The Impact of Property Tax Rate Caps on Local Property Tax Revenue in Indiana

BALL STATE UNIVERSITY CENTER FOR BUSINESS AND ECONOMIC RESEARCH POLICY BRIEF The Impact of Property Tax Rate Caps on Local Property Tax Revenue in Indiana Dagney Faulk, Ph.D. Director of Research, Center for Business and Economic Research with research assistance from Kevin Kroll and Hikoyat Salimova In 2008, the Indiana General Assembly adopted property tax rate caps to provide property tax relief and limit future increases in the property tax. [1] Property tax limits were first implemented in Indiana in the 1930s, with subsequent adjustments occurring in the 1970s and 1980s. See Bennett and Stullich (1992) for details. These initial property tax limits resulted in a complex system of levy growth limits for most funds, rate limits for some funds, and a process to appeal the limitations. The 2008 property tax restructuring imposed limits on property tax rates and local spending in Indiana in addition to reforms of the assessment process. [2] These rate caps have dramatically affected some local government budgets while having little impact on others. This policy brief examines the impact of property tax caps (circuit breaker credits) on property tax revenues in Indiana counties during 2010, 2011, and 2012 the first three years that the caps were implemented in all counties. The data on the property tax levy and circuit breaker credits (tax caps) included in this analysis were aggregated to the county level and include all taxing jurisdictions in the county: county, municipalities, townships, school districts, and special districts. We find wide variation in the impact of the circuit breaker credits on local government budgets in counties. The largest impact was in Madison and Delaware counties, where the credit was more than 30 percent of the net levy, while Photo: Flickr Creative Commons the credit was less than 1.0 percent of the net levy in 19 counties. In over half of Indiana counties the credits were less than 5.0 percent of the net levy. The statewide average for the 2011-pay-2012 Tax Caps/ Net Levy was 10.68 percent, meaning that the circuit breaker credits were 10.68 percent of the net property tax levy. INDIANA PROPERTY TAX LEVIES Figures 1 and 2 show the net property tax levy and the property tax levy per capita for local governments in Indiana from 1977 to 2012. The general trend is an increase in total and average property tax payments through 2002. This is followed by a period of variability with drops in the property tax levy early and mid-2000s due to legislated property tax relief. Finally, 2010 saw another decrease with the imposition of the tax caps (discussed later in this paper). BRIEF OVERVIEW OF PROPERTY TAX CHANGES IN INDIANA The first decade of the 21st century was a turbulent time for both property tax payers and local property tax officials in Indiana. In 1998, the Indiana Supreme Court ruled that property should be assessed under a system that incorporates an objective reality to determine the true tax value of a property. Objective reality does not have to be the same as market value. Subsequently, the Tax Court required the State Board of Tax Commissioners to implement a new assessment system and specified that the new regulations should be in effect by June 1, 2001, and that the reassessment of real property should occur by March 1, 2002. (The previous reassessment took place in 1995 for taxes due in 1996.) The court-ordered reassessment exposed fundamental problems with Indiana s property tax system. In 2005, the Indiana 1. House Enrolled Act 1001. 2008. Pub. L. No. 146-2008. 2. There are no limits on the growth in assessed value (AV), so the property tax levy can increase due to growth in AV. Mullins and Wallin (2004) conclude that tax and expenditure limits are most effective if they are coupled with property assessment limits. CENTER FOR BUSINESS AND ECONOMIC RESEARCH 1 BALL STATE UNIVERSITY MAY 2013

Fiscal Policy Institute published a Property Tax Equalization Study (Brown 2005) conducted to measure the accuracy of assessments in each of Indiana s 92 counties. Key findings of the study included: 1. The current structure of property tax administration in Indiana has resulted in systematic lack of uniformity in assessment practice and assessment results. 2. The data sets currently collected are not adequate for a market value assessment system. 