Umbaugh Tackles Indiana Property Taxes

Property taxes are once again at the forefront of the public policy debate in Indiana. Homeowners saw their 2007 property tax bills increase substantially, as much as double or triple in some areas of the State. The resulting public outcry is putting the property tax system in Indiana under the microscope.

Indiana's property tax system is complicated, which creates confusion and misunderstanding as to how property taxes are determined. As a result, Umbaugh is releasing a report that sheds light on the nuances of Indiana's taxing system. As decision-makers begin to develop and evaluate options for fixing the current property tax system, Umbaugh hopes to offer insight into the process and provide observations relating to the changes in 2007 property taxes.

This report, titled Indiana's 2007 Property Tax Crisis, offers an objective look at modifications made to property tax calculations between 2006 and 2007. Analyzing the main components of the property tax bill, the report focuses on changes in property tax levy, base, and credits. We evaluated these changes in three Indiana counties: Marion, Delaware, and Dubois, looking at how property taxes shifted for the county as a whole and how individual tax bills were affected by these changes. Although Marion, Delaware, and Dubois Counties are very different in composition, they experienced similar shifts and changes in their property tax bills, showing that property tax reform is an issue that affects the entire State.

Through our report, Umbaugh has developed some general conclusions as to the causes of the property tax increases. While local entities are shouldering the majority of the blame, our analysis shows that increased property tax levies of schools and local governments account for only a small portion of the increase in tax bills for Indiana homeowners. Instead, reductions in the level of property tax relief provided by the State and changes in the distribution of the tax, or who pays, are the major causes of the current crisis. Therefore, any successful resolution to the 2007 property tax crisis must address all three components of the property tax bill.

In a future issue of Footnotes, we will highlight our findings and share more results from our analysis. If you would like a copy of Umbaugh's Indiana's 2007 Property Tax Crisis report, visit our website at www.umbaugh.com and click on the "What's New" link to download a copy. If you have questions regarding the report or would like more information, please email us at footnotes@umbaugh.com.