Property Tax Outlook is Poor
After months of consultation and deliberation, the Distressed Unit Appeal Board responded on May 20 to Gary’s request for exemption from the state-wide property tax caps. In January, when the city presented its case for more tax revenue, MCC representatives were present to oppose the requested relief, on the grounds that the city had done little to reduce spending and live within the caps. Subsequently, MCC members and other citizens kept up a steady stream of messages to the DUAB, highlighting frivolous and wasteful spending by the administration. As time passed, the city was continuing to spend money. By late May, when the DUAB handed down its decision, the city government had already spent most of the money they would ever get in 2009 under the tax caps. In this context, the DUAB set tax rates for Gary which significantly excede the caps that are in place everywhere else, allowing the city to collect about $23 million in additional revenues. The following are the authorized maximum rates: Cap Rate Gary Rate Homesteads 1.5% 2.0% Rental properties 2.5% 3.27% Business properties 3.5% 4.55%
In addition, Lake County governmental units are allowed to collect taxes above the caps for the retirement of bonded debt. Right now, there is no official word on how much this will be, but estimates of the additional tax required run up to 0.75%. This means that the actual tax rate for homesteads will be about 2.75% (compared with a maximum of 2% last year).
George Rogge, the MCC Tax Committee Chairman, noted, on the plus side, that this decision retains the 2% cap for homesteads and gives other taxpayers lower rates than they have had previously. On the down side, the DUAB did not enforce the tax cap concept and Gary taxpayers will still be paying higher rates than anyone else.
Furthermore, there is widespread concern that assessed valuations will also increase, even though real property prices are currently falling sharply. In any case, owners will not be informed about the assessed value of their property until they get their tax bills (maybe in October), and those bills will probably be a lot higher than last year’s.
As a condition for granting the city additional property tax revenues, the DUAB is requiring Gary to acquire a fiscal monitor, to “further develop and oversee the fiscal plan.” This party will be chosen by the city, but the choice must be approved by the DUAB. Whoever is chosen must issue a preliminary report within 90 days, outlining a prioritized course of action, including organization changes, budget and spending controls, review of contracts, asset management and personnel policy. The object is to create a stable base for the oper-ation of the city in future years.
For the DUAB order to become effective, it must be ratified by the boards of all the involved units of govern-ment, including the civil city, the sanitary district, the airport, the public transportation corporation, and the storm water management district.
The Gary tax rates, which exceed the state-wide caps, are valid for this year only. If the city needs an exemption next year, it must apply again to the DUAB.
Story posted: 6/19/2009
After months of consultation and deliberation, the Distressed Unit Appeal Board responded on May 20 to Gary’s request for exemption from the state-wide property tax caps. In January, when the city presented its case for more tax revenue, MCC representatives were present to oppose the requested relief, on the grounds that the city had done little to reduce spending and live within the caps. Subsequently, MCC members and other citizens kept up a steady stream of messages to the DUAB, highlighting frivolous and wasteful spending by the administration. As time passed, the city was continuing to spend money. By late May, when the DUAB handed down its decision, the city government had already spent most of the money they would ever get in 2009 under the tax caps. In this context, the DUAB set tax rates for Gary which significantly excede the caps that are in place everywhere else, allowing the city to collect about $23 million in additional revenues. The following are the authorized maximum rates: Cap Rate Gary Rate Homesteads 1.5% 2.0% Rental properties 2.5% 3.27% Business properties 3.5% 4.55%
In addition, Lake County governmental units are allowed to collect taxes above the caps for the retirement of bonded debt. Right now, there is no official word on how much this will be, but estimates of the additional tax required run up to 0.75%. This means that the actual tax rate for homesteads will be about 2.75% (compared with a maximum of 2% last year).
George Rogge, the MCC Tax Committee Chairman, noted, on the plus side, that this decision retains the 2% cap for homesteads and gives other taxpayers lower rates than they have had previously. On the down side, the DUAB did not enforce the tax cap concept and Gary taxpayers will still be paying higher rates than anyone else.
Furthermore, there is widespread concern that assessed valuations will also increase, even though real property prices are currently falling sharply. In any case, owners will not be informed about the assessed value of their property until they get their tax bills (maybe in October), and those bills will probably be a lot higher than last year’s.
As a condition for granting the city additional property tax revenues, the DUAB is requiring Gary to acquire a fiscal monitor, to “further develop and oversee the fiscal plan.” This party will be chosen by the city, but the choice must be approved by the DUAB. Whoever is chosen must issue a preliminary report within 90 days, outlining a prioritized course of action, including organization changes, budget and spending controls, review of contracts, asset management and personnel policy. The object is to create a stable base for the oper-ation of the city in future years.
For the DUAB order to become effective, it must be ratified by the boards of all the involved units of govern-ment, including the civil city, the sanitary district, the airport, the public transportation corporation, and the storm water management district.
The Gary tax rates, which exceed the state-wide caps, are valid for this year only. If the city needs an exemption next year, it must apply again to the DUAB.
Story posted: 6/19/2009
