Bill would help school districts deal with property-tax caps
BY CHRISTIN NANCE LAZERUS firstname.lastname@example.org March 8, 2014 3:02PM
Transportion is one of the areas that Gary schools have had to cut back in due to the loss of property-tax revenue. | Post-Tribune File Photo
Updated: April 11, 2014 6:12AM
Relief may be on the way for school districts that have had to cut their budgets due to property-tax caps.
House Bill 1062 could lessen the impact of the property tax “circuit breaker” caps on school district budgets across the state. Different versions of the bill passed both the House and Senate; it’s in conference committee to resolve those differences.
The caps, which are 2 percent for residential properties and 3 percent for nonresidential properties, were placed in the Indiana constitution by voter referendum in November 2010. The caps mean property owners only pay a fixed percent of their property’s gross assessed value in taxes.
The situation meant districts had to trim their budgets, but a small paragraph inserted into a bill in 2012 worsened the situation, according to Executive Director of the Indiana Association of School Business Officials Dennis Costerison.
“It added a paragraph about protected taxes, saying that districts needed to pay their debt service obligations first, but for about one-third of the state’s school districts, it was much worse than the circuit breaker itself,” Costerison said. “When corporations experienced drops in collection rates, they can spread them among the funds, but protected taxes didn’t allow that.”
Thus, districts saw large cuts payments toward transportation, capital projects, bus replacement, pension debt, and other categories.
“Three districts, for example, wouldn’t have had any money available for transportation, maintaining buildings or technology,” he said.
For example, Gary lost more than $1 million in transportation funds and close to $900,000 in capital projects. Gary spokesperson Sarita Stevens said the district had to revamp its transportation system to cope with the loss of funds due to changes in the school funding formula and property taxes.
“It changes the way we transfer kids and dictates more walking zones,” Stevens said. “Funding can’t be impacted that severely without changes, and the service almost taken down.”
Other districts impacted by the situation are Lake Station, East Chicago, Boone Township (Hebron), Hammond, Lake Ridge, River Forest, Valparaiso, Whiting, Portage, Hobart, Griffith and Munster.
House Bill 1062 aims to remedy the situation somewhat by allowing schools who lost more than 10 percent through protected taxes to be exempt for the next few years. Meanwhile, legislators will convene a commission to look at the whole structure and hopefully find a longer term solution, Costerison said.
“Districts will still be losing money, but this should help them immensely,” he said.