The old saying goes that there are only two things in life that are certain: death and taxes. I would add that there is one thing certain about taxes: the more you learn about them, the more you don’t know.
What we’ve come to refer to as my little tax saga, which I think is entering its third year, seems to bring new questions with each succeeding cycle. A number of them center on the same issue which we call “tax shifting” and is highlighted in today’s front page news analysis.
We like to label some stories as a “news analysis” because it includes some observations in addition to straight facts. It can sometimes border on opinion. We feel it important that we note the difference. But I digress.
This year includes new explorations into areas that have already existed but has not been a focus and, I believe, cries out for a fresh look. I have heard of and been aware of the MLGQ as mentioned in that article, but I had never connected it with reality. During my conversation in December with State Sen. Travis Holdman about his State Tax Review Task Force, he mentioned the Maximum Levy Growth Quotient that is supposed to limit the property tax levy to 4% in 2024.
It popped into mind as I was putting this year’s data together. So why has ours grown by more that 12%? Working on that. Stay tuned.
Meanwhile, a few much more opinionated observations about this year’s saga at this stage. (Thus it is on the opinion page, just to be clear.)
• Homeowners are (once again) experiencing these double-digit increases. Our share of the pie continues to grow in spite of the state legislature increasing both the standard and supplemental Homestead deductions in an effort to relieve some pain. I’ve thought about computing what my tax bill would have been without those changes and still may. It’s just not risen to the top of my tax-saga-to-do list.
• We are blessed with open, conscientious, local elected officials and school superintendents. Don’t want all of them to get a big head, but I have yet to run into any resistance about answering questions and helping me analyze and understand data and how the system works. “Patience” would be another good adjective. I can be slow on the uptake at times.
I have run into some concern that I am looking for villains. If we find any, so be it, but I just want to understand how these things work, which may be helpful for our readers in their interactions with those who make these decisions, some of whom, I’ve discovered, have just as many questions as the rest of us.
• They feel the pain. County Auditor Lisa McCormick and Assessor Laura Roberts in particular, when it comes to tax bills. Lisa and her husband’s home taxes went up about 20%. They invested in a rental property. Its taxes have doubled this year. The Roberts residence’s taxes in the dynamically growing community of Rockford doubled. To be precise, 120%. Their Assessed Value went up more than 60%. “We did add a deck to our above-ground pool,” she told me. OK. But a 60% deck?
By the way, I lamented last week about perhaps having the distinction of having the largest percentage increase in the county (among homes that I’ve sampled) for our home’s taxes at 28%. Not to gloat, but as of now, Laura has that crown.
• As mentioned in today’s analysis, a change in the assessing process plus all the other factors has resulted in very significant increases in taxes on residential rental properties. (Again, this category does not include apartment complexes.) With a big factor in those AVs being the amount of rent charged, this seems to be a vicious cycle: landlords have to raise rent to cover the increase in taxes; the next tax cycle reveals higher rent income which results in a higher AV. On it goes.
Bluffton has a problem here. The N-B has had a couple hires in the past year or so who could not find affordable, suitable rental housing and are thus commuting from outside of the county. Wish I had a solution.
• While the price of homes has been the obvious factor in the growth of “Homestead” residential housing, one issue continues to be the inconsistency of the overall increase in this category. Another solution needed.
Further evidence of this arrived in my email inbox Thursday afternoon. A reader was inspired to look into the properties in his neck of the woods of eastern Lancaster Township. He found that of the eight residential properties in “‘my mile’ as country folk say it,” increases from 2023 to 2024 varied from 7 to 36%. Property tax bills from 2022 to 2024 varied from 23 to 68% hikes. There are reasons, we presume, and plan to look into that.
More good news: rising residential home values are not going away. Local data for the Wells County real estate market has been released by the Upstate Alliance of Realtors. The median sales price went up 20.5% in 2023.
• There are also a number of other factors that feed into the “tax shift” that has put an increasing tax burden on residential properties. The state has focused for many years on being “business friendly” in its tax structure. That has obvious benefits; not arguing against it. But when this filters down to the county level in property tax reality, one might be excused for asking for further review.
We will not belittle nor begrudge the property taxes paid by our local industries and businesses. It is not small change. Valero Renewables will pay $377,319 this year, for example, which is up about 15% from 2021’s $328,833. One modern, in-use commercial property in downtown Ossian has seen a 1.54-percent increase in its property tax bill since 2021. Meanwhile, you can find plenty — likely a majority — of homeowner properties with 50% and more growth in the same time period.
Tax shifting is not unique to Wells County. A quick analysis of numbers from neighboring Huntington and Adams counties reveal the same characteristics. However, those counties’ 2024 data is not yet available. The nearest rural county that has its 2024 data posted is Noble; it’s ratio of residential-to-nonresidential portions of the pie have gone from a 34-66 mix in 2018 to a 45-55 ratio in 2024.
• I am learning about how school debt funding works after realizing it is outside of the MLGQ. The more you learn, the more you don’t know. But it has had and will obviously continue to have an impact on the mail we get from the county treasurer’s office.
• I am most puzzled by this MLGQ thing. In a brief conversation with Holdman this week, I learned about the appeal option. When hearing how much our total levy went up, he did not seem shocked but mentioned that perhaps something “needs tightened up.” The legislative session was wrapping up so he was pressed for time. We will chat more later; meanwhile I submitted three specific questions to the Indiana Department of Local Government Finance Feb. 28 which basically say: “Explain this to me please.”
“We’re working on it,” I am told. Waiting.
• Last but far, far from least is this: Are Wells County taxpayers suffering any more or less than our fellow citizens in comparable Indiana counties? Last year, I devoted a few hours to trying to compare and quantify that. My conclusion was that while we are seeing double-digit increases and want to cry “woe is me,” it could be worse if we would be living elsewhere. How are we doing in 2024?
There are so many factors that go into doing a comparison. In an effort to try to simplify that — to ascertain how to compare data and get an updated idea of how we compare with our neighbors — I’ve been renewing my acquaintance with Darren Bates, a tax consultant who lives near Muncie and works with 60 of Indiana’s 92 counties, including Wells. A half-hour or so into a conversation and looking through his extensive data bases that involved assessed values (both gross and net), tax rates, tax caps, local income tax rates, property tax credits, school budgets and school projects, county budgets per-person, and a few other details, we concluded our conversation with this:
“So Darren, if you had to choose, which county would you live in: Adams, Huntington or Wells?”
“I think, generally speaking, Wells is doing better than their surrounding counties,” he replied. “You’ve been good stewards.”
I sincerely believe him, and it’s nice to hear. It’s just difficult to keep that in mind sometimes — like when you get that piece of mail from the treasurer’s office.
miller@news-banner.com
