Referendum is Required for Any Criminal Justice Center

I've come to the conclusion that the proposed Criminal Justice Center, should it get any further, be put to a vote of the public in the form of a referendum.

Project details are being withheld from the public by the Ballard administration - even details they have seen fit to divulge to the project bidders. 

The price tag noted in the press began as $200 M, but has hemmed and hawed its way to over $600 M.  For our purposes here, any of these price tags works.

The CJC would be built and run by an outside, private concern.  The City would lease-to-own the building over 35 years.

The administration keeps saying it will not result in a tax increase. They toss around an annual lease payment of less than $122 M. Taxes might go up or stay the same.  Either case works here.

Nonetheless, some of the payments would come from money normally appropriated to the Sheriff's Office and the Superior Courts, among others.  The Public Defender and Prosecutor won't actually be part of the CJC, despite its huge size.  Any accommodations for them nearby would have to be part of a separate public-private-partnership and add to the already huge price tag being hung on the CJC.

Between just the Sheriff and Courts budgets, nearly $100 M comes from the Consolidated County Fund.   This year, this Fund got about $165 M in revenues, 25 M, or 15%, of which came from property taxes.  It is impossible to imagine a repayment scheme that did not include a significant portion from property taxes.

By state law, any project costing $12 M or more in property taxes - whether it be through bond or lease payments - requires the consent of the voters through a referendum.

The little information so far let out by the project handlers in the administration clearly demonstrates that the CJC project qualifies as a project that meets the threshold for a referendum.

The public has deserved far greater transparency on the proposed CJC than it has received.  It also deserves a referendum, so that it has a real say in whether or not it wants to commit hundreds of billions of dollars over 35 years to a Criminal Justice Center.

Hold On To Your Wallets - Its Budget Time

Tonight's City County Council meeting will kick off the budget process for next year's spending and taxing.

Mayor Ballard will give his annual budget introductory remarks. 

Elimination of the local homestead credit is once again included - Prop 248.  Not to make ends meet anymore.  Not to contain the ballooning public safety budget 'deficit' anymore.  This time he wants to eliminate it to fund pre-K education.

I did not see increases in income taxes, but expect to see that appear soon enough.

Being introduced tonight is a second attempt to increase the stormwater user fee that appears on the property tax bill.  Prop 249 would automatically increase the fee each and every year going forward.  This feature was also included in the first attempt and drew speculation that the Ballard administration was just sweetening the pot so that he could sell off this utility to a private concern.

We are being treated again to a lobbyist-drafted ordinance sponsored by Councillor Mary Moriarty Adams.  Prop 250 would allow digital billboards in Marion County.

Prop 254 is offered in reaction to Ballard-Vaughn's recently inked agreement with Covanta for 'recycling', which contained a 70% tax abatement that was not called a tax abatement.  Prop 254 urges the State Legislature to make any agreement containing a rebate on taxes or a forgiveness of taxes to be subject to Council approval, just like any other abatement in a TIF district is.

Coming before the Council for a vote this evening are a few items, including:

Prop 241 urges IPL to abandon coal as a fuel at its Harding Street plant.  Check this one off as completed.

Props 162 and 163 would allow $100,000 from the Mayor's Office budget be donated to United Way.  This brings up two questions - why is there so much fluff in the Mayor's Office budget and why should taxpayers be subsidizing any non-for-profit that brings in millions of dollars a year on its own?

Prop 349, 2013 would establish a TIF in the Avondale Meadows area.  This TIF is much needed, no doubt.  But specificity regarding its funding remain lacking and of concern.  Also of concern is a lack of resident control of or input on the projects that might get funded.

Prop 195 would establish a landlord registry.  It would cost local residential landlords $5 per year, but it would require out of state owners to establish an in-state manager responsible for any infractions that might beset the property.  Failure to register a property would result in fines ranging from $100 to $500.  This is a good one in my book.

Another good one is Prop 232, which would require defibrillators in all public buildings and buildings housing a department or agency of the City County government.

Budget hearings start this week.  Tuesday will see the introduction by Controller Jason Dudich as well as the budget presentation his office, the Office of Corporation Counsel, and two others.  Wednesday will be the budgets of the Public Defender, Community Corrections, and the Child Support division of the Prosecutor's office.  Both hearings will begin at 5:30 pm in Room 260 of the City-County Building.  Thursday will be the hearing for the Parks Department budget.  That will begin at 5:00 pm, same room.

Decatur Referendum - There Are Strings Attached

Now that Decatur Township voters approved a property tax increase to bail out the School District from its own flagrant fiscal mismanagement, there are a few things the District needs to do for the Community in return.

First, recognize that this tax increase will harm some very real people; maybe even, one of your neighbors.  We have a community of modest means.  Some of our elders already decide between spending on food and spending on medication.   The home they live in was purchased at a price far lower than the assessed value upon which the tax rate is applied.  We have families, with and without kids in school, that just make ends meet and have struggled to keep their home through the Great Recession.  We have renters in similar situations, whose rent will rise to accommodate the tax hike.

