April 1, 2017 at 4:05 a.m.
Entities must adjust
Municipalities, schools will have less $
Entities must adjust
Cuts to agricultural base property tax rates will likely impact tax levies for Portland, Dunkirk, Redkey and Jay School Corporation, according to projections from Purdue University agricultural economist and property tax expert Larry DeBoer.
The impact is expected to hit hardest starting in 2019, when a combination of lowered agricultural tax rates will result in increased homestead, rental property and business rates. Those increased rates, in the case of the county’s three largest municipalities, will result in properties hitting the state mandated tax caps, or “circuit-breakers,” cutting off revenue that would otherwise go to the municipalities, school corporation and other taxing entities.
Portland Mayor Randy Geesaman said he plans to focus on expanding the city’s tax revenue base through aggressive economic development and annexations, to weather the potential storm of lost tax revenue in the future.
In budget year 2017, $129,973.71 of Portland’s tax revenue will be lost from homeowners, rental property owners and businesses hitting the state’s tax caps, totaling 3.9 percent of the total levy of $3,251,600.
“A combination of economic development and annexation is the only hope we have,” Geesaman said. “If it wasn’t for places like FCC, IOM Grant, Fort Recovery Industrial and our other industries, we’d be in trouble.”
Portland’s largest industries, Geesaman said, have helped increase the assessed value of the city, meaning future tax increases will be buffered by being spread out among residents and businesses.
He also hopes to push for future expansion of the city limits to the west and south, targeting areas like Golf Brook Estates, thereby widening the city’s tax base and further increasing its assessed value.
For Jay School Corporation, which received 42.3 percent of the countywide total tax revenue in the county in 2014, the impact of the lost revenue could create the need for more budget cuts.
Brad DeRome, business manager and treasurer for Jay School Corporation, said the expected revenue shortage won’t effect the district’s general fund, which is financed by the State of Indiana through the State Basic Grant. But it will impact the debt service, pension debt service, capital projects, transportation and bus replacement funds, all of which are driven by local taxes.
“We would have to reduce spending in those tax-supported funds. That is our most likely course of action,” DeRome said. “Any increase to the tax caps certainly helps the individual taxpayer, but will mean that all tax districts in Jay County will have to be able to operate with a possible 1 to 3 percent drop in tax revenues due to these changes.”
In Dunkirk, with the highest property tax rate in the county at $3.71 per $100 of assessed value, more than 8 percent of tax revenue will be lost in 2017. The circuit breaker losses will total $80,898 from a levy of $953,249.
A Dunkirk home assessed at $100,000, only applying the homestead deduction and supplemental homestead deduction, already saves $297 this year from hitting the 1 percent homestead circuit breaker. Any future increases on the $100,000 home would mean no change in tax rates for the owner. For a $75,000 assessed value home, with the same deductions, there’s only $42 remaining in possible increases before hitting the circuit breaker. A $50,000 home in Dunkirk is only $28 below hitting the cap.
In Portland, Redkey and Dunkirk, homes assessed above $100,000 and claiming only the homestead and supplemental homestead deductions, have already hit the state mandated tax caps. For Portland in budget year 2017, a home assessed at $87,381 or above with the same deductions would be at the 1 percent cap. In Redkey, the assessed value would have to be $85,443 or above. In Dunkirk, a home with an assessment of $78,099 or above would see no future tax increases even if rates go up.
Redkey town council president Doug Stanley said he doesn’t expect the change in rates to have a major impact on the town’s tax revenues. He said one way to help combat any possible impact is to encourage town residents to improve their properties, causing an increase in assessment and helping to increase revenue for the town.
“We’re trying to make every effort to get residents to take care of their properties and raise their property values,” Stanley said.
The impact is expected to hit hardest starting in 2019, when a combination of lowered agricultural tax rates will result in increased homestead, rental property and business rates. Those increased rates, in the case of the county’s three largest municipalities, will result in properties hitting the state mandated tax caps, or “circuit-breakers,” cutting off revenue that would otherwise go to the municipalities, school corporation and other taxing entities.
Portland Mayor Randy Geesaman said he plans to focus on expanding the city’s tax revenue base through aggressive economic development and annexations, to weather the potential storm of lost tax revenue in the future.
In budget year 2017, $129,973.71 of Portland’s tax revenue will be lost from homeowners, rental property owners and businesses hitting the state’s tax caps, totaling 3.9 percent of the total levy of $3,251,600.
“A combination of economic development and annexation is the only hope we have,” Geesaman said. “If it wasn’t for places like FCC, IOM Grant, Fort Recovery Industrial and our other industries, we’d be in trouble.”
Portland’s largest industries, Geesaman said, have helped increase the assessed value of the city, meaning future tax increases will be buffered by being spread out among residents and businesses.
He also hopes to push for future expansion of the city limits to the west and south, targeting areas like Golf Brook Estates, thereby widening the city’s tax base and further increasing its assessed value.
For Jay School Corporation, which received 42.3 percent of the countywide total tax revenue in the county in 2014, the impact of the lost revenue could create the need for more budget cuts.
Brad DeRome, business manager and treasurer for Jay School Corporation, said the expected revenue shortage won’t effect the district’s general fund, which is financed by the State of Indiana through the State Basic Grant. But it will impact the debt service, pension debt service, capital projects, transportation and bus replacement funds, all of which are driven by local taxes.
“We would have to reduce spending in those tax-supported funds. That is our most likely course of action,” DeRome said. “Any increase to the tax caps certainly helps the individual taxpayer, but will mean that all tax districts in Jay County will have to be able to operate with a possible 1 to 3 percent drop in tax revenues due to these changes.”
In Dunkirk, with the highest property tax rate in the county at $3.71 per $100 of assessed value, more than 8 percent of tax revenue will be lost in 2017. The circuit breaker losses will total $80,898 from a levy of $953,249.
A Dunkirk home assessed at $100,000, only applying the homestead deduction and supplemental homestead deduction, already saves $297 this year from hitting the 1 percent homestead circuit breaker. Any future increases on the $100,000 home would mean no change in tax rates for the owner. For a $75,000 assessed value home, with the same deductions, there’s only $42 remaining in possible increases before hitting the circuit breaker. A $50,000 home in Dunkirk is only $28 below hitting the cap.
In Portland, Redkey and Dunkirk, homes assessed above $100,000 and claiming only the homestead and supplemental homestead deductions, have already hit the state mandated tax caps. For Portland in budget year 2017, a home assessed at $87,381 or above with the same deductions would be at the 1 percent cap. In Redkey, the assessed value would have to be $85,443 or above. In Dunkirk, a home with an assessment of $78,099 or above would see no future tax increases even if rates go up.
Redkey town council president Doug Stanley said he doesn’t expect the change in rates to have a major impact on the town’s tax revenues. He said one way to help combat any possible impact is to encourage town residents to improve their properties, causing an increase in assessment and helping to increase revenue for the town.
“We’re trying to make every effort to get residents to take care of their properties and raise their property values,” Stanley said.
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