3. International assessment standards are not being met. 4. Administration and interpretation of assessment are inconsistent among counties. In addition to the administrative problems listed above, the reassessment resulted in substantial increases in tax burdens for some property owners, especially residential property taxpayers in older homes. As before, the legislature enacted various short-term measures to provide relief to affected taxpayers. [3] However, 2007 saw large increases in tax burdens for many Indiana homeowners brought on by the elimination of the inventory tax, rising local operating and capital levies, and further increases in residential assessments resulting from trending. [4] Trending was authorized to begin in 2002 as a means to bring assessed value closer to the market value of property, but was not widely implemented for several years as local officials completed the general reassessment. During this time period, many counties issued late or provisional property tax bills. Trending was actually implemented in 2007, and assessed value was based on selling prices in 2005. However, the previous year s assessed values had been based on 1999 sales data, resulting in a large increase in assessed value for many homeowners. [5] The ultimate result of these changes to the property tax system was a FIGURE 1: Real Net Property Tax Levy (Indiana Local Government, 1977-2012) Billions Source: Indiana Legislature Services Agency (various years), adjusted to 2011 purchasing power using the CPI. FIGURE 2: Per Capita Real Net Property Tax Levy (Indiana Local Government, 1977-2012) Source: Author s calculation from Indiana Legislative Services Agency (various years), adjusted to 2011 purchasing power using the CPI. sudden and rather unexpected property tax increases on a substantial number of homeowners in 2007. This led to calls for numerous property tax reforms, including an organized effort for total property tax repeal. The 2008 restructuring was driven by taxpayer dissatisfaction resulting from perceived inequities and dramatic increases in taxes among some taxpayers in 2007. Horizontal inequities stemming primarily from assessment issues led taxpayers to march on the state capital and to organize a campaign to abolish property taxes in the state. Some Indiana taxpayers experienced dramatic increases in their property tax payments as a result of the reassessment (variation over time). In addition, some taxpayers experienced higher assessed values than owners of similar properties nearby (variation among comparable properties). A variety of proposals to restructure the property tax were considered. [6] The legislation that was ultimately passed by the General Assembly was based substantially on Governor Mitch Daniels proposal. The current Indiana property tax rate caps (circuit breakers) were partially implemented in 2009 and fully implemented for taxes paid in 2010. The caps implemented in 2010 are rate limits that constrain property tax payments to a maximum of 1.0 percent of gross assessed value (AV) on homesteads, 3. See Faulk (2008) for a summary of property tax relief legislation. 4. In 2002, legislature approved a measure to remove inventories from the business personal property tax by 2006. A 2005 LSA report indicated that the inventory tax accounted for 8.7 percent and 7.2 percent of overall property tax collections in 2002 and 2003. 5. DeBoer (2007) discusses five policy changes that affected property taxes in 2007. 6. See http://www.bsu.edu/cber/publications for studies analyzing various property tax reform measures proposed during the 2008 Indiana General Assembly session. CENTER FOR BUSINESS AND ECONOMIC RESEARCH 2 BALL STATE UNIVERSITY MAY 2013

TABLE 1: The impact of property tax caps, top 15* counties ranked by 2011-pay-2012 credits as a share of the net property tax levy Net Property Tax Levy Per Capita 2007** Average Gross Tax Rate 2007 LOIT rate 2007 (%) 2011-pay- 2012 Tax Caps/ Net Levy*** 2012 Tax Caps/Certified Budget Population % change 2001 to 2011 Manufacturing employment % change 2001 to 2011 Madison 841 50 3.45 6 1.250 36.66% 1 9.88% 2-1.3% -59.6% Madison Delaware 999 23 3.49 5 1.050 36.09% 2 10.79% 1-2.2% -55.8% Delaware Fayette 892 36 3.28 9 1.370 28.85% 3 6.86% 5-3.9% -73.1% Fayette Vigo 911 33 3.15 11 1.250 21.11% 4 6.95% 4 2.6% -8.2% Vigo Hancock 884 39 2.18 78 1.150 20.59% 5 6.85% 6 24.3% 16.7% Hancock St. Joseph 1,162 10 3.97 2 0.800 19.45% 6 6.26% 7 0.5% -20.8% St. Joseph Lake 1,625 1 4.59 1 0.000 18.59% 7 7.93% 3 2.3% -24.1% Lake Henry 824 53 2.77 28 1.250 17.86% 8 4.76% 10 1.8% -47.4% Henry Huntington 864 44 2.86 22 1.250 16.35% 9 4.73% 11-1.8% -25.2% Huntington Elkhart 1,027 21 2.70 33 1.500 15.68% 10 5.32% 8 7.7% -15.1% Elkhart Randolph 808 59 2.81 25 1.500 15.59% 11 4.48% 13-3.9% -27.1% Randolph Hendricks 1,162 9 2.61 41 1.400 13.89% 12 5.29% 9 34.4% 92.4% Hendricks Rush 807 60 2.52 44 1.500 13.51% 13 4.63% 12-4.7% -46.2% Rush Marion 1,321 3 3.2 10 0.900 12.64% 14 3.21% 21 5.3% -28.7% Marion Clinton 837 52 2.46 49 1.500 12.08% 15 3.17% 22-2.1% -19.6% Clinton Sources: Author s calculations from Department of Local Government Finance (various years), Indiana Legislative Services Agency s Indiana Handbook of Taxes, Revenues and Appropriations and Bureau of Economic Analysis, Local Area Personal Income and Employment Tables CA25N and CA1-3. *Full list of Indiana Counties are included in appendix tables A1 - A2. LaPorte is not included in the analysis due to lack of data. ** Net of the property tax replacement credit (PTRC) *** Net of state credits, county funded credits and circuit breaker credits. Property tax circuit breaker credit as a proportion of the aggregate property tax levy in a county. See CBER website for data tables A3, A4, A5 showing rankings for all counties in 2010 and 2011, and showing demographic and employment data for all counties. 