Remember their very real sacrifice each time you spend a penny of that new money.

Second, spend the new money only on the new circuit breaker impact coming next year.  That is what the community was told it was for.  Not raises, not all expense paid trips to extra conferences, not new carpeting - just the upcoming fiscal shortfall.  It would not be honorable to spend it in any other fashion than for the reason broadcast to the voters.

Third, counter the ill effect of our tax rate compared with our neighboring communities, by actually improving the education delivered to Decatur's children.  A "D" school system in a Township with a high tax rate will not attract the move up homes and the basic retail that we desperately need.  The least you can do is improve the education to a "B" District level, if not an "A".  The community deserves it.  More importantly, every child deserves it.  Even a child who earns all As is more challenged and learns more in an "A" district than in a "D" district.

I am impressed with Dr. Matt Prusiecki, the new Superintendent, and like some of the ideas he has shared with me; they are forward thinking and worth a try.   I trust Decatur school's CFO, Kirk Farmer, to be a good steward of our tax dollars.   So, it is possible, if these two are given the chance, to provide children with the education they deserve while keeping our fiscal house in order.

Fourth, don't expect this tax increase will be renewed in seven years.  Use every tool available to bring down the debt payment as quickly as possible.   State law allows refinancing for an extra 10 years, which will lower the principle and likely the rate as well.  It's not perfect, but the debt is overwhelming for a community our size.  Sell the extra real estate.   New state law demands that in 2015, our TIF district must get a sunset date applied to it.  It is possible the TIF could be gone before these seven years are up; in any case, the timing will be close.

Fifth, it is time to seat a new school board.  Three of the five seats are up for election in November.  It is time to sweep out those who voted for every debt increase and tax increase our community could not afford, who voted for every golden parachute, ungodly raise, and purchase of  unnecessary property.  It is high time to seat a new board who will honor the community's sacrifices.  It is time to seat a board who will stop the excuses and improve our school system

Yes Kids, TIF Bases Really Did Erode

I was pretty taken aback when alerted recently to a Twitter exchange between City-County Councillor Zach Adamson and Mayor Ballard's Chief of Staff, Ryan Vaughn.

Yes, Ryan Vaughn actually stated that "TIFs don't touch the base.  That's why it's called Tax 'Increment' Financing."

It is discouraging that someone so involved with spending our tax dollars, does not understand the difference between the promises made about TIFs and the reality.

The erosion of the base was so prevalent in Indiana, that two years ago the Legislature enacted changes in how the base is recalculated each year (the TIF neutralization). 

I have obtained all of these forms for all Marion County TIFs from 2008 to 2013.  Below I chart the increment and base for all TIFs whose base was not already zero in 2008.  I did not include 2013 data because they grouped the TIF numbers - for instance, all the component TIFs of the Consolidated Downtown TIF are no longer reported individually.  Suffice it to say, the new base recalculating method is most helpful in preserving the base.

Some notes to the graphs:
Assessments are done in one year, and the taxes are billed the following year on that assessment.  Thus, the x-axis reports time in the format of 2008pay2009.
The y-axis for the increment is on the left and increment is shown in red.
The y-axis for the base is on the right and base is shown in blue.

29 TIFs had non-zero base in 2008.

 

 

 

I think TIF 151 had a transcription error on the pay 2011 form

 

TIF 640 had been dormant before 2012, when it was reactivated.  The base was reconfigured at that point in time.

 

 

 

 

Regardless of what happened to the increment - rise or fall - the base always fell.  The combined erosion of the bases between 2008 and 2012 (not counting TIF 640 - the Dow Elanco TIF because its base was reconfigured during that period) amounted to $283,579,872.  The taxes on that eroded base did not continue to flow to the schools, libraries, or the city, as was promised.  Instead it went into the increment to fatten the TIF slush funds.



Onus of TIFs Not Equally Shared

Anyone who has followed this blog for very long knows that TIF districts cause all of our tax rates to rise, account for at least half of the circuit breaker penalties that plague the delivery of basic services (from cops to schools), and are really slush funds so the Mayor can reward his favorite developers, bond salesmen, and lawyers.

Most of us know that the burden of having TIF'd real estate is not distributed evenly.  I was given a heads up last week, that there is information available on the State's Gateway website related to assessed values.  When I saw that information, I found it also had important data about the distribution of taxable property between the various taxing districts in Marion County.

From this information I was able to calculate the amount of real estate assessed value, personal property AV, and more, as a percent of the total for each Township.

Before I pull you too far into the weeds, let's back up a tiny bit and define some terms.

Property taxes are based on the value of the real estate and the value of personal property owned by businesses - from conveyor belts to manufacturing equipment.  Business personal property is in the crosshairs of Governor Pence and the Indiana Manufacturer's Association for eventual elimination.

