Property taxes have been a big topic here in Hoosierland for the past couple of years – so much so that they became the centerpiece of our new Governor’s campaign efforts. We’ve heard a lot about your property taxes from Mr. Braun, his lieutenant, and General Assembly members as they battle over the budget.
If you’ve paid attention to what those elected officials have been saying, you probably believe that your property taxes have been soaring because all those brainless local officials have been spending money like a sailor on their first shore leave. I’m willing to bet you’ve said things like, “If I have to live within my means, then so does that town council and school board. They have to stop wasting all that money on people and things they don’t need.”
I have respect for our state government’s officials, but to be frank, they haven’t been telling you the whole story. Those property tax increases aren’t being fueled by out-of-control local spending. They’re happening because we’re in one of the craziest housing markets Hendricks County has ever seen. I’ll explain why in a moment. (And by the way, 31 states – including the four that border Indiana – have higher property taxes than we do. Take Illinois, whose residents pony up better than four times what the average Hoosier pays.)
Now, it’s absolutely true that what you spend on property taxes goes to local government. When you look at your tax bill, all the local entities are listed. You have the county, your town (if you live within the boundaries of an incorporated town), township, school district, and maybe a library. Property taxes are a major source of funding for all those parts of local government.
A lot of people think local government is bulging with waste, fraud, and do-nothing employees. I know better, but let me ask you to consider something. The Republicans have controlled the Governor’s office and both houses of the General Assembly for better than two decades, with supermajorities in both houses for much of that time. If you’re right about all that waste and fraud, how have they missed or ignored it? We’re not talking about the federals here – just the folks in and around your community.
The reality is that local government employs the smallest percentage of citizens in Indiana’s history. Another reality? That same inflation that frustrates you affects local government. While the amount of the funding most local governments receive has indeed climbed, it’s done so at a slower rate than inflation. Take schools. Every year, you hear the General Assembly boast that public school funding is at “record levels.” But when you factor in inflation, Hendricks County schools receive less money per student than they did in 2000.
Compare your property tax bills over the past several years. Yes, the amounts for each local government have increased. But look at how the tax rate has changed. In many cases, you’ll see that it’s flat or has even declined. Local and county governments are constantly tightening their belts. Just ask their employees, who earn far less than they would in comparable private-sector jobs.
As I noted earlier, the primary reason your property taxes have gone up is that the price of homes in Hendricks County is shooting through the proverbial roof. If you haven’t bought or sold your house recently, you’d be stunned to see what homes are selling for. And because Indiana law says the tax valuation of your home must be based on current market conditions, when average prices go up, so does your home’s assessed value.
County assessors don’t get to make up random numbers or artificially inflate the value of your home to force you to pay more in taxes. They’re required to use a formula created by state law. If three nearby homes similar to yours sell for $450,000, the formula will say that’s what your home would be worth if you sold it today. Not sure how they arrived upon your home’s value? Stop by the Assessor’s office in Danville, and they’ll be happy to pull your property record and explain. It might not make you happy, but at least you’ll understand.
I wish state officials were more forthcoming about home prices being the real driver behind those property tax increases. Unfortunately, because so few Hoosiers understand how things really work, local governments make a convenient target. I suppose casting them as the bad guys makes the state folks look like heroes.