Property tax reform may force city to tighten belt

By Brian M. Boyce
The Tribune-Star

TERRE HAUTE May 09, 2008 12:04 am

— Some belts will need tightened once the effects of House Bill 1001 are fully realized, but local officials are arming up with information.
Cliff Lambert, executive director of the city of Terre Haute Redevelopment Commission, introduced consultants from H.J. Umbaugh and Associates of Indianapolis at a special meeting of the City Council on Thursday night, the purpose of which was to initiate discussions on how the new property tax structure will affect Tax Incremental Finance districts.
“There are some fairly dramatic changes in our TIF legislation,” Lambert said, noting “it’s not as bad as it could be” as he introduced Jason Semler, an accountant with H.J. Umbaugh.
City councilman Norm Loudermilk, D-3rd, stated that H.B. 1001 is a “tax shift, not a tax cut,” to which Semler said “we’re just the messenger,” and drew some chuckles.
Semler explained to the group that with the state’s new circuit breakers and other property tax exemptions, the assessed valuation of the city, county, school corporation and other municipal tax centers will drop from $3.9 billion to $3.4 billion. And since property tax rates will not be able to be raised, the revenue lost will have to be generated elsewhere or programs cut, he said.
Circuit breakers, he explained, are “tax caps” based on individual property owners’ exemptions designed to keep those taxes lower.
One of the new changes resulting from the legislation is that municipal projects costing in excess of $12 million, or 1 percent of the area’s Gross Assessed Value, will have to be voted on in referendum, he said, noting that the GAV’s specific definition has yet to be set.
The state also will assume more of the county’s levies, such as school corporation revenue, and placing bond limitations on debt terms.
Councilman Neil Garrison, D-5th, said local government will have to “tighten the belt” a little, but noted that some of the area’s TIFs are generating enough revenue that they won’t be affected as much by the changes.
“I hope not,” he said, when asked if government programs would have to be cut because of the tax decreases, calling the legislation “a shell game” and stating that the money will have to be made up elsewhere.
Council President Todd Nation, D-4th, emphasized “it’s important for us to have as much information as possible” and complimented Lambert’s agency on spearheading Thursday’s discussion.
“I get educated every day on the changing responsibilities of my job,” he said, reiterating Semler’s earlier comments that more interpretation on H.B. 1001 is yet to come.
Brian Boyce can be reached at (812) 231-4253 or brian.boyce@tribstar.com.