The data available on the State's Gateway website go into a fair amount of detail.  It also notes how much of the assessed value of a TIF is being 'passed through' in a given year.  This decision is made each year by Mayor Ballard/Vaughn, through the actual vote of the Metropolitan Development Commission, which he controls.  Each TIF district is examined for how much tax money the Mayor wants to keep, and he 'generously' sends some back to the other taxing units.  But, next year he could simply decide to keep all that value in his slush funds.  It is optional.

I looked at the percentage of assessed value of real estate in each Township caught in a TIF - both before and after the pass through.  (for those who don't mind the weeds - these numbers are the net AVs after deductions, like the homestead deduction, are subtracted)  The number before the pass through is the truer value of the amount of real estate actually ensnared by the TIF.  The number after the pass through is the truer value of the tax base for the TIF in a given year.  I also pulled out the percentage of assessed value of the personal property in each Township caught in a TIF district.  Because Beech Grove, the City of Lawrence, and Speedway have all created their own TIFs, I also aggregated the number for each of these entities.  But, please be aware, that the Township data contains these three city/town data.

Township or City/Town	% Net Real Estate AV in TIF after pass through	% Net Real Estate AV in TIF before pass through	% Net Business Personal Property AV in TIF
Center	39.49%	44.58%	26.72%
Decatur	24.86%	24.86%	0.00%
Franklin	0.03%	0.03%	1.03%
Lawrence Tnshp	4.23%	7.71%	0.83%
Perry	0.70%	0.70%	0.00%
Pike	2.35%	8.91%	2.97%
Warren	0.65%	1.40%	4.16%
Washington	0.01%	4.86%	0.00%
Wayne	9.78%	10.02%	8.41%
Total Marion County	9.77%	13.10%	10.65%
Beech Grove	6.72%	6.72%	2.31%
Lawrence - City	14.06%	14.06%	3.49%
Speedway	4.09%	5.81%	37.52%

Center Township has a frightening amount of real estate trapped in TIFs, at 45%.  To add to the tax burden, they also have the lion's share of personal property in TIFs, at 27%.

My community, Decatur Township, is hit the next hardest for real estate value in a TIF, at 25%.  Luckily, for a while anyway, all the taxes from personal property are outside the TIF.

Wayne Township is hit next hardest with a combination of 10% real estate and 8% personal property value in a TIF.

Washington, Lawrence, and Warren Townships are each home to a 'dormant' TIF district, whose entire AV is passed through each year.  As noted above, that can change with the whim of the Mayor.  The City of Lawrence's TIF districts account for all of the active TIFs inside Lawrence Township.

Pike Township has one TIF district - the Dow Elanco TIF.  This was a dormant TIF just a couple of years ago, but was reactivated recently.  The majority of the value is passed through at the discretion of the Mayor.

The Town of Speedway has evidently gone a slightly different route, capturing far more value from business personal property than real estate inside its TIFs.

 Taking the County as a whole, we are up to 13% of our real estate tax base inside a TIF.  This year some of it was passed through to help pay for basic services, reducing the actual TIF tax base to 10%.  But, as I keep saying, next year the Mayor could decide to keep it all for his special friends.

These numbers probably illuminate the reason Decaturites hate TIFs.  It is a puzzlement, though, why Center Township residents haven't stormed City Hall with torches and pitchforks.

Big Changes for MDC and TIFs - Thanks to SB 118 - edited

The Legislature continues to chip away at the more flagrant abuses of TIFs.  This year SB 118 provides a lengthy list of changes in the oversight of the Metropolitan Development Commission (and similar entities throughout the state), calls for an in depth review of the work of these entities, and causes old TIF districts to get sunset dates.

Let's start with that last item, because it is immensely important.  TIF districts established before July 1, 1995, could have, but did not need to have, a sunset date - a time certain when the TIF district is dissolved.  With the passage of SB 118, we will now have a sunset date placed on all of our older TIFs - EXCEPT those that comprise the Consolidated Downtown TIF.  The biggest slush fund must be protected !  On July1, 2015, each old TIF (except downtown) will get a sunset date of either June 30, 2025, or the date of the last payment on any outstanding bond tied to that TIF district, whichever is later.  According to information provided to the TIF Study Commission, there are at least 11 TIF districts in Marion County do not currently have a sunset date.

Also of considerable importance, is the requirement that the City-County Council review many more aspects of the MDC's exercise of its powers than it does now.  These include review of its annual budget, purchase of property over a term more than 3 years or a price greater than $5 M,  and sale of property. [edited - the Indianapolis-Marion County City-County Council is the only legislative body that will not be able to review the budget of its redevelopment commission.  The City-County Council will only be able to approve or deny a property purchase of the MDC if the term of repayment is more than 5 years.]  The MDC must get Council approval to take on any obligation payable from public funds. [edited - the rest of Indiana's redevelopment commissions will be bound by this, but not the MDC] The Council must approve the term of any debt, the maximum interest rate, provisions for early payment of the debt, and any inclusion of collateralized interest. [edited - the Council already has the authority to review all bonds the MDC wants to issue.]