2.0 percent of AV on apartments, other residential, agricultural land, mobile home land and long-term care facilities, and 3.0 percent of AV on nonresidential (business) real property and personal property. [7] Because this provision would substantially decrease local government revenue, the state took over about $3 billion of local spending, including the remaining 15 percent of school operating costs, child welfare levies, juvenile incarceration, indigent health care, state fair and forestry levies, preschool special education levies, and police and fire pensions. The state sales tax increased from 6.0 to 7.0 percent to pay for a portion of these costs. To further limit local spending, the statute requires that referenda be held for new school and local government capital projects. This same legislation also included a circuit breaker for senior citizens: qualifying seniors receive an additional credit if (a) their homestead AV is less than $160,000, (b) their income does not exceed $30,000 ($40,000, if married), and (c) the year-to-year increase in net tax on the homestead after all other credits exceeds 2.0 percent. We included these credits in the calculations provided in Table 1 and the tables in the appendix. The statute also addressed issues with the accuracy and fairness of property assessment. The number of assessors was reduced from 1,100 assessors (mainly in townships) to 92 county assessors and 42 township assessors (in townships with more than 15,000 parcels). November 2008 referenda further reduced the number of township assessors transferring their duties to the county. Requirements for assessor certification were increased. In 2007, the General Assembly also authorized three additional local option income taxes (LOITs) to provide local governments with additional ways to raise revenue while reducing property tax burdens. As of October 2012, 31 counties had adopted at least one of the LOITs related to property taxes. The LOIT to Freeze the Property Tax Levy provides a means to raise revenue to replace normal property tax increases and has been adopted by 11 counties. The LOIT for Property Tax Relief can be used to reduce property taxes and has been adopted by 30 counties. The LOIT for Public Safety can be used to fund public safety programs thus reducing the amount of property taxes needed to fund these services. As of 2012, 21 counties had adopted this LOIT. Faulk, Kuhlman, Salimova and Devaraj (2010) provide details on these LOITs. A portion of each of the three original LOITs (CAGIT, CEDIT, and COIT) can also be used to provide property tax relief. These LOITs essentially shift part of local tax revenue from the property tax to the income tax. [8] 7. Taxpayers are entitled to a credit if the net tax due on the property exceeds the applicable AV threshold (1.0%, 2.0% or 3.0% depending on the type of property. The credit is equal to the excess tax over the threshold. 8. CAGIT is the Adjusted Gross Income Tax. CEDIT is the Economic Development Income Tax. COIT is the Option Income Tax. In certain counties CAGIT can be used to fund construction or operations of jails, detention centers and justice centers. CEDIT can be used for capital projects, and COIT can be used to fund public communication systems, public transportation, and economic development project bonds, in addition to property tax relief. See Legislative Services Agency (2012) for more information on LOIT distributions. CENTER FOR BUSINESS AND ECONOMIC RESEARCH 3 BALL STATE UNIVERSITY MAY 2013

THE IMPACT OF PROPERTY TAX CAPS ON LOCAL PROPERTY TAX LEVIES Table 1 shows two measures of the impact of property tax caps (circuit breaker credits) on local government budgets -- the property tax circuit breaker credits as a percentage of the net property tax levy in each county and the circuit breaker credits as a percentage of the certified budget for all local governments units in each county for the 15 counties most impacted by the caps. See appendix table A1 for a list of all counties. The rankings are similar for the two measures. In 2012 Madison (Anderson) experienced the largest impact followed by Delaware (Muncie). In both Madison and Delaware, the circuit breaker credits are more than 36 percent of the net property tax levy in 2011 pay 2012, indicating that the property tax caps reduced 2012 property tax revenue by more than 36 percent in these counties. Urban counties that have experienced large declines in manufacturing tended to be most affected by the caps (Madison, Delaware, Vigo, St. Joseph, Lake, Elkhart). The closing of manufacturing facilities has decreased property tax revenues by millions of dollars in these counties and increased tax rates for remaining businesses and residents, ultimately affecting local government s ability to maintain infrastructure, schools, etc. A couple of the Indianapolis metro counties (Hancock and Hendricks) had the opposite problem: dramatic increases in population and employment over the past