One thing nearly everyone agreed was positive about the property tax reform passed this session was that the school general fund levy would disappear completely from the property tax roles and be picked up by the State of Indiana instead. Most welfare levies would also move off property tax roles and onto support directly by the state.
"Whenever you get completely rid of a levy it's a good thing, because otherwise if it's just reduced, it tends to creep back up over time," says Don Villwock, Indiana Farm Bureau president. "We were certainly happy with that portion of the bill. Villwock was less than thrilled about other portions, including the proposed cap system.
Andy Miller, director of the Indiana State Department of Agriculture, also hailed complete removal of the support for general fund with property tax money as a major victory for both homeowners and farmers. Like Villwock, he noted that removing the levy entirely gets it off the roles for good.
However, one quirk has arisen. When a central Indiana school district recently received approval to raise the general fund for '08 to cover opening a new building, the local paper reported that it would increase property taxes on a typical home by a set number of dollars per year. But it the general fund is no longer supported by property tax at well, why would the rate go up?
Katrina Hall, tax specialist for Indiana Farm Bureau, Inc., explains that it's because the state doesn't pick up all of the general fund support for schools until 2009. Property taxes payable in 2008 will still include the general fund support for schools levy in the bill. However, she questioned how the paper could have predicted an exact dollar amount increase for a typical homeowner based on the increase in the general fund for a school corporation, since rates have yet to be determine din that county. What is correct, however, is that property taxes will still go up in '08 to cover the increase. Schools are allowed to request an increase in the general fund portion of the property tax bill when they bring a new school online to cover increased costs of operating the new building, including staffing it with custodial and maintenance staff.
So why did sales tax go up 1% this April1 if the general fund is still supported by property tax this year? Hall says it's because that money collected through sales tax now will go toward a large reduction in taxes for homeowners expected to be evident once bills are mailed out this year. However, it appears that just like last year, a sizable number of counties will be late in issuing property tax bill notices this year.