The Council approval will now have to be sought for the annual determination of how much of the assessed value of a TIF district increment will be treated as 'base' for the upcoming year.  If the taxes that would be generated are more than twice what is required for payment of debt in a given year, then the MDC will be required to get Council approval for how much of the excess is passed through.  The downtown TIF is so huge, the MCD regularly 'passes through' tens of millions of AV.  This provides a tiny bit of cushion to IPS.  Say next year the Mayor wants to horde every penny of the Downtown TIF and not let any of its AV pass through, well the Council can say differently and pencil in how much it thinks should be made available.

In the future, the MDC will have to submit to the Council one important piece of documentation sorely lacking right now, whenever it wants to establish a new TIF or expand an old one - it will have to document that any new taxes generated in the TIF would not have been generated if the TIF were not there.  As an example, the Broad Ripple parking garage could not have been included in the North Midtown TIF if this law had been in place for the last couple of years.  It is also likely that the Mass Ave TIF and most of the North Midtown TIF would be a no-go, since those areas were already seeing a heady rate of organic private investment.  This provision will put an end to the Mayor's practice of establishing TIFs in booming areas in order to create healthy slush funds.

The MDC will be subject to audit by the State Board of Accounts.  By August 1, 2014, the Department of Local Government Finance must submit a report on all redevelopment commissions, authorities and departments with the following items:

(1) The activities of each redevelopment commission, authority, and department throughout Indiana, including projects proposed and projects completed.

(2) The budgets for 2009 through 2013 for each redevelopment commission, authority, and department, including a summary of these budgets.

(3) The audit findings for 2009 through 2013 for each redevelopment commission, authority, and department audited by the state board of accounts, including a summary of these audits. 

(4) The actual increase in assessed values in redevelopment areas compared to the estimated increases set forth in the redevelopment plan. 

(5) The actual increase in assessed values in redevelopment areas compared to the increase in assessed values outside redevelopment areas. 

(6) Suggested changes in the law with regard to redevelopment commissions, authorities, and departments.

These are certainly improvements that can benefit the taxpayers.  It is also welcome news that there will be an actual review of the work of these redevelopment authorities; a review that includes data that can expose the usefulness of TIF districts to catalyze growth that would not have happened without the TIF.

But, mostly, I am so happy that almost all TIFs will be required to disband someday.  Next year, maybe the sunset provision will be extended to the Downtown TIF so that downtown can begin to give back to the rest of us.

Decatur School Referendum - Other Matters to Consider

There are some points that don't fit neatly in a discussion of the pros and cons of the upcoming May 6 Decatur School District Referendum to increase property taxes by almost $0.3 per $100 of assessed value to help the District dig out of its financial mess.  Some of these are 'in the weeds', but hopefully you'll wade in anyway.

Here are some of them:

1) Dr. Prusiecki, the new Superintendent, is demonstrating a respect for transparency and fiscal responsibility.  I've had two chances to talk with him at least briefly, and I find I trust him the more I get to know him.  I like his ideas about education, especially his respect for parents and his clear interest in putting the District's emphasis on what is best for the kids.  He is now the caretaker of the school system.  He did not cause the fiscal problems he must deal with.  Our District has a chance to improve the quality of education delivered to Decatur's children with him at the helm.  Further cutbacks only make that more difficult.  He seems to be actively listening to the community as he goes about with his presentation.  The last time I heard him, he said he has asked the CFO to obtain appraisals for the excess property the District owns; setting the stage for that property's potential sale.

2) Kirk Farmer, the CFO of the District, is the person who convinced me that a new day just might be dawning for the District when he took over the finances back in 2011.  He convinced me with his transparency, willingness to share public records, and the fact that he lives in Decatur and is one of us.  Farmer has been working diligently to dig us out of the financial hole we are in, and that is no mean feat.  But, he needs more time.  As you'll read below, other factors have caught up with the District finances and with each passing year his task becomes harder and harder to do.  Passing the Referendum would give a bit of ease back into paying the bills - not much ease, but a bit.

3) Make no mistake about it, the various taxing units are at war with one another in their attempt to push the property tax cap/circuit breaker penalties off on each other.  Witness this year's move by the City to expand the IMPD taxing district from the old City limits to the entire County.  The whole reason was to lower tax rates in the old City and raise them in the rest of the County - thereby pushing the tax cap/circuit breaker penalty outward.

4) With our tax rate topping 4%, a large fraction of property in Decatur is hitting the tax cap maximums.  Estimates last year, when the rates were lower, suggested that 2/3rds of Decatur properties were at the caps.  That means that when another taxing unit increases the amount of money they want to raise through property taxes, it hits the School District's bottom line.  In the curious world of tax cap math, one dollar increase in another budget causes a 50 cent decrease in the amount of money the School District can collect.