decade. Property tax rates increased to keep up with the demand for infrastructure and services which led rates higher than the caps. In 19 (primarily nonmetropolitan) counties the circuit breaker credits are less than one percent of the net levy. Many of these counties also experienced declines in manufacturing employment, but had increases in population since 2001. The net property tax levy per capita, average gross tax rates, and the aggregate Local Option Income Tax (LOIT) rate from 2007, the year before the passage of the circuit breaker legislation, are also included in Table 1. As expected, counties with higher tax rates in 2007 tend to be most affected by the caps. The 2007 per capita levy is included to show the variation in this measure among counties. There is also variation in the LOIT rates charged in the counties most impacted by the caps. Figure 1 shows the tax caps as a share of the property tax levy in each county in Indiana for 2012. This map shows that caps had large impacts on central counties in the state s metropolitan areas while the impacts in many rural counties have been relatively small. The dollar values of the circuit breaker credits and net levy for 2012 are shown in the appendix table A2. For many counties in the state and certainly those counties that have been most affected by the caps, the 2 percent and 3 percent circuit breakers credits, which primarily affect businesses, are substantially larger than the 1 percent credits for homesteads. For example, in both Delaware and Madison, almost 90 percent of the circuit breaker credits are from the two and three percent credits. Exceptions are those counties with limited industry such as suburban counties of the Indianapolis metropolitan area (Boone, Hamilton, Hendricks). An examination of the detailed information on circuit breaker credits by type of local government (not shown) shows a common pattern. In counties most impacted by the tax caps, the civil city government unit(s) (Anderson and Muncie, respectively) followed by the city school corporation(s) and the county government unit was most affected. In Madison and Delaware, for example, Anderson and Muncie s (civil city) share of the overall reduction in the levy was 34 percent ($8.9 million) and 37 percent ($9.8 million), respectively in 2011. Each city s school system represented 28 percent ($7.3 million) and 20 percent ($5.4 million) of the levy reduction, FIGURE 3 Tax caps as a share of the net property tax levy 2011-pay-2012 15% - above 10% - 14.99% 5% - 9.99% 1% - 4.99% 0-0.99% No data reported 1 county 11 counties 12 counties 16 counties 33 counties 19 counties Sources: Author s calculations from Department of Local Government Finance (various years), Indiana Legislative Services Agency s Indiana Handbook of Taxes, Revenues and Appropriations. respectively, due to the caps. The county governments share of the overall levy reduction was 14 percent ($3.8 million) and 16 percent ($4.2 million), respectively. Other units of government in these counties experience relatively small shares of the impact, ranging from 0.0 percent to 4.0 percent in Madison and 0.0 percent to 8.0 percent in Delaware. In summary, the property tax circuit breaker credits (caps) have had a large impact on net property tax revenue of some counties while having little impact on others during the first three years of implementation. In the counties that have been the most impacted, business properties have received the largest share of the credits, and the largest cities and those cities school systems have experienced the largest reductions in property tax revenue due to the caps. CENTER FOR BUSINESS AND ECONOMIC RESEARCH 4 BALL STATE UNIVERSITY MAY 2013

REFERENCES Bennett, David J. and Stephanie E. Stullich. 1992. Financing Local Government in Indiana. Fort Wayne, IN: Lincoln Printing Corporation. Brown, Mark D. 2005. Statewide Property Tax Equalization Study Policy Report. Indiana Fiscal Policy Institute, Indianapolis, IN, IFPI Report No. 24, http://indianafiscal.org/report.pdf. DeBoer, Larry. 2007. Home Owner Property Taxes. Capital Comments, March 22. http://www.agriculture.purdue. edu/agcomm/newscolumns/archives/ CC/2007/March/070322CC.htm Faulk, Dagney, Kevin Kuhlman, Hikoyat Salimova and Srikant Devaraj. (2010). Local Option Income Taxes in Indiana. Center for Business and Economic Research, March http://cms.bsu.edu/-/ media/www/departmentalcontent/ MillerCollegeofBusiness/BBR/ Publications/LOIT0318.pdf Faulk, Dagney. 2008. A chronology of Indiana property-tax laws. Indiana Policy Review 19 (1): 3-7. Indiana Department of Local Government Finance. 2012. The Impact of Property Tax Caps. July 2. http://www.in.gov/ dlgf/files/120702_-_circuit_breaker_ Report(1).pdf. Indiana Department of Local Government Finance. 2011. The Impact of Property Tax Caps, 2011. August 5, http://www.in.gov/dlgf/ files/110805-_impact_of_the_ Property_Tax_Caps.pdf. Indiana Department of Local Government Finance. 2010. The Impact of Property Tax Caps, 2010. February 21, http://www.in.gov/ dlgf/files/101022-_impact_of_the_ Property_Tax_Caps.pdf. Indiana Department of Local Government Finance. 