A series on understanding local government finances

Posted by on Oct 22, 2013 | 0 comments

A series on understanding local government finances

Much of the consulting work we provide to Indiana municipal subdivisions is fundamentally rooted in municipal finance and the fund accounting and budgeting process spelled out in Indiana State statutes.   Although the Department of Local Government Finance, DLGF, attempts to make municipal finance understandable – in short, it’s not all that easy to follow the debits and credits.

Once a week I will be trying to write a post about some part of municipal finance law, regulation, or analysis.    Since the State of Indiana has diligently worked to make budget and finance reports available online, we will try to use publicly accessible documents whenever possible.   This post is basically the index or table of contents – which will grow as each post is written so you have one place to find the links to the specific subjects.

If you have more specific questions, don’t hesitate to contact your local clerk-treasurer, county auditor, or Indiana’s Department of Local Government Finance.

Table of Contents – The Plan and subject to significant changes

  • Assessing real estate property
  • Reassessment
  • Sales Disclosures
  • Trending
  • Property tax appeals – PTBOA and State levels
  • Assessing personal property
  • Deductions and Exemptions and Abatements on property assessment
  • Indiana’s constitutional tax caps – a/k/a circuit breakers, or 1/2/3
  • What qualifies as tax exempt, how is that different than non profit?
  • Rolling and Certifying to the state
  • Maximum tax levy
  • State growth quotient
  • What in the world is the deal with these TIF’s?
  • Redevelopment Commissions and Allocation Areas
  • TIF Neutralization
  • The property tax rate
  • Why is a levy different than the budget?
  • How many funds are there in my community?
  • Miscellaneous revenues
  • Income taxes affecting local government finances
  • The annual budget building and approving process
  • State budget, tax rate, and levy approval process
  • Certified budget order and 1782 Notices
  • Sending tax bills
  • State Audit process
  • Municipal Bond Financing
  • Economic Development Incentives and Analysis
  • Local and Municipal Planning
  • What is a town?
  • What is a township?
  • What is a city?
  • What is a county?

The Indiana Department of Local Government Finance defines property taxation:

What is the purpose of property taxes?

Property taxes are a primary source of funding for local government units, including counties, cities and towns, townships, libraries and other special districts including fire districts and solid waste districts. Property taxes are administered and collected by local government officials. These funds are used to pay for a variety of services including welfare; police and fire; new construction and maintenance of buildings; local infrastructure like highways, roads and streets; and the operations, including salaries, of the local units of government.

Property taxes are an ad valorem tax, meaning that they are allocated to each taxpayer proportionately according to the value of the taxpayer’s property. The statewide average revenue distribution for each property tax dollar is as follows:

  • County: $0.1870
  • Township: $0.0377
  • City/Town: $0.2247
  • School: $0.4364
  • Library: $0.0458
  • Special Unit: $0.0660
  • Conservancy: $0.0024
  • Redevelopment: $0.0010

Breakdown is based on average expenditure per dollar of property tax levied in Indiana for taxes payable in 2010. (Information sourced by the Department and includes all counties except LaPorte.) Learn more about where tax dollars are spent in Indiana.

The property tax process is also known as the property tax assessment and billing cycle. This cycle begins with the development of each property’s assessed value by the county assessor. The assessor then transfers the data on each property’s value to the county auditor. The auditor, after applying deductions, exemptions, and other valuation adjustments, sends these values (known as the certified net assessed values) to the Department of Local Government Finance. After thorough review, the Department converts these values to property tax rates by dividing each local unit’s approved budget amounts by the assessed value for each unit. The Department forwards these rates back to the county, where the auditor and treasurer work together to calculate, generate and mail tax bills to each taxpayer. Learn more about the assessment to budget process.

The Department’s Website offers a variety of resources to educate and inform taxpayers on this process. The site also features search tools to provide taxpayers with sales disclosure and assessment information on properties statewide. This information can be used in the appeals process or to allow taxpayers to better understand how assessors determine a property’s assessed value.

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