April 27, 2007

Wells officials to indefinitely delay spring tax deadlines

(Joint statement by Wells County treasurer, auditor on page 8)

Citing potential sweeping property tax changes pending before the legislature, and already delayed in action by situations outside the county, Wells County officials announced that they would indefinitely delay the upcoming spring billing deadline and the mailing of bills rather than risk an expensive second and corrected billing.

It was already announced that property tax bills will be mailed later than normal this year, a fact which has been acknowledged by county officials since Mid-March. At the time, Wells County Treasurer Rinda Vaughn noted the usual May 10 deadline for payments on spring tax installments would be extended, with an indefinite schedule for mailing of the bills.

That initial delay came about after a switch on the state level to a trending approach for county tax assessments. The change left some counties falling behind on the implementation of the new assessment procedures, and in having their property tax rates certified. While Wells County’s data is complete, the state was initially unable to certify the county tax rates due to the unique bi-county nature of the towns of Markle and Zanesville.

Since Wells County shares the Town of Markle with Huntington County and shares the Town of Zanesville with Allen County, property tax rates for Wells County cannot be certified by the state until those counties also are completed.

While the local officials say Wells County offices have completed everything necessary for certification of tax rates, as has Huntington, Allen County was still working through the impact of a change in state assessment procedures. This week’s announcement that the deadline was to be suspended was made in a joint news release issued by Vaughn and County Auditor Laura Brubaker on Thursday in which they cited potential changes requiring a re-billing that could result if any of the three significant tax bills now under review in conference committee are approved in the closing days to the legislature session.

It’s likely that some type of compromise bill may emerge. Bluffton Mayor Ted Ellis said each bill being considered in conference included an increase in the Homestead Credit. Any legislation that modifies the Homestead Credit would require new tax bills, Ellis said.

House Bill 1487 which was of special concern to Brubaker and Vaughn would swap out the property tax replacement credit, a offset for homeowners based on sales and income tax revenues, for a direct payment from the state for school tax levies, juvenile delinquent funds, and the family and children’s fund levy.

“Any action taken will affect how tax bills are calculated. We’ll know by midnight on Sunday night,” Ellis said. “Assume this goes up to the wire, we just wait a few days more and have a much better idea about the big picture.”

Once a new deadline date is identified by Vaughn and Brubaker, by law local taxpayers will receive at least 15 days notice before the spring payment is required. In reality, given everything that is required to amend for tax changes, it’s more likely that the process could take 6-8 weeks or more before bills would be in the mail.

The process is so labor intensive and involved that taxpayers may think it’s a summer tax bill when the next bill arrives. Before a realistic deadline date is set and bills can be mailed, county officials must still advertise the rates, getting the rates approved, and take on the physical and logistical challenges of recreating the abstract, entering new tax rates, printing and stuffing nearly 17,000. As of now, county officials do not expect any changes or delays in the fall tax deadline of Nov. 10, 2007.

In an effort to help keep local schools and other governmental units fluid, Wells County officials are encouraging people to pay the amount of last year’s spring installment as they normally would in the weeks to come. Differences between that amount and the eventual figure to be calculated on the actual tax bill will be resolved upon payment of the fall installment. Taxpayers have no obligation to pay before the eventual due date, but Brubaker and Vaughn said the estimated payments would allow local governments to request advance draws on their expected property tax distribution.

The early payments likely would limit the cash flow impact of the delay and possibly reduce the need for local governments to borrow, officials said.

Early payments would be appreciated by area school corporations.

Bluffton-Harrison M.S.D. Schools Corporation treasurer Becky Biberstein noted the district would likely have to borrow funds from a bank or transfer money from other funds. Biberstein said schools are required to show a positive fund balance by June 30.

The Bluffton-Harrison board has already approved a tax anticipated warrant and the funds could be borrowed at 4.39% interest.

“I think we’re going to be OK at this point,” Biberstein said. “Hopefully money comes in after July one.”

“The rate is not too bad, of course it’s more than we’d like to spend,” Biberstein said. “We’re not going to find ourselves in a huge bind.”

With this week’s release, along with statements made during an earlier interview with the News-Banner, both Vaughn and Brubaker expressed their frustrations with the process. “Everything is on the state level. We’ve got our hands tied,” said Vaughn. The problems facing local government in collection of taxes this spring are not limited to this area, Vaughn and Brubaker pointed out. “It’s just an all-over-the-state thing,” Vaughn has said. In a typical year certified tax rates typically would be received by Feb. 15 of the new year.

