INDIANAPOLIS - For homeowners in Posey and Gibson counties, Wednesday's announcement their property taxes will be frozen at last year's levels - sparing them big increases this year - likely will come as a relief.
But for county government officials who have been ordered to conduct new reassessments in Posey and Gibson, the announcement is frustrating, and the future is fraught with questions.
"A reassessment is a waste of time and money for the county," said Posey County Assessor Kristi Carroll.
Gov. Mitch Daniels on Wednesday ordered a do-over of reassessments in three counties - Posey, Gibson and Delaware - after state officials identified disparities in earlier reassessments. Commercial and industrial properties appeared to have been under-assessed there, shifting the tax burden onto residential taxpayers, he said.
Cheryl Musgrave, head of the Indiana Department of Local Government Finance, said the assessed values of commercial and industrial properties should have either gone up or down since the previous reassessment.
Yet in Posey County, assessments had not changed from seven years earlier for 97 percent of the commercial and industrial properties, Musgrave said. In Gibson County, 79 percent of commercial and 83 percent of industrial property also showed no change, she said. Musgrave termed that "suspicious."
By contrast, reassessment of residential homes has resulted in changes reflected in property taxes.
"It would appear that more active engagement (by assessors) happened with the residential, really, in all of the counties; but the commercial and industrial showed a further look was required," Musgrave said.
Tried to get it right
County officials from Gibson and Posey responded they tried to assess property properly, given the rules the state provided. But the small number of commercial properties sold made it difficult to do comparisons or establish fair-market value for "trending," the new catch-up process for assessing homes and businesses.
"We hardly have any commercial sales," Carroll said. "You can't 'trend' what you don't have."
Besides court-mandated trending of assessment data from year-to-year, another factor shifted the property tax burden onto residential taxpayers - the state's old inventory tax expired last year. Neither Gibson nor Posey county officials could readily provide numbers Wednesday on how much property tax revenue their inventory tax used to generate. But in rural counties, big employers such as Toyota and GE Plastics no longer have to pay inventory tax, officials said.
"Yes, without question the repeal of the inventory tax had an impact on us," said Rep. Trent Van Haaften, whose Indiana House district includes Posey County.
Because of the governor's order, homeowners in the three counties will pay property taxes at 2006 levels. Because counties won't be receiving their expected level of property tax revenue, the state bond bank will offer loans for any localities facing a cash flow or timing problem, Daniels said.
Once reassessment is finished in early 2008, new tax bills will be calculated and homeowners would make any adjustments over what they already paid.
Posey County has not yet issued its property tax bills; Gibson County has.
All three counties will be responsible for covering the costs of the new reassessment. Stephanie McFarland, spokeswoman for the Department of Local Government Finance, said the agency will work with counties in contracting private appraisal firms.
Costs a concern
Posey County Auditor Jolene Elpers said county officials are concerned about the costs.
"You wonder, 'Well, do we have enough money to operate for the rest of the year? Do we have to borrow money?'" Elpers said.
Gibson County Council President Tom Wolfe said that county runs on a carefully planned budget, which can't grow more than 4 percent.
"The state seems to think counties are spending money with reckless abandon," he said. "When Indianapolis sneezes, the whole state gets a cold."
Gibson County Commissioner Bob Townsend said reassessment probably won't do much good because the trending system was applied correctly to non-residential property there.
Van Haaften agrees with reassessing in light of the apparent under-assessment of non-residential property.
"In order to make sure everyone pays their fair share, that's what they need to do," he said.
However, he said the state should reimburse counties for reassessment costs.