The city of Elkhart isn’t the only taxing unit hit by a drop in property tax revenue brought on by tax caps.
All told, limits on property tax bills stemming from tax caps will cost Elkhart County’s cities, towns, schools, libraries and townships $27.88 million this year, according to figures from the Elkhart County Auditor’s Office. That’s funding the varied entities would have received, but won’t because of the caps — known as circuit breakers and implemented by state lawmakers in 2008 to keep a lid on homeowners’ property tax bills.
Elkhart city officials said Monday that a larger-than-expected loss due to tax caps, $8.53 million instead of an anticipated $6.4 million, has left them scrambling to cover the $2.1 million gap. Elkhart County and Goshen city officials say the losses they’ll experience are about what they expected, while reps from the Elkhart and Concord school districts say they’re going to experience bigger-than-anticipated losses, like the city of Elkhart.
Government leaders by now know to expect circuit breaker losses when crafting their budgets. But because of the complex math involved, specific losses can’t be pinpointed until after they’ve crafted their spending plans. In the interim — 2012 budgets were actually completed last fall — officials make do with estimates.
Indeed, the county auditor’s office calculated the anticipated losses for 2012 only late last month, after receiving pertinent data from state authorities. That’s what led to Elkhart officials’ announcement that they were trying to figure out how to cover the $2.1 million gap.
Here’s more on the circuit breaker losses:
The biggest losers: The city of Elkhart takes the largest financial hit, $8.53 million, followed by Elkhart Community Schools, $4.85 million, and Elkhart County government, $3.41 million.
Increasing losses: The $27.88 million to be lost this year by Elkhart County and the three cities, four towns, seven school districts, 16 townships and six library systems is up from $20.13 million in 2011. In 2013, Indiana’s Legislative Services Agency expects the total to rise yet again to $31.2 million.
Worried school officials: Concord Community Schools Business Manager Janet Gruwell said the school district’s $2.73 million loss this year compares to the $2 million they had been expecting.
The higher figure will likely force school officials to look for areas where they can cut.
Likewise, Doug Hasler, who manages finances for Elkhart Community Schools, said the district had hoped for a circuit breaker loss on par with last year, $3.18 million. Instead, it will see a dip of $4.85 million.
“What we’re dealing with now is worse than the worst-case scenario,” said Hasler. Spending on capital projects — things like roof repairs, tech purchases, building maintenance — will be scaled back as a result.
Bruce Stahly, superintendent of Goshen Community Schools, worries the continued bite from tax caps will whittle away at the district’s debt service fund, hampering efforts over the long haul to pay off outstanding debt.
That will potentially put the district in the position of considering two options, neither of which he likes. The district can refinance its debt, incurring additional expense, or tap capital projects funds, reducing the revenue available to maintain and upgrade school buildings and other infrastructure.
Foreseeable?: Estimates issued by the Legislative Services Agency at the end of 2011 hint at the 2012 circuit breaker losses now putting the city of Elkhart and the Elkhart and Concord school districts in the position of making additional spending cuts.
In a Dec. 31, 2011, report, the agency estimated the city’s 2012 loss would total $8.65 million, higher than the $6.4 million estimate and not far off the actual $8.53 million figure. The report estimated the Elkhart school district’s loss at $4.59 million, some $250,000 less than the actual $4.84 million figure, while it said the Concord school district’s shortfall would be $2.7 million, close to the actual $2.73 million figure.
Could the city and school districts have started looking for areas to trim in January in anticipation of larger-than-forecast circuit breaker losses, based on the Dec. 31 estimates?
It’s a moot point now. At any rate, the city and school districts had already crafted their 2012 budgets by then, basing their spending plans on the estimates that turned out to be too low.
The winners: Though government takes a hit because of tax caps, property owners collectively benefit, keeping the $27.88 million in circuit breaker money in their pockets.
Cumulatively, Elkhart County homeowners will save $6.57 million on their 2012 property tax bills because of the limits, according to auditor’s office figures. Owners of apartment complexes and ag land will save $9.3 million while owners of industrial and commercial real estate, all told, will save $11.97 million. A tiny fraction goes to seniors over 65, beneficiaries of another credit.
The tax caps amount to 1 percent of the assessed valuation of homeowner-occupied homes. On a $100,000 home for instance, the maximum property tax bill would be $1,000. The caps are 2 percent on apartments, rental property and ag land and 3 percent on commercial and industrial real estate.
@Breakout heads 08:Property tax funds lost due to tax cap
Taxing entity 2013 loss, est. 2012 loss 2011 loss
Elkhart (city) $9,335,589 $8,532,225 $5,958,235
Elkhart schools $4,868,320 $4,846,081 $3,181,946
Elkhart County $3,838,795 $3,407,539 $2,429,471
Goshen $3,262,988 $2,669,943 $2,077,452
Goshen schools $3,175,090 $2,531,724 $2,179,239
Concord schools $2,801,703 $2,732,336 $1,874,928
Elkhart library $792,373 $740,459 $498,398
Nappanee $654,060 $504,384 $375,931
Wa-Nee schools $569,276 $389,277 $345,605
Midd. schools $470,505 $310,279 $307,703
Goshen library $357,874 $266,845 $228,863
Concord Twp $233,899 $172,964 $145,247
Middlebury $140,737 $121,652 $111,359
Nappanee library $117,428 $84,030 $67,712
Middlebury Twp $111,387 $81,542 $72,962
Osolo Twp $74,408 $74,989 $43,777
Wakarusa $65,542 $56,150 $48,237
Baugo schools $61,324 $141,343 $20,959
Bristol $53,548 $52,312 $34,555
Cleveland Twp $46,396 $24,262 $22,160
Total* $31,204,850 $27,875,020 $20,129,688
* Figures include circuict breaker losses for Elkhart County schools, townships, towns and other taxing units not listed here. Figures do not include losses to tax increment finance districts.
Source: Indiana Legislative Services Agency, Elkhart County Auditor’s Office.