Tax cap impact low locally

Although property tax caps have affected Jay County’s tax revenue, the impact has been lessened with help from optional taxes adopted within the last 10 years.
The Indiana property tax caps cap were adopted in 2007 and inserted into the state constitution after passing a state referendum in 2010.
Those caps set a maximum of how much tax a property owner can pay based on total assessed value — 1 percent for homes, 2 percent for rental properties and farmland and 3 percent for businesses.
In 2010, Jay County lost $569,990.40 in revenue to the tax caps — most of which came inside municipalities due to landowners having to pay an additional city/town rate on top of the county, township, school and library rates.
Jay County Treasurer Robin Alberson said that the county collected $16,858,152.97 in property taxes during the 2010 tax year, meaning the revenue lost to the caps accounts for about 3.4 percent.
Alberson, however, added that the $16.86 million only accounts for taxes directly collected and does not include state money, meaning the overall impact would be less than that 3.4 percent.
The cap on homesteads has had small effect on the county, due to the availability of tax deductions for homeowners. The county only lost out on $6,075.42 on homesteads. Most of that capped tax comes inside municipalities — $3,813.22 in Portland, $1,805.28 in Dunkirk and $329.52 in Redkey.
As for rental properties, farmland and businesses, the effect is greater. Since fewer credits are available, the chance that those properties will hit the tax cap is higher.
“Rental properties would be under the 2 percent cap,” Culy said this morning as an example. “If the tax rate is over 2 percent in a given unit, then they’re going to be hitting caps more than likely.
“And the same with businesses,” she said. “So in Portland our rate is over 3 percent (of total assessed valuation), so likely your businesses will hit the cap.”
The 2 percent cap accounted for $282,838.36, the majority of the lost tax revenue. All of those circuit breakers were hit within municipalities — suggesting that farmland throughout the county is not reaching the caps.
The 3 percent cap on businesses accounted for the remainder at $216,719.14, coming from businesses in Portland, Dunkirk and Redkey.
Options such as the Local Option Income Tax and wheel tax have helped keep Jay County strong financially.
Setting new taxes isn’t politically popular, but the moves have allowed the county to cover budget shortfalls from reduced property tax revenue with the LOIT funds. Jay County Council members have said in the past that LOIT is one of the major reasons the county is not in financial turmoil, along with the council’s relative fiscal conservativeness.
For example, while a portion of LOIT goes toward property tax credits for residentially qualified properties — both homes and rentals — another portion of it pays for public safety, which is currently helping support the operating costs of the Jay County Jail. The income tax reduces some of the burden on property owners and spreads it among all those working in the county.
Other local governments that have not adopted or refused to adopt optional taxes like LOIT have been faced with making severe budget cuts affecting services.[[In-content Ad]]