Tax rates across the county increased this year, but the impact that will have on your tax bill is not yet known.
The state approved tax rates this month for local governments, including cities, towns, schools, libraries and fire districts. The majority of those rates increased in the county for this year’s tax bills.
Local government officials say most of the higher tax rates are because of decreases in the values of properties in their area. In general, when values decrease, tax rates increase; and when values increase, tax rates decrease.
The majority of property values in the county changed this year because of a statewide reassessment, which updated the values of all properties in every county across the state.
After the reassessment, about half of local property values increased, and the other half decreased.
But increases were typically small, since counties have been updating property values every year to reflect market value, a state tax expert said.
Overall, Johnson County’s total value of all properties increased slightly, but statewide values dropped slightly, said Larry DeBoer, a Purdue University professor and property tax expert.
Property tax bills are based on two main factors: property values and tax rates.
With property tax caps, which limit tax bills to a percent of a property’s value, a drop in values could mean property owners could be closer to reaching their caps, DeBoer said.
You won’t know how this year’s reassessment and the change in tax rates will affect your tax bill until this spring. Bills will be mailed out by April 25 and due on May 10, Johnson County Treasurer Diane Edwards said.
The county is now calculating each property owner’s tax bills, based on the value of their property, any deductions and the tax rate in their area.
Tax rates are calculated based on local government spending. The tax rate you pay depends on where you get government services, including whether you live in a city or town, what library district and fire department serve you and what school district you live in.
In the past, when property values fell, an increase in the tax rate allowed local governments to even out the drop and collect the same amount of money. But, with property tax caps, that is no longer true, and local governments can only collect so much money before taxpayers hit the caps and don’t have to pay any more, DeBoer said.
That’s why a drop in values, which some local governments said they saw this year, could mean less money for local government services, DeBoer said.
In past reassessments, local governments could almost always expect a significant increase in property values, because the values hadn’t been updated in years, DeBoer said.
But this year, the reassessment comes after the county had already implemented a state-required change to update property values each year based on market values, DeBoer said.
“One can’t emphasize enough how weird that is — reassessments historically have caused a great big increase,” DeBoer said.
During other years, about a third of home values increase, a third decrease and the remainder stay the same, Johnson County Assessor Mark Alexander said.
This year, just about all home values went up or down, he said.
“It was uncanny because about half of them went up and half of them went down,” he said.
The total assessed value for the city of Franklin dropped from $809 million to $767 million because of the reassessment, and the city’s tax rate increased by about 5 percent, clerk-treasurer Janet Alexander said.
“We’re not raising any more money than we did last year. Actually we’re raising less. We were stunned by the reduction in the (values), but it can’t be helped,” Janet Alexander said.
The tax rate for Clark-Pleasant Community Schools increased slightly because of a decline in value for property located in the district’s borders, Clark-Pleasant business director Steve Sonntag said.
The tax rate increased, despite cuts made by the school district but would have been much larger without taking those measures, Sonntag said.
“We’ve endured and refinanced our debt. That enabled us to decrease our total tax levy and maintain a constant tax rate. The tax rate would have went down even more if the assessed valuation would have stayed the same,” Sonntag said.
Nineveh-Hensley-Jackson Schools had an 11 percent hike in the tax rate, but director of learning and instruction Andy Cline said the increase is not due to new debt or spending and instead is due to changes in property values.
Value changes weren’t responsible for all changes in the tax rate. The tax rate for Franklin Community Schools increased by 11 percent, due to increasing debt payments the school district needs to make this year.
The annual payments on the school’s debt are scheduled to increase each year until 2015, said Jeff Mercer, executive director of finance. After that, payments will remain at about the same level which should stabilize the tax rate, he said.
“When we hit 2015, that’s the single largest amount we were scheduled to pay and then it levels off and ends up about where it is now,” Mercer said.
The rate increase also occurred in part because of more money required to replace buses, which increased to what had been normal levels this year after being low last year, Mercer said.