Sunday, October 26, 2014

Property taxes in rural areas catching up with city rates

The disparity in property tax loads is narrowing between Elkhart County's cities, where homeowners have typically had bigger tax bills, and towns. At the same time, property tax bills in towns have been edging upward at a faster clip than in cities, at least judging by the typical load for a $100,000 home. Credit property tax caps for the trend.
Posted on June 25, 2012 at 1:00 a.m.

Please scroll to the bottom of the story for a table comparing estimated homeowner property taxes in Elkhart County's cities and towns.

Life in a small town may offer lower crime rates and relief from the bustle of a larger place.

Property taxes, though — that's another story, at least here in Elkhart County.

As of 2009, at least, property taxes in the county's four towns, Middlebury, Millersburg, Wakarusa and Bristol, tended to be lower than in the larger cities of Elkhart, Goshen and Nappanee. Call it a perk of small-town life.

But since then, the difference has narrowed, and now the tax load of homeowners in the four towns seems to be approaching that of the three cities.

Credit the 1 percent property tax cap on homes that went into effect in 2010. It's capped the tax load on a $100,000 home in Elkhart, Goshen and Nappanee, where tax rates are higher, at $1,000. In the four towns, though, where tax rates are lower, keeping tax bills from bumping the $1,000 lid, the tax burden has continued to edge up. Consider:

Ÿ From 2009 to 2012, property taxes on a $100,000 home have increased minimally in most parts of Elkhart — by just 0.5 percent in the Cleveland Township portion of the city and 1.8 percent in the Osolo Township part of Elkhart. In the section of southern Elkhart in the Concord Community Schools district, taxes actually fell by 6.4 percent.

Ÿ In the same period, the tax bill on a $100,000 home increased 28.6 percent in Bristol, 18.1 percent in Middlebury and 17.4 percent in the Clinton Township portion of Millersburg.

Ÿ Taxes for 2012 on a $100,000 home are still lower in Middlebury, Millersburg, Bristol and Wakarusa compared to the $1,000 bills in Elkhart, Goshen and Nappanee, but barely in some cases. In Middlebury the total bill is $982 and in Millersburg it's $946.

Ÿ In 2009, property tax bills on $100,000 homes in Middlebury, Millersburg, Bristol and Wakarusa were 9.1 percent to 33.5 percent lower than in Elkhart, Goshen and Nappannee. By 2012, the difference narrowed, and bills in the three locales were just 1.8 percent to 12 percent lower.


New tax caps approved by state lawmakers and since enshrined in the Indiana Constitution by voters took full effect in 2010. That's when the tax rate for homeowner-occupied homes fell to 1 percent of a structure's assessed valuation.

The move was meant chiefly to keep a lid on homeowners' property tax bills. But it's had other impacts, notably reducing the amount of property tax funds entering the coffers of cities, counties, libraries and other governmental units, forcing them to cut back or find other revenue sources.

And now, judging by the Elkhart County example, it appears that the caps are having the effect of narrowing the differences in what homeowners pay from locale to locale.

Whether that's good or bad, “that's in the eye of the beholder,” said Larry DeBoer, an economist and expert on tax issues from Purdue University.

Bigger cities generally require a comparatively larger chunk of revenue from taxpayers than smaller locales to cover the cost of the broader range of services offered, according to DeBoer. By that measure, relative parity in property tax load between big and small places, then, would mean homeowners in larger cities are getting a bargain compared to their small town counterparts.

Indeed, do away with the 1 percent cap and the 2012 tax bill for the owner of a $100,000 home in Elkhart jumps from $1,000 to anywhere between $1,284 to $1,409, depending on city section. The bills jump to $1,196 in Goshen and $1,123 in Nappanee.


The seeming trend toward tax parity has hardly hit the radar screens of city and town officials in Elkhart County.

Kim Ingle, clerk-treasurer in Nappanee, questioned whether perceived tax load was ever an issue for those deciding whether to live in a city or town. The lower taxes in the county's unincorporated areas, where city and town taxes aren't collected, is the more germane difference for those wanting to live where the tax bite is the smallest.

Likewise, Mark Salee, town manager in Middlebury, said the traditional selling points for Middlebury have been the solid repuation of the schools there and lower crime rate, not taxes.

Still, officials in Elkhart and Goshen see a potential silver lining.

Arvis Dawson, assitant to Elkhart Mayor Dick Moore, said Elkhart leaders are more worried about the loss in property tax revenue brought on by tax caps. However, relatively equal property tax loads could be used as a selling point to draw more residents to the city from smaller places.

Similarly, Goshen Mayor Allan Kauffman, said property tax parity could reduce some of the disincentive to live in the bigger cities in Elkhart County. In turn, that could draw residents from outlying areas, reducing sprawl.

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