2012 Certified Budget, Levy, CNAV, Tax Rate by Fund, http://www.in.gov/dlgf/ files/2012_certified_budget_detai_ by_unit.pdf, March 4, 2013. Indiana Department of Local Government Finance. 2011 Certified Budget, Levy, CNAV, Tax Rate by Fund, http://www.in.gov/dlgf/ files/2011_certified_budget_detail_ by_unit(1).pdf, March 4, 2013. Indiana Department of Local Government Finance. 2010 Certified Budget, Levy, CNAV, Tax Rate by Fund, http://www.in.gov/dlgf/ files/2010_certified_budget_detail_ by_unit.pdf, March 4, 2013. Indiana Legislative Services Agency. 2005. Indiana Property Tax Summaries. Indianapolis, IN. Indiana Legislative Services Agency. Various years. Indiana Handbook of Taxes, Revenues and Appropriations. Office of Fiscal and Management Analysis. http://www.in.gov/ legislative/2396.htm Mullins, Daniel R., and Bruce A. Wallin. 2004. Tax and expenditure limitations: Introduction and overview. Public Budgeting & Finance 24 (4): 2-15. U.S. Bureau of Economic Analysis. 2013. Local Areas Personal Income and Employment. Tables CA1-3 and CA25N, http://www.bea.gov/itable/ itable.cfm?reqid=70&step=1&isuri=1 &acrdn=5#reqid=70&step=1&isuri=1. CENTER FOR BUSINESS AND ECONOMIC RESEARCH 5 BALL STATE UNIVERSITY MAY 2013

APPENDIX TABLE A1: The impact of property tax caps, ranked by 2011-pay-2012 credits as a share of the net property tax levy Net Property Tax Levy Per Capita 2007** Average Gross Tax Rate 2007 Source: Author s calculations from Department of Local Government Finance (various years) and Indiana Legislative Services Agency s Indiana Handbook of Taxes, Revenues and Appropriations. *LaPorte not reported **Net of the property tax replacement credit (PTRC) *** Net of state credits, county funded credits and circuit breaker credits. Property tax circuit breaker credit as a proportion of the aggregate property tax levy in a county. See CBER website for data tables A3-A5, which contain rankings for 2010 and 2011. TABLE A1 CONTINUED ON FOLLOWING PAGE LOIT rate 2007 (%) 2011-pay- 2012 Tax Caps/ Net Levy*** 2012 Tax Caps/Certified Budget Population % change 2001 to 2011 Manufacturing employment % change 2001 to 2011 Madison 841 50 3.45 6 1.250 36.66% 1 9.88% 2-1.3% -59.6% Madison Delaware 999 23 3.49 5 1.050 36.09% 2 10.79% 1-2.2% -55.8% Delaware Fayette 892 36 3.28 9 1.370 28.85% 3 6.86% 5-3.9% -73.1% Fayette Vigo 911 33 3.15 11 1.250 21.11% 4 6.95% 4 2.6% -8.2% Vigo Hancock 884 39 2.18 78 1.150 20.59% 5 6.85% 6 24.3% 16.7% Hancock St. Joseph 1,162 10 3.97 2 0.800 19.45% 6 6.26% 7 0.5% -20.8% St. Joseph Lake 1,625 1 4.59 1 0.000 18.59% 7 7.93% 3 2.3% -24.1% Lake Henry 824 53 2.77 28 1.250 17.86% 8 4.76% 10 1.8% -47.4% Henry Huntington 864 44 2.86 22 1.250 16.35% 9 4.73% 11-1.8% -25.2% Huntington Elkhart 1,027 21 2.70 33 1.500 15.68% 10 5.32% 8 7.7% -15.1% Elkhart Randolph 808 59 2.81 25 1.500 15.59% 11 4.48% 13-3.9% -27.1% Randolph Hendricks 1,162 9 2.61 41 1.400 13.89% 12 5.29% 9 34.4% 92.4% Hendricks Rush 807 60 2.52 44 1.500 13.51% 13 4.63% 12-4.7% -46.2% Rush Marion 1,321 3 3.2 10 0.900 12.64% 14 3.21% 21 5.3% -28.7% Marion Clinton 837 52 2.46 49 1.500 12.08% 15 3.17% 22-2.1% -19.6% Clinton Crawford 733 71 3.94 3 1.000 12.06% 16 3.39% 19-2.4% ND Crawford Miami 674 78 2.87 21 1.290 11.94% 17 2.63% 28 0.4% -39.1% Miami Daviess 772 65 3 15 1.750 11.85% 18 3.67% 17 7.5% -3.5% Daviess Wayne 917 31 3.09 13 1.500 11.72% 19 3.78% 16-2.9% -35.7% Wayne Cass 933 29 3.56 4 1.500 11.63% 20 3.11% 25-5.0% -32.1% Cass Allen 1,031 20 3.01 14 1.000 11.57% 21 4.11% 14 7.0% -20.3% Allen Knox 815 57 2.86 23 1.100 11.12% 22 3.98% 15-0.9% 10.5% Knox Blackford 822 55 3.4 7 1.360 10.94% 23 3.13% 24-8.3% -48.0% Blackford Clark 753 68 2.62 39 1.500 9.85% 24 3.14% 23 14.8% -7.7% Clark Johnson 979 25 2.44 52 1.000 9.72% 25 3.26% 20 20.2% -33.0% Johnson Boone 1,326 2 2.37 65 1.000 9.31% 26 3.46% 18 22.2% -6.9% Boone Perry 683 76 2.97 18 1.060 9.31% 27 2.65% 27 2.4% 22.5% Perry Lawrence 721 73 3.11 12 1.000 8.64% 28 2.23% 32 0.5% -55.9% Lawrence Montgomery 1,243 7 2.82 24 1.100 7.98% 29 2.58% 29 1.7% -25.7% Montgomery Greene 562 86 3 16 1.000 7.49% 30 1.82% 36-0.9% -20.5% Greene Hamilton 1,278 4 2.23 75 1.000 6.83% 31 2.76% 26 45.3% -5.0% Hamilton Vanderburgh 979 24 2.98 17 1.000 6.45% 32 2.26% 31 4.6% -32.3% Vanderburgh Union 861 45 2.62 40 1.500 6.44% 33 1.80% 37 2.6% 17.8% Union Scott 687 75 2.62 37 1.160 6.07% 34 1.60% 42 2.8% -35.9% Scott Porter 1,143 11 2.57 42 0.500 5.92% 35 2.42% 30 11.6% -14.1% Porter Howard 1,225 8 2.88 20 0.900 5.32% 36 1.99% 34-2.5% -46.5% Howard Carroll 859 47 2.27 73 1.100 5.24% 37 1.84% 35-1.3% -19.0% Carroll Tipton 881 40 2.42 59 1.330 5.11% 38 1.55% 44-4.4% -29.2% Tipton Sullivan 891 37 2.62 38 0.000 5.00% 39 1.76% 38-1.9% 39.8% Sullivan Bartholomew 1,052 18 2.54 43 1.000 4.97% 40 2.02% 33 8.0% -1.9% Bartholomew Adams 783 63 2.76 29 1.124 4.67% 41 1.74% 39 2.4% -26.2% Adams Vermillion 1,054 17 2.63 36 0.100 4.49% 42 1.68% 40-2.5% -32.6% Vermillion Tippecanoe 874 43 2.43 56 1.100 4.39% 43 1.66% 41 15.6% -23.0% Tippecanoe Floyd 824 54 2.49 46 1.150 4.08% 44 1.39% 45 5.0% -21.9% Floyd Washington 662 81 2.79 27 1.500 3.77% 45 0.98% 50 2.4% -36.9% Washington Gibson 1,056 16 2.71 31 0.500 3.76% 46 1.56% 43 2.6% 41.9% Gibson CENTER FOR BUSINESS AND ECONOMIC RESEARCH 6 BALL STATE UNIVERSITY MAY 2013

