Elkhart County cities, schools and other governmental units to lose $42.63 million to tax caps in 2014

The loss is up from $36.37 million in 2013, and it has some school officials scrambling to make up the deficit.

Posted on May 17, 2014 at 7:17 a.m.

Property tax caps will take a larger bite, in dollar terms, out of the budgets of the cities, schools and other Elkhart County taxing units this year.

All told, the county, the seven towns and cities, the 16 townships, the seven school districts, the six library systems and the varied tax increment finance districts in Elkhart County will lose $42.63 million to tax caps in 2014. That’s up $6.26 million, or 17.2 percent, from $36.37 million in 2013, according to numbers from the Indiana Department of Local Government Finance, or DLGF.

Scroll down to see a pair of tables comparing 2014 and 2013 property tax losses due to tax caps for some of the larger Elkhart County taxing units.

Going back further, the impact is even more dramatic: The $42.63 million loss for 2014 represents a $28.09 million jump from 2010, when tax cap losses collectively totaled $14.54 million in Elkhart County.

The DLGF released the tax cap figures in April, and while cities, schools and taxing units try to anticipate what the loss will be each year, the official number, when it’s finally calculated, isn’t always what was expected. Goshen Community Schools, for instance, anticipated a tax cap loss for 2014 of around $4 million, but it was actually $5.23 million, $1.23 million more than expected.

From the perspective of property owners, the $42.63 million represents money they can hold onto, money they don’t have to fork over when property tax bills come due.

But for cities, schools and other taxing units, it’s lost funding and an ongoing issue. Ever since more rigorous caps started going in effect in 2009, per 2008 state legislation meant to give homeowners a break on their tax bills, there’s been a lot of clamoring, hand-wringing and budget-cutting by elected leaders as they contend with the revenue dip.

Here are more reactions from around Elkhart County on the upshot of the new numbers.

Goshen Community Schools: The Goshen school system has the dubious distinction of having the largest dollar increase in its tax cap loss, from $3.23 million in 2013 to $5.23 million, a $2 million jump.

Jerry Hawkins, director of finance for the district, said the larger-than-expected loss for 2014, $5.23 million instead of $4 million, means the system will have to tap into general and reserve fund resources to make up for the difference. Transportation funding, one of the most impacted budget segments, won’t be cut in response, he assured.

School officials, fortunately, have the ability to tap reserve funds, but if tax cap losses continue to mount “it’s going to be impossible at some point in time,” Hawkins said. “What’s it going to grow by next year? That’s a concern.”

On the bright side for school officials, Goshen voters last year approved a referendum to boost school funding. The new property tax revenue should start entering school coffers next year.

All told, cumulative tax cap losses in the Goshen school district for 2009, 2010, 2011, 2012, 2013 and 2014 total $14.94 million.

Concord Community Schools: Concord schools will actually see a decrease in tax cap losses, to $3.47 million this year from $3.99 million last year. It’s the only taxing unit among the larger ones in Elkhart County experiencing a reduction in losses.

Janet Gruwell, business manager for the school district, said the decline stemmed, in part, from a cut in spending for capital projects. She also noted that parallel to the dip in tax cap losses, the district will see a dip in net property tax revenue coming into the system for 2014 to around $13.45 million from around $13.82 million in 2013.

Concord voters approved a referendum question in the May 6 primary, which also will increase property tax funding for the district.

Elkhart Community Schools: The fact that the tax cap loss for 2014 is bigger than in 2013, to $6.51 million from $5.26 million, wasn’t a surprise, said Doug Hasler, executive director of support services for the district. But the hike was larger than anticipated.

Like the Goshen school district, Elkhart officials will draw on reserves to offset the larger-than-expected loss, which chiefly impacts funding for busing.

Elkhart voters approved two referendum questions on May 6, which will increase Elkhart schools funding for transportation and capital projects.

City of Goshen: Goshen officials anticipated a tax cap loss of $4 million for 2014, said Mayor Allan Kauffman. It ended up being larger, $4.51 million, and Kauffman said reserves will be tapped to make up the difference. The 2013 loss totaled $3.5 million.

Reserves won’t last forever, though, and the larger 2014 loss will make budgeting for 2015 “a lot more tricky,” he said. If the trend of increasing losses keeps up, the city may have to slash services at some point. In fact, he’ll be broaching the possibility of axing Goshen’s city court system in the 2015 budget proposal.

Elkhart County, Elkhart: As in years past, the city of Elkhart has the largest dollar amount loss due to tax caps in 2014 of any taxing entity, $10.81 million, up from $10.01 million in 2013.

Since tax caps were tightened in 2009, the resulting losses “have increased each year and have resulted in a greater impact on the budget,” Elkhart Mayor Dick Moore said in an email. “Given that trend, tax caps will continue to be a concern...”

Elkhart County government, the other larger taxing unit in the county, will see tax cap losses of $4.85 million, up from $4.12 million last year.


Follow reporter Tim Vandenack on Twitter at @timvandenack or visit him on Facebook.


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