Software hiccup results in erroneous tax distribution

Error has resulted in a miscalucation of revenues collected from Tax Increment Finance districts

Posted on May 16, 2012 at 1:00 a.m.

GOSHEN — The Elkhart County Auditor’s Office is working to resolve a problem that led to an incorrect distribution of property taxes among cities, towns and their redevelopment commissions.

A software error resulted in a miscalculation of revenues collected from Tax Increment Finance districts, according to county auditor Pauline Graff. Graff said redevelopment commissions ended up getting more money than they should have while cities and towns were shortchanged. The exact amount of money, she said, is still being calculated.

“I don’t really want to say a lot right now until the letter comes through from the software company that we will send out to the redevelopment commissions and the taxing units that were affected by this,” Graff said, adding that the problem will be corrected in June.

TIF districts only collect taxes from businesses and industrial properties, but software company Government Utilities Technology Service mistakenly included revenues from residential real estate properties in its 2011 distribution, Graff said. Taxes from residential properties have not been part of TIF district collections since 1995, Graff pointed out.

Goshen Mayor Allan Kauffman said he started asking questions when he found that in 2011, the city received just under 92 percent of the property taxes it was supposed to collect, well below the levels of the last several years. Despite the recession, in 2008 the city got nearly 99 percent of the property taxes it was supposed to get, and in 2009 it got more than 97 percent and close to 99 percent again in 2010.

Kauffman said he talked with the mayors of Nappanee and Goshen and found they had similar dips in 2011.

Those questions led to the discovery of the county’s software program, Kauffman said.

Because of the error, the city will get an extra $500,000 in June, Kauffman said.

The money will come at the expense of the Goshen Redevelopment Commission, which got overpaid last year.

Mark Brinson, community development director for Goshen, said he’s still waiting for official word of the error from the county.

“We know that our disbursement was more than what it should’ve been. We haven’t received official notification from the county of how much it was,” Brinson said.

The hit in June won’t be a problem, though, Brinson said. “This is money we weren’t planning on, anyway.”

Brinson said, “we understand software issues can come up,” and said of the mistake, “It doesn’t harm us in any way.”

Nappanee Mayor Larry Thompson said the impact on Nappanee is unclear.

“It’s just a matter of the county getting it straightened out and seeing how it affects the TIF districts,” he said. “I don’t know how it will affect us, but I trust the county auditor’s office is working to correct it.”


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