TABLE A1, CONTINUED Net Property Tax Levy Per Capita 2007** Average Gross Tax Rate 2007 LOIT rate 2007 (%) 2011-pay- 2012 Tax Caps/ Net Levy*** Source: Author s calculations from Department of Local Government Finance (various years) and Indiana Legislative Services Agency s Indiana Handbook of Taxes, Revenues and Appropriations. *LaPorte not reported **Net of the property tax replacement credit (PTRC) *** Net of state credits, county funded credits and circuit breaker credits. Property tax circuit breaker credit as a proportion of the aggregate property tax levy in a county. See CBER website for data tables A3-A5, which contain rankings for 2010 and 2011. 2012 Tax Caps/Certified Budget Population % change 2001 to 2011 Manufacturing employment % change 2001 to 2011 Jennings 629 83 2.42 58 1.250 3.54% 47 0.97% 51 0.9% -24.6% Jennings Shelby 934 28 2.52 45 1.250 3.53% 48 1.16% 47 1.4% -33.5% Shelby Jefferson 878 41 2.92 19 0.350 3.47% 49 1.27% 46 1.1% -24.3% Jefferson DeKalb 913 32 2.44 51 1.500 3.13% 50 1.10% 48 4.6% -34.1% DeKalb Jay 812 58 2.69 34 1.500 2.73% 51 0.80% 54-1.9% -10.2% Jay Grant 859 48 3.33 8 1.250 2.64% 52 0.66% 59-4.3% -45.1% Grant Fountain 735 70 2.4 61 1.100 2.51% 53 0.71% 57-3.0% -11.8% Fountain Pike 1,135 12 2.7 32 0.400 2.46% 54 1.06% 49-1.4% 8.6% Pike Newton 1,036 19 2.79 26 1.000 2.42% 55 0.85% 53-1.4% -42.8% Newton Starke 765 67 2.74 30 1.060 2.41% 56 0.66% 58-0.1% -22.7% Starke Benton 1,253 6 2.42 57 1.290 2.31% 58 0.65% 61-4.9% -34.9% Benton Dubois 964 26 2.36 66 1.000 2.31% 57 0.75% 56 5.1% -20.9% Dubois Decatur 789 62 2.3 71 1.330 2.29% 59 0.65% 60 5.5% -29.5% Decatur Noble 820 56 2.43 54 1.500 2.27% 60 0.75% 55 0.9% -25.8% Noble Martin 615 84 2.47 48 1.000 2.09% 61 0.45% 67 0.2% -35.1% Martin Marshall 902 34 2.28 72 1.250 2.08% 62 0.64% 62 3.3% -20.3% Marshall Posey 1,273 5 2.44 53 0.200 2.04% 63 0.87% 52-4.5% -3.2% Posey Jackson 838 51 2.24 74 1.600 1.90% 64 0.61% 63 3.9% -24.4% Jackson Whitley 737 69 2.33 68 1.233 1.56% 65 0.50% 65 7.7% -2.3% Whitley Owen 575 85 2.45 50 1.300 1.49% 66 0.49% 66-2.1% 27.6% Owen Warrick 860 46 2.14 81 0.500 1.47% 67 0.54% 64 14.2% -19.6% Warrick Dearborn 939 27 2.4 62 0.600 1.33% 68 0.44% 68 7.2% -20.0% Dearborn Kosciusko 843 49 1.8 89 1.000 1.27% 69 0.39% 69 3.5% -6.9% Kosciusko Wabash 779 64 2.68 35 1.500 1.24% 70 0.26% 72-6.0% -47.5% Wabash White 1,063 15 2.18 79 1.320 1.15% 71 0.31% 71-2.6% -24.7% White LaGrange 698 74 1.99 84 1.400 1.01% 72 0.34% 70 5.9% -17.7% LaGrange Putnam 795 61 2.33 67 1.500 0.82% 73 0.23% 74 4.2% -35.7% Putnam Fulton 874 42 2.49 47 1.430 0.75% 74 0.26% 73 1.8% -24.4% Fulton Monroe 772 66 2.38 64 1.000 0.47% 75 0.19% 75 14.9% -16.7% Monroe Spencer 1,078 13 2.21 77 0.800 0.39% 76 0.14% 76 2.4% -34.2% Spencer Wells 727 72 2.41 60 1.450 0.39% 77 0.10% 79 0.4% -30.5% Wells Orange 514 90 2.21 76 1.250 0.37% 78 0.09% 80 3.1% -36.3% Orange Parke 674 79 2.39 63 1.500 0.37% 79 0.09% 81 0.2% -32.0% Parke Steuben 1,072 14 1.82 87 1.290 0.35% 80 0.11% 77 1.4% -38.0% Steuben Franklin 560 87 1.94 85 1.250 0.31% 81 0.11% 78 3.3% -36.8% Franklin Switzerland 495 91 1.77 90 1.000 0.21% 82 0.06% 82 11.7% -46.9% Switzerland Pulaski 896 35 2.43 55 1.730 0.19% 83 0.04% 84-1.9% 2.8% Pulaski Harrison 638 82 2.03 83 1.000 0.18% 84 0.05% 83 12.8% -49.3% Harrison Morgan 675 77 2.1 82 1.270 0.15% 85 0.03% 86 3.9% -17.9% Morgan Clay 546 88 2.32 69 1.250 0.12% 86 0.02% 87 1.1% 33.5% Clay Warren 924 30 2.31 70 1.320 0.09% 87 0.03% 85-1.4% 65.0% Warren Ripley 672 80 2.16 80 1.380 0.08% 88 0.02% 88 6.0% -28.9% Ripley Brown 1,025 22 1.57 91 1.250 0.04% 89 0.01% 89-0.7% 15.3% Brown Jasper 891 38 1.88 86 1.500 0.04% 90 0.01% 90 9.9% -11.7% Jasper Ohio 517 89 1.81 88 1.000 0.03% 91 0.01% 91 7.7% ND Ohio Statewide 1,108 2.86 1.139* 10.68% 6.4% -23.7% Statewide CENTER FOR BUSINESS AND ECONOMIC RESEARCH 7 BALL STATE UNIVERSITY MAY 2013

APPENDIX TABLE A2: Breakdown of Circuit Breaker Credits, by type and county, 2011-pay-2012 Name 1% Cap 2% Cap 3% Cap 65+ Cap Total: All Cap Gross Levy 2012 ($) Final Net Levy 2012** ($) Tax Caps/Gross Levy Ratio Tax Caps/Net Levy Ratio Adams 463,592 788,637 11,092 28,765 1,292,086 29,511,588 27,671,576 4.38% 4.67% Allen 15,526,129 16,146,885 2,700,781 481,362 34,855,157 346,798,301 301,276,248 10.05% 11.57% Bartholomew 2,119,937 1,544,442 241,918 120,283 4,026,581 85,064,471 81,037,890 4.73% 4.97% Benton 35,659 189,749 0 1,915 227,323 11,527,798 9,832,640 1.97% 2.31% Blackford 65,727 645,936 246,433 6,067 964,162 9,967,487 8,816,968 9.67% 10.94% Boone 5,752,063 590,751 0 6,878 6,349,692 74,537,797 68,188,105 8.52% 9.31% Brown 0 0 0 3,987 3,987 11,540,069 10,330,040 0.03% 0.04% Carroll 119,402 492,326 148,554 2,808 763,089 15,911,511 14,567,095 4.80% 5.24% Cass 295,608 1,664,585 804,392 32,995 2,797,580 32,109,561 24,056,375 8.71% 11.63% Clark 2,446,725 4,943,639 320,957 210,629 7,921,950 98,203,916 80,392,268 8.07% 