Submitted by: Gary Malone, Executive Partner

A frequent complaint about property taxes is that various entities can increase tax rates independently without considering the overall impact on taxpayers. The Indiana General Assembly enacted a change in the last session that addresses that concern, setting up a process for centralized approval at the county level.

Beginning in 2009, every county must have a Board of Tax and Capital Projects with the authority to review, revise and reduce the budgets, tax rates and levies of all political subdivisions in the county - unless the county council enacts an ordinance before July 2 of any year to prohibit such reviews. The exact composition of these boards is prescribed by law, but will vary from county to county depending on how many cities, towns and school systems are in the county.

Fiscal bodies of all political subdivisions in the county must prepare a capital projects plan for the five years beginning with plan approval. The fiscal body must conduct a public hearing on the plan before submission and publish a summary and public hearing notice in accordance with IC 5-3-1. The plan must include controlled projects financed with bonds or leases payable from property taxes with a cost of at least $7 million per project. Wastewater treatment projects, sewer systems, water systems, drainage or flood control, highways, roads and bridges are excluded from capital plan review.

The county board will conduct its own public hearing on the five-year plan and issue a written report within 60 days after plan submission. If the board rejects any part of a plan, the political subdivision may not implement that project unless it holds a public meeting to address the board's concerns and explain why that part of the plan should be retained.

New five-year plans must be submitted every two years.

In addition to being included in the capital projects plan, each capital project must be submitted to the county board for review. The process is similar to submitting a five-year plan, but must include a feasibility study. The county board also may require plans, specifications, cost estimates, estimated impacts on tax rates and other information. The county board will consider the need and cost for the project as well as its relative priority among other proposed projects in the county. The county board may not disapprove a capital project that is required by court order.

If the county board disapproves the project, the political subdivision may initiate its own petition and remonstrance process.

If you have questions about the new process or the exact make up of the board for your county, please contact us at footnotes@umbaugh.com.

This article is the fifth in a series about recent changes to property taxes and revenue streams enacted in the 2007 Indiana General Assembly. Upcoming articles will begin to illustrate how these new tools can be used. We thank Buddy Downs and Karen Arland from Ice Miller LLP for their research and insights.