5) Between 2013 and 2014, 5 of the 7 taxing units who charge property taxes in Decatur raised their tax rates - this despite the fact that the total assessed value rose, so they clearly were increasing their tax levy (the total amount of taxes they were charging).  Only the School District and IndyGo lowered their tax rate.  Most of the increases were single digit, but the Decatur Township rate rose 25% and the City tax rate rose 41%.  Again, every dollar increase from another taxing unit causes a 50 cent decrease in the amount of revenue the School District can collect.

6) The debt problem is high and long term.  The district has 6 outstanding bonds, some of which do not get paid off until 2028.  Additionally, the district is paying on short term loans (the District was living off loans for a while; $2.5 M still owed).  The short term loans should be paid off in 2016 - so there is some bit of relief coming.  The payment due on the bonds rises from $13.4 M this year to $14.5 M in 2019, when it levels off for a couple of years before dropping just below $11 M from 2023 through 2028.  In 2016 the terms of the bonds will allow the District to refinance them, hopefully at a lower rate.  The legislature extended the opportunity for the District to extend the term of the bonds by 10 years - not ideal, but still it would lower the payment due and help the District make ends meet.

7) With some help coming by 2017, there are two ways of looking at the Referendum - either make the District struggle with finances for two more years through operating budget cuts, or, let them get over this hump in a way that leaves the District at its current operating levels.

8) If we vote for the Referendum, would the District use the money only to get through the worst of the crisis, or would they get used to the extra money come 2017 and become dependent upon it?  I still have deep concerns about continuing this tax increase for more than 7 years.  I think our community can bite the bullet as far as quality growth is concerned for a short period.  But, if we go beyond the short term, I fear we will never recover and we won't really get a chance to attract that move-up housing, basic retail, and good hometown jobs that everyone else in Marion County has.

9) The best I can tell, a provision in Senate Bill 118, that would create a sunset date for all old TIF districts, made it into law.  The Legislative Services Agency analysis states that an exception for the Consolidated Downtown TIF was created, but I cannot find that exception in the final version of the bill (see page 28).  More on this bill later, at it makes substantial changes in the oversight of the Metropolitan Development Commission.  If this did get into law, then the Airport TIF, including the Ameriplex portion, would have to sunset by June 30, 2025 unless the City floats new bonds with a longer term by July 1, 2015.  That is a long way away, but the future finances of our Township and its schools could be a bit brighter than it was.

This all brings us back to the start.  The most important thing about this Referendum is that it reflect the will of the Decatur community.  For that to be the case, everyone should show up on May 6 and vote.  And, for that to happen, everyone who is 18 years or older should be sure to register to vote before the April 7 deadline.  Links to easy, online registration are in the sidebar of this blog.  I hope to see you at the polls on May 6.

Decatur School Referendum - Reasons to Vote NO

There are reasons to vote against the upcoming May 6 Referendum to increase property taxes in Decatur by nearly 0.3 dollars per $100 assessed value.

1) Former Superintendent Don Stinson and the School Board knew full well that the massive debt they were loading onto our community would get caught up in tax caps and thereby require using operating funds to cover the shortfall.  They were fine with that - so let them live with it. 

2) The whole idea behind the tax caps was to make governmental units more responsible with their budgets and the amount of debt they accumulate.  If they have to make cuts, so be it.

3) The second intergenerational obligation we have is to our elder community members.  Even if you and I can afford another $50 to several hundred dollars a year, those living on a fixed income may already be in a bind.  They would have bought their homes long ago, when the costs were much lower.  With each passing year, the value of their homes have risen and along with that the property taxes due grew.  I know I would feel a lot better about this referendum if we could somehow carve out the senior citizen population - myself excluded - and forego any rise in their property tax rate.

4) The Decatur School District still owns well over one hundred acres of excess property.  More than one person has suggested to me that they sell it, even if they must take a loss.  If things are really desperate, then sell the land.

5) The district cut $12 million from their budget over the past few years, and I trust that number.  Yet, the list of cuts presented by Dr. Prusiecki suggests more might be done.  When I saw his presentation (see sidebar of this blog for a link to the PowerPoint), he offer a two-page list of cuts.  Many were from the 'Fiscal Restructuring' of a few years ago.  Only, not everything that was supposedly cut back then was actually cut.  Take the first item on the list - 7 administration positions supposedly cut. They included 4 administrators from the Central Office, one elementary principal, and two high school 'directors'.  There may have been two real cuts in the Central Office, but it is hard to tell if they have been replaced - as of now there are at least 14 administrators in the Central Office (folks under specific contract).  Certainly the Elementary Principal position was filled immediately and by this point in time the two High School Directors positions are once again filled.

A jog through the District website shows one Principal, 5 Directors, 1 Athletic Director, and 1 job-unspecified Administrators at the High School.  Beyond that, there are 8 Principals and 12 other Administrators through the rest of the District's school buildings.