9.85% Clay 66 3,274 0 10,866 14,207 14,939,944 12,066,983 0.10% 0.12% Clinton 159,957 1,667,300 1,150,483 33,848 3,011,588 30,293,549 24,935,547 9.94% 12.08% Crawford 68,931 714,013 35,407 2,920 821,271 7,630,381 6,809,110 10.76% 12.06% Daviess 471,609 1,342,876 710,207 23,937 2,548,629 25,109,818 21,498,393 10.15% 11.85% Dearborn 223,664 357,473 0 75 581,212 44,271,856 43,690,644 1.31% 1.33% Decatur 102,005 327,618 0 32,598 462,221 20,968,259 20,193,008 2.20% 2.29% DeKalb 122,600 1,027,438 6,423 54,452 1,210,914 41,568,066 38,740,792 2.91% 3.13% Delaware 3,144,898 11,734,546 12,074,490 56,177 27,010,111 105,630,559 74,847,433 25.57% 36.09% Dubois 508,596 342,285 0 31,993 882,875 39,045,259 38,162,384 2.26% 2.31% Elkhart 6,565,815 9,303,045 11,969,130 37,032 27,875,022 205,627,713 177,752,691 13.56% 15.68% Fayette 457,211 1,888,934 1,812,055 75,944 4,234,143 22,184,895 14,676,582 19.09% 28.85% Floyd 441,379 1,730,744 0 69,092 2,241,214 58,638,179 54,926,263 3.82% 4.08% Fountain 35,214 263,612 0 12,268 311,094 12,981,869 12,409,929 2.40% 2.51% Franklin 8,192 29,671 0 4,620 42,483 13,682,859 13,640,376 0.31% 0.31% Fulton 1,671 95,950 0 12,473 110,094 16,262,378 14,765,424 0.68% 0.75% Gibson 294,178 913,607 75,338 44,295 1,327,418 36,584,776 35,257,358 3.63% 3.76% Grant 9,121 411,121 632,970 40,786 1,093,999 51,218,532 41,442,723 2.14% 2.64% Greene 246,363 989,478 46,524 39,468 1,321,832 18,967,924 17,646,092 6.97% 7.49% Hamilton 19,752,633 4,717,473 63,825 109,324 24,643,254 385,653,234 361,009,980 6.39% 6.83% Hancock 6,782,180 4,855,950 994,666 80,979 12,713,775 78,035,735 61,743,116 16.29% 20.59% Harrison 5,279 17,590 0 12,669 35,537 19,892,431 19,856,894 0.18% 0.18% Hendricks 14,167,058 6,198,565 969,997 59,083 21,394,702 179,981,956 153,979,651 11.89% 13.89% Henry 545,685 2,851,804 1,749,807 18,352 5,165,649 35,776,886 28,923,491 14.44% 17.86% Howard 25,764 4,147,152 317,153 14,616 4,504,684 95,608,640 84,595,605 4.71% 5.32% Huntington 707,740 1,535,855 1,903,754 44,992 4,192,340 31,178,907 25,640,528 13.45% 16.35% Jackson 24,566 507,486 10,095 68,132 610,280 34,240,777 32,082,754 1.78% 1.90% Jasper 0 0 0 6,975 6,975 25,492,145 18,319,698 0.03% 0.04% Jay 5,181 249,888 165,502 48,492 469,062 19,171,281 17,181,988 2.45% 2.73% Jefferson 352,302 457,942 0 25,830 836,075 24,926,208 24,090,133 3.35% 3.47% Jennings 115,370 456,101 0 23,866 595,337 17,401,336 16,805,999 3.42% 3.54% Johnson 5,035,017 4,989,979 1,256,702 77,984 11,359,682 128,188,253 116,828,571 8.86% 9.72% Knox 661,793 1,648,513 1,034,664 9,001 3,353,971 33,503,606 30,149,635 10.01% 11.12% Kosciusko 347,173 458,209 1,924 28,393 835,699 66,641,059 65,805,360 1.25% 1.27% LaGrange 27,084 181,083 19,217 10,974 238,358 24,437,800 23,594,350 0.98% 1.01% Lake 14,110,750 36,499,047 58,491,635 224,177 109,325,609 697,391,613 588,066,004 15.68% 18.59% Lawrence 550,769 1,538,149 306,464 28,010 2,423,393 33,617,101 28,052,382 7.21% 8.64% Source: Author s calculation from Department of Local Government Finance (various years) and Indiana Legislative Services Agency s Indiana Handbook of Taxes, Revenues and Appropriations. * Reported credits do not include credits from TIF districts; therefore, statewide totals do not summarize all credits received from the tax caps. ** Gross levy minus county funded credits minus circuit breaker credits ($) Final Net Levy 2012 = (Gross levy minus county funded credits minus circuit breaker credits) Does not include LaPorte for taxes payable in 2012 See CBER website for data tables A6 and A7, which contain data for 2010 and 2011. TABLE A2 CONTINUED ON FOLLOWING PAGE CENTER FOR BUSINESS AND ECONOMIC RESEARCH 8 BALL STATE UNIVERSITY MAY 2013

TABLE A2, CONTINUED Name 1% Cap 2% Cap 3% Cap 65+ Cap Total: All Cap Gross Levy 2012 ($) Final Net Levy 2012** ($) Tax Caps/Gross Levy Ratio Tax Caps/Net Levy Ratio Madison 3,550,994 14,104,623 11,436,041 45,418 29,137,077 117,170,485 79,472,208 24.87% 36.66% Marion 36,706,887 47,736,574 19,057,986 247,334 103,748,780 938,036,596 820,921,731 11.06% 12.64% Marshall 215,047 560,873 0 23,160 799,080 39,292,085 38,493,005 2.03% 2.08% Martin 2,124 93,618 6,195 6,501 108,439 5,681,572 5,183,969 1.91% 2.09% Miami 707 715,576 1,151,983 25,204 1,893,470 23,098,864 15,854,648 8.20% 11.94% Monroe 160,394 163,569 0 175,120 499,082 107,089,336 105,242,446 0.47% 0.47% Montgomery 0 1,503,014 928,340 147,823 2,579,177 41,072,426 32,329,951 6.28% 7.98% Morgan 0 0 0 40,409 40,409 39,358,199 26,663,809 0.10% 0.15% Newton 60,383 284,467 14,257 16,001 375,108 15,845,206 15,470,098 2.37% 2.42% Noble 18,180 736,803 6,226 24,446 785,655 36,936,708 34,593,038 2.13% 2.27% Ohio 0 0 0 854 854 2,631,225 2,630,372 0.03% 0.03% Orange 10,056 14,450 0 17,392 41,898 11,357,246 11,315,348 0.37% 0.37% Owen 37,331 157,177 0 4,371 198,878 13,584,691 13,385,813 1.46% 1.49% Parke 4,910 11,449 0 16,086 32,445 9,959,698 8,848,501 0.33% 0.37% Perry 183,054 586,299 287,386 27,676 1,084,416 12,968,715 11,651,059 8.36% 9.31% Pike 29,012 229,955 52,912 9,536 321,415 13,410,887 13,089,472 2.40% 2.46% Porter 4,650,533 4,718,094 15,970 93,721 9,478,319 