The initial delay was attributed to the state’s move to an annual assessment of property. State law now requires an annual “trending” of real estate values to bring the property closer to market value. In the past, a reassessment typically was done every six to 10 years. “Trending is very complex,” said Brubaker, a former deputy assessor.

The move to the first market-based annual property tax adjustment in the history of the Hoosier state has been a challenge for county officials across the state. The effort to review the values of the all of the more than 3 million parcels of real property in the state is the first since Indiana adopted a market-based real estate appraisal system in 2002.

That switch moved Indiana from an outdated replacement cost-based method of real estate appraisal to a more market-sensitive approach. A market based system is used by 48 other states in the country, according to the Indiana Department of Local Government Finance website.

“It is imperative we implement and administer a fair and equitable property tax system that offers the least surprises to taxpayers at tax time,” said Melissa Henson, the commissioner for the state’s Department of Local Government Finance. “By annually adjusting assessed values based on sales data, we can more realistically reflect the market value of the property and reduce the large increases in assessed values that Hoosiers have experienced in the past.”

“This tax year is very unusual, it’s almost unique,” Brubaker said. “Trending is a brand new thing.”

Historically, properties were only adjusted during renovations or approximately every 10 years during general reassessments. The decade of lapse in assessments often gave taxpayers an exponential change in their assessed value. By adjusting values annually, taxpayers won’t be left to make up for 10 years of market activity in one year like they did under the previous system, Henson said. Assessors across the state made adjustments by comparing 2004 and 2005 sales data in their area with the 2002 assessed values. The amount of change between the two was used to create a factor that assessors will use to update the 2002 assessed values.

“Some taxpayers may see an increase or a decrease in the assessed value based on local market conditions,” said Barry Wood, the department’s assessment director. “Regardless of the change, it is important to remember that the assessed value of a property is only one component of property taxes. Another component in whether a taxpayer will see a change their property tax bill is the spending of local government,” he said.

Brubaker said the decision to further delay the billing was a difficult one but based on advice given by state officials, and with the input from the county commissioners, local school superintendents, and Ellis, the officials decided to wait.

“We had to weigh the expense of a second billing. It was a tough call but it all comes down to expenses up to $40,000 in re-billing,” Brubaker said. “That is not something I feel good about as a taxpayer.”

Brubaker said most of the community has been understanding and that she and Vaughn have received a very positive response from the public. “We live in a great community,” Brubaker said. “Rinda and I are both delighted.”

Looking specifically at House Bill 1487, Brubaker and Vaughn wrote, “the bill offer some tax relief to taxpayers on your current year (2007) taxes.”

“This bill has several points of interest, many of which will benefit taxpayers and counties alike. That is the good news. The bad news is that if we continue with the endeavor of getting tax bills to the taxpayers as quickly as humanly possible, it will be a huge financial mistake for the county.”

“A second tax bill will have to be created, printed and mailed. Computer vendors will charge counties for the work that will go into creating files to get ready for the second tax statement. The cost alone of the postage, paper and envelopes as estimated by Rinda Vaughn, the County Treasurer, is well above $10,000 on the low end.

The first installment of Property Tax Replacement Credit and Homestead Credit has arrived from the state. This money along with any property tax money that comes in will be available to the schools or units seriously needing money for advance draws.

Letters have been sent out to every delinquent taxpayer, owing in excess of $200 to pay their delinquencies now.

Both county officials urged taxpayers to make estimated payments based on their 2006 bills. Estimated payments should be paid at the Wells County Treasurer’s Office in the Courthouse or by mail.

Payments should not be made at local banks until the spring tax bills are mailed so statements can be submitted with the payment. Those making an estimated payment by mail should mark the parcel number on the check so staff in the Treasurer’s Office will know how to apply the payment.

The parcel number or numbers can be taken from last year’s tax bills or be obtained by calling the Treasurer’s Office for the information. Citizens with questions over the delay or the estimated payment process can contact either the Treasurer’s Office at 824-6512 or the Auditor’s Office at 824-6470.

jgwallace@news-banner.com

Talk about this story in our forums!