6) I am extremely concerned about the impact of a higher tax rate on our community's ability to attract move up homes and much needed commercial retail.  The tax rate just over our borders is much lower, as I noted in earlier posts. 

7) Even if we could weather 7 years of higher taxes, what happens after that?  Will the district just absorb the tax increase and become dependent upon it, even as the State Legislature offers other means of lowering the cost of our debt or eases the effects of property tax caps or TIFs?

8) There are a couple of legislative items currently still in action at this year's Legislative Session that could help.  One is to give the District the ability to refinance its bonds for 10 extra years, once they are eligible in  2016 due to the bonds' own terms.  That would lower the principle and interest due, thereby lowering the tax rate which in turn lowers the number of properties hitting the tax caps.  The other would cause the Ameriplex TIF (part of the Consolidated Airport TIF) to sunset by 2025 at the latest.  The bonds owed by that TIF will be fully paid off by 2021 - so conceivably it could sunset in the last year of a 7 year referendum.

If there were to be only one 7-year referendum, it would be less destructive to our community's future than if it were to be rolled over again and again and again.

Those are the reasons to vote no that leap to mind.

[edited to  note: I thought the PowerPoint presentation by the Superintendent was posted on the website.  However, I cannot find it.  I'll post a link if I can]

Decatur Schools Referendum - Calculating the Cost to You

Because the May 6 Referendum would fix a specific extra tax rate, you can get a pretty good idea how much passage of the referendum would cost you.

The extra rate requested is 0.2986 dollars per $100 of assessed value.  Assessed value is the amount of money the City/County thinks your house and property are worth.  That will likely creep up over the next 7 years - which is the length of time the extra tax would be in effect.  If the school system got the referendum and it wanted it in year 8 as well, then it would have to put another referendum on the ballot in 2021.

Here's how you get a good estimate of the cost to you by using a little math and your last property tax bill.

Pull out your last property tax bill (pay 2013) and look at the long page titled "Special Message To Property Owner". 

In Table 1: "Summary of Your Taxes", locate line 3. "Equals subtotal of net assessed value of property". 

In the far right column of Line 3, under the heading "2013", is the important dollar value for your property that is used in this calculation.

Multiply that important dollar value by 0.003 - I used a calculator for mine.  The resulting number is the extra dollars you would have to pay if the referendum is passed. 

The School District hired a firm to run some sample homestead property taxes and calculate the extra dollars for variously valued residential property.  Here is their results (I calculated and added the column "Percent Increase in Tax Bill"):

Home Value                   Extra Tax Dollars Owed        Percent Increase in Tax Bill
$76,900                                            $50.85                                    7.4%
$92,500                                            $79.93                                    8.6%
$110,200                                        $116.65                                   10.4%
$175,000                                        $233.70                                   13.4%

Now, if you own homestead property larger than one acre, you will find that the extra tax you calculated is higher than shown in these examples, because the value of that extra land does not get any deductions.  By following the calculation method I noted above, you'll get a better representation than by using the table supplied by the District.

Rental residential property and farmland have a property tax cap of 2%.  So, increasing the tax rate by 0.3% would increase the tax bill by 15%.

Commercial and industrial property have a property tax cap of 3%.  So, increasing the tax rate by 0.3% would cause an increase in those tax bills by 10%.

IMPD Budget Recap - It's Probably Not What You Expected

Last night's budget hearing for IMPD was quite well attended.  For those who missed it, let me recap.

Public Safety Director Troy Riggs, Police Chief Richard Hite, and Public Safety Deputy Director Valerie Washington present limited IMPD budget numbers; noting only that the money flowing to IMPD from one fund (the IMPD General Fund) would remain the same, at $187m.  

In 2014, the want to hire 35 civilians to take over duties now conducted by sworn Officers, allowing those Officers to return to patrol duties.  They also want to set up a recruit class of 50 new hires.  That, combined with 10 civilian hires this year, make the 90 new sworn Officers that is being bandied about in the media today.

But, in order to accomplish all of this, they need to have their budget cut by $5.65 m.

Now, I know you want to go back and re-read that last sentence.  Go ahead.  I'll wait.

Yes the IMPD budget is being reduced by $5.65 million.  This includes a $7.09 million decrease in salaries from the current year budget.  No wonder they glossed over all the numbers except that one fund's expenditure total.

So you say, but Pat, what about the $1.4 million in fees to be charged the Officers for use of their take-home cars?  Well, I assume that's in the budget somewhere, but there is  no line that says 'fuel surcharge fee' in the numbers available to the public.  And, all I can say is, what one hand giveth, the other taketh away.

And you say, but Pat, what about the two tax hikes the Council gave the CIB - the increased ticket tax and car rental taxes?  Wasn't the first year's $6m supposed to go to IMPD and IFD?  And, after that isn't 25% of those increases to continue to flow to IMPD and IFD?  Why, yes, that's true.  But the year began on March 1, so the is only two months of 100% CIB 'public safety' revenue in 2014 and the rest is at 25% - so maybe $1m to IMPD. 

