By JONDI SCHMITT, Princeton Daily Clarion
Staff Writer
INDIANAPOLIS-Gibson County property owners may eventually see a tax break this year, but they will have to pay to find out.
Gov. Mitch Daniels ordered a new property tax reassessment Wednesday morning for Gibson, Posey and Delaware counties, but the Department of Local Government Finance (DLGF) said each county will have to foot the bill.
State Rep. Kreg Battles. D-Vincennes, asked the governor Tuesday to order the reassessment of Gibson County and added the state should incur the expense. He said the DLGF is responsible for overseeing property tax rates and if they approved faulty assessment, then they should be the ones to pay for the fix.
The question localities like Gibson County and its cities and towns are asking is 'how are we going to pay for that?'
"I don't see how the governor thinks we are going to function," said Gibson County Council President Tony Wolfe. "We are on borrowed money now, and we will have to borrow more."
Princeton Mayor Bob Hurst said whatever happens, the city will not borrow any money.
"I am a big proponent of raising the sales tax," Hurst said. "We're at 6 (percent) now, maybe we could go to nine."
The possibility of raising the sales tax to offset rising property tax costs was one of many possible solutions discussed during the regular session of the General Assembly. In the meantime, however, that option is not on the table.
Cities, towns and counties may have to further tighten their belts.
"There are places you can cut, but they are things like fire and police, and you really don't want that," Hurst said.
Battles still maintains that the state should pay for Gibson County's reassessment.
"It is a state problem and the state should pay for it," he said. "I had envisioned a much smoother transition and it looks like that's not going to happen, but I still think we can work to make this a positive thing for Gibson County."
DLGF spokesperson Stephanie McFarland said county assessors will be responsible for residential reassessments, but outside vendors will have to be contracted to reassess commercial and industrial properties. Because there are legal processes the state has to go through to select these vendors, McFarland said it is too early to estimate the cost.
"At this point we don't know how much the reassessment will cost," she said.
The governor said evidence indicates commercial and industrial properties were undervalued in Gibson, Posey and Delaware counties, pushing an increased tax burden on residential property owners. He ruled out the possibility of a statewide reassessment, but said the public can expect some more reassessment orders in the coming weeks.
A state analysis of assessments in Gibson County showed that there was no change in values for 79 percent of commercial parcels and 83 percent of industrial ones in the past six years.
Daniels also froze property taxes at the 2006 rates in all three counties, saying adjusted tax bills will be issued once reassessments are completed.
While no official timeline has been given for the reassessment, McFarland said they can base their estimate on that of Marion County - which is six to eight months.
"It may not take that long in other counties," she said. "At this point we just don't know."
Public hearings in the four counties must be held before the reassessment orders take effect. But McFarland said the agency is confident the reassessments would go forward after the hearings.
Gibson County faces another issue in the midst of the reassessment. Although spring payment checks have been received and can be cashed, the county cannot spend the money until it can settle its account with the state - something the state is not allowing at the moment.
"Without a settlement, the DLGF will have to give us permission to do an advance draw," Wolfe explained.
An advance draw is basically the usage of money not yet approved by the state for use. In addition to the cost of the reassessment the county must shoulder, funds are still needed for the regular budget, for the school corporations and Wolfe also fears the reassessment will force several county offices incur overtime expenses.
"I am just unsure at this time of how this will effect us," he said.
Wolfe also wonders what happens next year when reassessment time comes around.
"Will they jack the rates up next year?" he asked.
He questioned the states reasons for ordering a reassessment now.
"If there were red flags about incorrect assessment, then they should have been flagging us five years ago," Wolfe said.
The governor said the reassessment is necessary to provide relief to the homeowners who are hurting or in danger of losing their homes because of unfair taxes. He said a special session is still a possibility, something Battles said he is only in favor of if they go in with a plan in-hand to work on.
Daniels thinks one plan is to use "circuit breakers" - a capping of property tax bills at a rate based on a percentage of the assessed valuation, or by capping the allowed tax increases.
"I am continuing to work on the circuit breaker concept," Daniels said. "There are variety of ways we could do it, but it will take everyone working together to find the solution."
One result Daniels said will come of the reassessment is a stronger and more reliable DLGF. "We will have a much less lenient DLGF," he said.
He added that the reassessment is just a Band-Aid on a much bigger problem.
"This isn't going to solve the property tax problem, this is just a small piece of the solution." Daniels said. "What this is meant to do is protect the homeowners and other property owners against intolerable bills and even the loss of their property."
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