6/24 Torchbearer Weekly Policy Update

Property taxes again took center stage during tax reform discussions Tuesday — with farmers asking for a reprieve and local units of government seeking to head off significant cuts in revenue.

What they’re saying: “That’s it: how do you make (the system) simple, yet take care of those folks that have different needs? … It’s complex to fix it.” Rep. Jeff Thompson, who chairs the State and Local Tax Review Task Force, told the Capital Chronicle upon adjournment.

The backstory: Thompson in April warned of impending jumps in agricultural land property taxes. And on Tuesday the Indiana Farm Bureau said its members “need an intervention.” Indiana uses recent sales to assess most property types, but farmland is different.

The Department of Local Government Finance (DLGF) instead determines a “base rate,” a rolling average with six years of capitalized net cash rent and net operating income. DLGF drops the highest value of the six and averages the remaining five years.

But Indiana Farm Bureau’s advocacy lead, Katrina Hall, said the years-long delay in the formula data means farm income per acre is dropping even as the base rate grows. “It’s kind of a fiscal cliff,” she said. That delay will keep hitting farmers.

While the formula does help farmers, Hall continued, it’s still volatile because the net operating income calculation relies heavily on corn and soybean prices. “We have homeowners and other folks whose bills go up a few hundred dollars, and that is real burden to them. But for farmers, it’s several thousand at a time,” she said.

Yes, but: Groups representing Hoosier municipalities and counties, meanwhile, acknowledged rising tax bills but detailed their members’ challenges. The Association of Indiana Counties’ Ryan Hoff expressed dissatisfaction with limits on how much money local units of government can raise in property taxes.

Indiana caps that amount — the maximum levy — and dictates how much that cap can rise each year via the maximum levy growth quotient. The quotient uses the statewide rate of average, non-farm personal income growth over the last six years.

Campbell Ricci of Accelerate Indiana Municipalities said local income tax is controlled at the county level, so interested cities and towns can’t make changes unilaterally. He pushed to give individual municipalities that power.

On the other hand: Organizations representing school boards, business officials and superintendents — alongside small and rural schools — said the state’s current property tax system has some struggles. (Indiana Capital Chronicle)