But, Pat, you say, what about the proposed increase in the old IPD Tax District?  Isn't that assumed in the 2014 that is on the table?  Why, yes - yes it is.  I know they say it will net about $3 million in additional funds, but the additional revenue IMPD collects is only $1.6 m.  And it actually should show up as a decrease in the property tax circuit breaker.  But that number is just about the same as it was for the 2013 budget.  So, you got me.  I'm sure its in there.  Yet again, what one hand giveth, the other taketh away.

What about the $9 million that is supposed to come from elimination of the Local Homestead Credit?  Surely that's in the IMPD budget.  Ryan Vaughn and Troy Riggs are all over the media saying that if that credit isn't eliminated then the IMPD budget will lose $9 million and there could be no new hires next year if that happens.  Well, this one gets a 'not really'.  Should the Local Homestead Credit be eliminated, the IMPD budget would actually go down about $300,000.  IMPD is better off if its not eliminated.  The elimination frees up County Option Income Tax revenue, but IMPD doesn't see a penny of that money.

Lets add up all the new money that the Mayor Ballard, Vaughn and Riggs imply is in the IMPD budget, shall we?  $1.4 million in fuel surcharge fee, $1 million from the CIB, $1.6 million or $3 million from expanding the old IPD Taxing District, and the $9 million from eliminating the Local Homestead Credit - sounds like $13 million to $14.4 million more money to IMPD, doesn't it?

But - nope.  No $14 million more for IMPD.  The 2014 budget really is $5.65 million less than 2013.

Its all a game to use public safety to secure public support for this round of tax changes. 

They Call it "COUNTY" Option Income Tax for a Reason

In a previous blog entry I showed graphs comparing the impact of eliminating the Local Homestead Credit, expanding the old IPD Tax District, and doing both, on various units of government.  In that I showed only the aggregated impact on City and County government.  That is the government run out of City Hall.

Now, because of obfuscation and deliberate confusion being tossed around by the Mayor's Office to the media, I'd like to show you what effect these tax changes would have on the pieces of City and County government.

But, first...

The Local Homestead Credit is a reduction in property tax bills that is paid for by using County Option Income Tax (COIT) revenue.  They call it County for a reason - the income taxes collected go to the COUNTY.  Not the City of Indianapolis.  Not to the IMPD fund.  Not to the IFD fund.  But to the County of Marion. If the Local Homestead Credit is eliminated, there would be more COIT money to spend on other things.  But, again, it is COUNTY Option Income Tax.

There are 6 different property tax districts that provide money to City and County government.  Each has a different footprint in Indianapolis/Marion County.  I will give you the impact data for each of these at the bottom.  But, for clarity and a bit of simplicity, I want to concentrate on the tax impact on the Police district, the Fire district, the consolidated City, and the consolidated County.

So, without further ado...

The overview of how eliminating the Local Homestead Credit, expanding the old IPD Tax District, and doing both will affect the coffers of the Police, Fire, City and County.

The scale is Millions of Dollars

As you can plainly see, most of the additional revenue would go to the County government coffers.  That's the Sheriff, Clerk, Prosecutor, and more.  By comparison, IMPD sees only a blip in increased revenue, Fire less so and nearly imperceptible changes for the City. [edited - my mistake here, the consolidate County is actually the City's general money - but none of that fund is used for police or fire.]

Looking more closely at each individual group...

POLICE

The scale is Thousands of Dollars

The Police fund would see its best gain if only the old IPD Tax District were expanded and slightly less if both changes are made.  It sees a loss of just over $200,000 in revenue if only the Homestead Credit is eliminated. 

FIRE

The scale is Thousands of Dollars

The Fire fund would see less than half the gain that Police see if only the old IPD Tax District is expanded.  It would experience a loss of almost $800,000 if only the Homestead Credit were eliminated.  And it would see a modest loss if both changes are made.

CITY

The scale is Thousands of Dollars

City funds would grow by a bit if the old IPD Tax District were expanded.  It would see roughly a $2000,000 loss if the Homestead Credit were eliminated, and about $150,000 loss if both are enacted.

COUNTY

The scale is Millions of Dollars


The County gets buckets-o-cash if the Homestead Credit is eliminated and next to no change if the old IPD Tax District is expanded.  Please note that while the scale of the preceding three graphs has been Thousands of Dollars, this scale had to be Millions of Dollars.

Here are the exact numbers for all 6 tax districts.  You'll notice an additional 'County' district that brings in even more money to the County coffers.  Please do not ask me why there are two County districts.  Loss of revenue is highlighted in red.  Gain in revenue is black.

