By Dan Shaw, Evansville Courier & Press
The Indiana Department of Local Government Finance has rejected Evansville's request to raise up to $2.7 million in property taxes beyond the amount called for by the city's 2010 budget.
Evansville officials asked for that permission at the end of 2009, saying they needed it to make up for taxes they had planned to collect last year but couldn't.
In rejecting the request, the department said the city has more money in a reserve fund than it needs for its 2010 budget.
"If the department had approved this appeal, the city would have been able to tax its citizens more, essentially adding to the city's savings account rather than leave the money in the hands of taxpayers," said Mary Jane Michalak, the director of communications for the department.
Michalak said such requests are rejected if a city's reserve money exceeds a threshold set by the state.
Jenny Collins, Evansville controller, said she thinks the state's decision neglected the consequences of new limits set on the city's ability to bring in property taxes. Those limits, often called tax caps or circuit breakers, are expected to deprive Evansville of $3.9 million in 2010.
Collins said city officials are reviewing the reasons behind the state's denial and weighing an appeal.
Michalak said Evansville isn't the only local government to get a rejection. State officials also have denied requests from the city of Peru, the town of Indiana Village and the town of Ingalls, among others. And they have given several, such as the city of Westfield, less than originally requested.
In asking to collect extra property taxes this year, the city is trying to make up for money lost in 2009 after property owners won fights to have their property assessments reduced. An assessment is an estimate of a property's value and plays an important role in the calculation of taxes.
Lowered assessments, while reducing payments of property taxes, deprive local governments of money they had planned to collect. The actual amount lost from the 2009 budget wasn't known at the end of last year. The $2.7 million in extra taxes sought by the city was a maximum amount, unlikely to be approved without a reduction.
The state usually waits until the full loss is accounted for and lets cities raise no more in extra property taxes. That is what has happened in previous years when Evansville won such appeals.
For instance, the city received permission to recoup a $1.3 million shortfall in 2008 and a $1.5 million shortfall in 2009. City Councilman John Friend, D-5th Ward, said the denial this year seems strange in light of the city's history of success.
"Nothing has changed," Friend said. "It has to be a mistake."