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Caps reduce funding, pinch governments, schools

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Snow takes longer to plow in New Whiteland because the town has fewer workers. Many Clark-Pleasant students ride buses longer because the school had to consolidate routes. Some class sizes grew by 25 percent in Franklin when the school district couldn’t afford to hire new teachers.

But in the city of Greenwood or Center Grove and Indian Creek schools, services for residents and students haven’t changed much in the past few years.

The difference is due to tax caps, which limit how much local governments can collect in property taxes. Areas with higher tax rates, such as Franklin, Edinburgh and the Clark-Pleasant school district, lose 15 to 20 percent of the taxes they expect to collect each year because of tax caps. Clark-Pleasant Schools can’t collect more than $4 million in taxes each year, so administrators have had to make cuts such as putting off building maintenance, not buying new buses and not replacing staff members who leave or retire.

Tax caps limit the amount of property taxes you pay. For example, a homeowner with a $100,000 home doesn’t pay more than $1,000 in taxes. But for a homeowner in Whiteland, the schools, town, county, library and fire district may need that person to pay $1,500 to fund all their staff and services. Since taxes are capped, all of those local governments lose a portion of the $500 that is over the tax cap.

For about the past five years, New Whiteland Clerk-Treasurer Maribeth Alspach expected to get only about 80 percent of the taxes the town actually needs every year. So the town hasn’t replaced three public works employees who maintain the sewer plant, plow snow, cut grass and pick up leaves. That means grass in parks grows a little higher, snow sits on the streets a longer, and in the future the town may not be able to pick up leaves in front of homes in the fall.

“Are we going to be able to continue picking up leaves and some of those services that have become a normal part of the way you live? And at some point those are going to be threatened unless there is some way to replace that revenue,” Alspach said.

Some school districts are more affected by tax caps than others, impacting how much is spent on transportation, new equipment purchases and building maintenance. The money to pay teachers comes from the state based on enrollment, but the local property taxes you pay for schools go toward debt, buses, technology and buildings. Since school districts are required to make debt payments, they’ve had to slash spending in those other areas.

Bus fleets grow older, meaning they require more maintenance. Districts also have cut the number of bus drivers and consolidated routes, so those older buses are now on the road longer, too.

Clark-Pleasant purchased one bus last year, a larger bus for special needs students, business and finance director Steve Sonntag said. In Edinburgh, students and athletes now pay for the gas needed to get them to field trips or games at other schools, Superintendent Bill Glentzer said.

Cutting spending on transportation and projects typically isn’t enough, so school districts also use some of the money for teachers and staff on other expenses. Franklin was expecting to lose $3.4 million this year and hadn’t replaced 18 teachers who left or retired, executive director of finance Jeff Mercer said. Some elementary school class sizes grew by 24 percent, meaning teachers spend less one-on-one time with students.

Officials can’t always predict what they might lose to the caps each year. Mercer expected Franklin schools to lose $3.4 million this year, but the school will only lose about $2.5 million. He expects the tax cap losses will top $3 million again next year, so it wouldn’t make sense to hire a new teacher only to have to make cuts again next year, he said.

The city of Franklin is losing $2.1 million this year, which was less than the $2.6 million expected when officials were planning 2014 spending. The city has not replaced some workers in parks or other city departments in recent years, but residents likely haven’t noticed any change in service, Clerk-Treasurer Janet Alexander said. But tax-cap losses continue to chip away at the city’s savings, so deeper cuts might be needed in the future, she said.

Since the losses are unpredictable, New Whiteland holds off on purchases, Alspach said. For example, the town council will wait until fall to decide whether to replace two or three sets of gear for firefighters. Instead of buying new vehicles, they’re buying used trucks to save money, she said.

“Major expenses that are budgeted, we don’t usually make those in the first six months. We wait until September or October until we’re sure there were no major unexpected expenses,” she said.

If tax rates go down, the money lost to tax caps will, too. But for Franklin schools, debt payments will continue for about the next 10 years. Clark-Pleasant is in a similar situation with its debt, so working around those annual losses has become a new normal, Sonntag said.

And at some point, those cuts won’t be possible, such as when buses have to be replaced.

Officials also are concerned about the impacts of the cuts. For example, they worry good teachers will leave for other schools where classes aren’t as big and salaries are higher, Mercer said. Other school districts, such as Greenwood, Mooresville or Martinsville, which don’t have large tax cap losses, don’t face those questions, he said.

“I can’t beg, borrow and steal my way out of this circuit breaker loss,” Mercer said.

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