Name	HSC Elim. Only	IMPD Exp Only	Both
Marion County	$1,346,500	423,000	1,720,400
Indianapolis Sanitation (Solid)	(254,400)	94,000	(171,600)
Indianapolis Police Special Service	(234,100)	1,671,000	1,332,800
Indianapolis Fire Special Service	(749,400)	645,000	(130,600)
Indianapolis Consolidated City	(225,100)	90,000	(164,100)
Indianapolis Consolidated County	8,442,000	173,000	8,576,300

So, what have we learned here today?  While the Mayor's office continues to connect these tax changes with some improvement in IMPD's budget, it is a fabrication intended on selling the tax changes.  Expanding the old IPD Tax District does have a small, but real, affect on IMPD's revenues.  But eliminating the Homestead Credit has a negative affect on IMPD. 

It is a shame that we cannot get the real story from the Mayor or his Chief of Staff and that we citizens have to resort to examining the minutia of the numbers to learn the truth.

Dazzle Them With Numbers

Tonight the Admin & Finance committee of the City-County Council will consider eliminating the local homestead credit (again - Prop 274) and expanding the old Indianapolis Police District taxing district (Prop 275) from basically the old city limits to the entire county minus the excluded cities.

The local homestead credit is applied to homestead property tax bills.  The money used to supply the credit comes from local income taxes.  It costs more in income tax money than it saves taxpayers in property taxes, because so many property taxpayers have already hit the tax caps and can be billed no more than the 1% value of their homes.  I'll give you graphs and numbers below, but suffice it to say without numbers, that the City/County government stands to reap millions of dollars and those Townships that retain their fire departments stand to gain in tens to hundreds of thousand dollars if the homestead credit is eliminated.  The remaining Townships, the School Districts, and three municipal corporations (IndyGo, the Library, and Health & Hospitals) all stand to lose anywhere from $50,000 to nearly $1 million if the homestead credit is eliminated.

The expansion of the old IPD taxing district would still collect the same total amount of money - but more property taxpayers would pay a share.  Therefore the tax rate in the old city limits would go down and the tax rate outside would go up.  Through the magic of the property tax caps, this would cause the City/County to again reap millions more from this change, IPS would see millions more, and Center Township along with the three municipal corporations would see hundreds of thousands more in revenue.  All other Townships and School Districts would see a drop in revenues from minimal to just over $700,000.

If you do both - eliminate the homestead credit and expand the IPD taxing district - you get a mixed bag of effects because the list of winners changes with the two.

The administration is basically holding forth the notion that those who stand to lose revenue through these changes, will make up for the losses because other revenue they get is scheduled to increase and would absorb most, if not all, of any losses.  This ignores two facts - one is that the School Districts have already signed teacher contracts obligating them through June of next year.  These contracts were crafted in anticipation of the increased revenues.  The other fact is that the City/County will also see an increase in revenues and can, using the same logic, forgo both the homestead credit elimination and the expansion of the IPD tax district.

Below are some charts showing the impact of eliminating the homestead credit, expanding the IPD tax district, and doing both, on most of the taxing districts in Marion County.  I have uploaded the raw data supplied by Jason Dudich, the City Controller, to Google Drive (here and here) should you want to look over those districts I've not followed below.  The data for the elimination of the homestead credit is from the Policy Analytics presentation to the Review Commission.

City/County Government

 

 

The City clearly finds advantage in any combination of changes.  It is the big winner.

Townships

Center Township and the westside Townships see the real 'action'.  Center gains if the tax rate in the old city limits goes down, by reducing the number of taxpayers who are at the property tax caps - thereby increasing the amount of property tax revenue that becomes collectable.  The westside Townships are the only three that retain their fire departments.  They receive income tax revenues and thereby gain when income tax money is freed up by the elimination of the homestead credit.  They lose, however, property tax revenue if the old IPD tax district is expanded, because the tax rate will go up in their district and more folks will hit the tax caps - decreasing the amount of collectable tax revenue.  The least difference for these Townships is if both the elimination and the expansion move forward, or if neither is enacted.

School Districts

I show the school districts with and without IPS, as that district's gain dwarfs the losses of any one of the other districts.  IPS gains only with the expansion of the IPD tax district.  The other school districts lose any way you cut it.  Beech Grove and Speedway have the lowest property tax dependence and thus the lowest impact from any proposed changes.

Municipal Corporations

 

Last but not least is the impact of the elimination and expansion on the Library, IndyGo, and Health & Hospitals.  These three depend upon both property tax and income tax revenues, but mostly the former.  They lose money if the homestead credit is eliminated and gain if only the IPD tax district is expanded.

 

There is no threading the needle here; if any changes are made, some taxing district will lose and some other will win.  Clearly these proposed changes are being proposed only because they increase the revenue to the City/County government no matter what combination is enacted.  But, the impact and fallout from changing the status quo is quite real.  The elimination of the homestead credit has had time for its impacts to be considered and weighed.  The full impact of the expansion of the IPD district and the full impact of the combination of changes, have not been granted the same study.  That will be unfortunate, to say the least, should any Councillor vote on these matters without reviewing the exact impacts for themselves.