a year for the tax starting in October, when the increase kicks in. The tax would jump from $450 per year to $825.

The property tax situation is harder to predict. Three major factors will determine which taxpayers pay more: the amount other local taxing units such as schools choose to spend, whether a home's assessment increased in a process called "trending," and a shift in the tax burden from business to residential taxpayers caused by the elimination of the inventory tax.
Countywide, the loss of the inventory tax and a change in how companies are assessed are expected to shift 11 percent of the property tax burden from businesses to homeowners, according to a City-County Council analysis. The trending process, meanwhile, is intended to make property tax collections more fair by completing the shift to market value assessment that began in 2003.

The idea is to more closely align property values with their market values. The change doubled or tripled property tax bills in some older, undervalued neighborhoods four years ago.
Indianapolis officials expect the same neighborhoods hit hard in 2003 to be hit again this year.

"Places where home values continue to increase, like Washington Township, will pick up the largest portion of the shift from business," said City Controller Bob Clifford.

Cindy Land, administrative deputy of the Marion County treasurer's office, said officials hope to start mailing the bills a week from today. Payments likely would be due July 27.

Clifford, the city controller, said he expects July to be a nightmare, as his office fields complaints about both tax increases while preparing the 2008 city-county budget.
He says rates have remained in check as city spending increased from about $700 million in 2000 to more than $1 billion this year.
A good bet for a substantial hit on both tax fronts is Crow's Nest, a wealthy Northside enclave of stately mansions off Kessler Boulevard just west of Meridian Street. County officials say assessments have risen 82 percent for the town's 40 or so homes as a result of trending.

"That's astronomical," said Town Council President Richard D. Wood, a former president of Eli Lilly and Co. "On the surface, it sounds ridiculous because nothing has really changed here."

Call Star reporter Brendan O'Shaughnessy at (317) 444-2751.