In 2010, more than 70 percent of Hoosiers voted in favor of a constitutional amendment capping property taxes. Fast forward to Wednesday, and those tax caps, while well-intentioned, continue to make life difficult for government officials across the state.
Especially here in Henry County.
During a budget meeting with county officials, experts with the public accounting and consulting firm Baker Tilly presented a draft of a five-year plan forecasting the county’s financial future.
And the crystal ball is clouded, primarily due to tax caps.
Information presented by Jason Semler showed that county government lost an estimated $1.5 million due to tax caps in 2019 and that number is expected to grow in the years ahead.
It was bad news for county officials who have grappled with an insurance shortfall in the past year – news that will make upcoming budget workshops even more difficult when they begin July 30.
“Their assumptions for the future don’t look good at all,” Henry County Auditor Debbie Walker said. “That’s where we’re at right now.”
During Wednesday’s meeting, Semler brought up one possible remedy to ease the pain – renewal of a $2 million bond issue due to be paid off soon.
“It bought new voting equipment and it was supposed to help with the Smith Building and they moved some of the money over to the Expo Center project,” Walker explained. “We’re talking about renewing the bond to be used only for capital outlay projects and maintenance.”
“We’re at the point where we can’t take care of our buildings,” Commissioner Kim Cronk said. “We’ve got to do something. If we don’t renew it (the bond issue), I’m not sure there is any other place we can get the money.”
“The pressure is tremendous on the budget because of things that are not in our own hands,” Commissioner Ed Tarantino added.
But county officials worry the bond issue renewal may be only a bandage for a taxpayer self-inflicted wound that will be hard to heal.
A chart presented by Semler showed the deep impact tax caps have had on county government – an impact that is predicted to get even deeper in the years ahead.
The chart showed Henry County lost an estimated $848 million to tax caps in 2011, the first year they went into effect. Next year, 10 years later, the losses will have more than doubled, estimated to be more than $1.6 million. By 2022, the losses are forecast to be more than $2 million.
“It gets worse every year,” Walker said.
“The state should change the law,” Tarantino said.
“To change that, you’re going to have to change the constitution,” Cronk replied.
Walker said she believed voters were misled when the issue was placed on the ballot. While they are saving property tax dollars, they may be paying a heftier price – both in real dollars and in quality of life.
“Services are cut,” Walker said. “We don’t have the sheriff’s deputies we’ve had on the road in the past.”
Extra efforts by some county departments have helped solve an insurance fund shortfall. Walker said money borrowed from the cumulative bridge fund and the county drain maintenance fund was paid back last month. In addition to a $65,000 contribution from the Commissioners’ budget, Walker said 2 percent cuts in surveyor, planning commission, clerk, auditor and assessor budgets helped pay the in-county loans back.
Officials say rural areas like Henry County seem to be hit hardest by tax caps and the latest forecast doesn’t call for financial storm clouds to dissipate anytime soon.
“Henry County is getting hit harder than some others,” Semler said, “because you are a rural county, and you all know farmland is anticipated to decrease in value in the foreseeable future. That’s why we see anticipated circuit breaker losses increasing over the next few years.”
Semler emphasized renewing the bond issue would not be a tax increase on the citizens, just keep the rate the same as it is now.
“We’ll have a better picture of where we are in November or December,” Semler said. “In the meantime, I wouldn’t do any additional appropriations this year unless absolutely necessary.”
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