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Circuit Breaker Issue on Property Taxes Leads to Annexation Pressure

Circuit Breaker Issue on Property Taxes Leads to Annexation Pressure
Legislature will likely address annexation policy in this session.

The circuit breakers in the property tax amendment added to the state constitution under Gov. Daniels' watch continues to have unintended consequences. Since the circuit breakers are kicking in – limiting increases in property tax values in some areas – taxing districts are looking for new ways to increase their property tax base. The goal is to raise more money to offset the tax dollars they're giving up once taxpayers hit the property tax cap.

Stay farm land: This may look like a cattle farm to you, but a town or city might think it's land to annex to increase tax base. Look for the legislature to clean up annexation rules in 2014.

One way to attempt to increase revenue is to enlarge the tax base. Towns and cities in some instances in Indiana are seeking to do that through annexation. Bob Cherry, state representative, R-Greenfield, a landowner and Indiana Farm Bureau legislative specialist, says the city of Anderson wanted to annex an extremely large area, but the effort was shut down by local authorities before it got out of hand. However, other areas are attempting to annex sizable chunks of land that are currently used for farming, he notes.

In his own community Cherry says the town of Fortville, a relatively small community, set out in an attempt to annex 6,000 acres into the town limits. The same attempt is being repeated in other small and large communities around the state.

"They're trying to get more tax base to offset what they're losing due to the circuit breakers," Cherry reaffirms.

Indiana is one of the only states left in the country which still allow forced annexation, Cherry says. Basically, those whose land is being annexed do not get a say in whether annexation occurs or not. Cherry is hopeful that the legislature will address this issue during this session. The goal in his mind would be to adopt language that has been adopted in neighboring states that gives landowners more rights in these matters.

"Cities want to annex the land, but they're not as fast to provide services," he says. "They may see they are accessible, but 'access' to sewers or water may be several miles away."

If nothing else, Cherry hopes that if the issue is debated and hammered out by the legislature, the communication process that occurs when annexation issues arise will be clearer.

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