175,006,365 160,203,404 5.42% 5.92% Posey 223,794 357,202 0 9,588 590,585 29,944,956 29,009,557 1.97% 2.04% Pulaski 439 10,344 0 5,475 16,258 10,815,913 8,610,887 0.15% 0.19% Putnam 623 176,814 0 20,955 198,392 25,568,594 24,069,083 0.78% 0.82% Randolph 186,067 1,390,420 1,394,580 14,680 2,985,747 22,140,301 19,154,554 13.49% 15.59% Ripley 0 2,837 0 11,805 14,642 18,217,711 17,604,272 0.08% 0.08% Rush 125,994 1,009,971 675,392 54,717 1,866,074 16,305,937 13,810,556 11.44% 13.51% St. Joseph 9,318,246 16,839,315 15,358,267 56,687 41,572,515 280,263,404 213,788,265 14.83% 19.45% Scott 39,593 763,107 49,670 10,221 862,590 15,557,517 14,207,160 5.54% 6.07% Shelby 420,114 848,217 3,630 25,869 1,297,829 38,100,333 36,802,504 3.41% 3.53% Spencer 11,763 58,487 0 10,238 80,487 20,821,883 20,578,281 0.39% 0.39% Starke 38,624 351,541 0 1,496 391,661 16,816,158 16,252,125 2.33% 2.41% Steuben 27,702 76,581 0 10,617 114,900 34,191,281 32,582,595 0.34% 0.35% Sullivan 42,012 741,959 70,405 7,914 862,290 18,095,913 17,233,623 4.77% 5.00% Switzerland 2,850 0 0 9,358 12,208 5,709,153 5,696,945 0.21% 0.21% Tippecanoe 1,147,323 4,547,858 0 28,262 5,723,443 140,184,818 130,407,231 4.08% 4.39% Tipton 31,758 465,150 153,753 10,977 661,637 14,515,812 12,942,041 4.56% 5.11% Union 51,262 284,969 71,592 1,137 408,959 6,754,814 6,345,855 6.05% 6.44% Vanderburgh 2,759,697 7,277,598 0 94,859 10,132,154 170,745,704 156,994,536 5.93% 6.45% Vermillion 97,323 426,146 139,515 8,230 671,213 15,634,937 14,963,724 4.29% 4.49% Vigo 4,027,821 6,984,267 6,737,755 206,771 17,956,613 103,016,910 85,060,297 17.43% 21.11% Wabash 0 82,513 0 121,159 203,672 21,879,936 16,414,465 0.93% 1.24% Warren 1,905 1,992 0 2,371 6,269 7,778,019 7,305,155 0.08% 0.09% Warrick 274,457 399,033 0 8,388 681,878 47,111,915 46,430,038 1.45% 1.47% Washington 53,653 482,128 66,931 24,578 627,290 18,100,482 16,621,670 3.47% 3.77% Wayne 1,762,570 3,799,188 880,867 18,487 6,461,111 61,591,025 55,129,914 10.49% 11.72% Wells 0 30,423 0 35,362 65,785 18,689,043 16,927,974 0.35% 0.39% White 41,939 218,167 0 2,334 262,440 23,302,162 22,780,082 1.13% 1.15% Whitley 76,853 239,800 0 24,896 341,549 22,352,839 21,830,720 1.53% 1.56% Statewide 169,296,649 250,943,290 158,832,212 4,128,856 583,201,008 6,238,626,057 5,461,260,057 9.35% 10.68% Source: Author s calculation from Department of Local Government Finance (various years) and Indiana Legislative Services Agency s Indiana Handbook of Taxes, Revenues and Appropriations. * Reported credits do not include credits from TIF districts; therefore, statewide totals do not summarize all credits received from the tax caps. ** Gross levy minus county funded credits minus circuit breaker credits ($) Final Net Levy 2012 = (Gross levy minus county funded credits minus circuit breaker credits) Does not include LaPorte for taxes payable in 2012 See CBER website for data tables A6 and A7, which contain data for 2010 and 2011. CENTER FOR BUSINESS AND ECONOMIC RESEARCH 9 BALL STATE UNIVERSITY MAY 2013

About the Author Dagney Faulk Dagney Faulk, PhD, is director of research in the Center for Business and Economic Research (CBER) at Ball State University in Muncie, Indiana. Her research focuses on state and local tax policy and regional economic development issues and has been published in Public Finance Review, the National Tax Journal, the Review of Regional Studies, State and Local Government Review and State Tax Notes. She has worked on numerous Indiana-focused policy studies on a variety topics including the regional distribution of state government taxes and expenditures, senior migration, and local government reform. About the Center Center for Business and Economic Research The Center for Business and Economic Research (CBER) is an economic policy and forecasting research center at Ball State University. CBER research encompasses public finance, regional economics, manufacturing, transportation, and energy sector studies. The center produces the CBER Data Center and the Indiana Business Bulletin with commentary on current issues and regularly updated data on housing, wages, employment, and dozens of other economic indicators. In addition to research and data delivery, the center serves as a business forecasting authority in Indiana s east-central region holding the annual Indiana Economic Outlook luncheon and quarterly meetings of the Ball State University Business Roundtable. About the Research Assistants Kevin Kroll Kevin Kroll is a graduate assistant specializing in geographic information systems (GIS) at the Center for Business and Economic Research. He has experience in the field with GIS, working several stints as a GIS intern and technician for the City of Danville Public Development Department. Kroll holds a bachelor s degree in geography from Indiana State University and recently completed his master s degree in urban and regional planning. Hikoyat Salimova Hikoyat Salimova is a research fellow for the Center for Business and Economic Research at Ball State University. She specializes in geographic information systems (GIS). As a master s student, Salimova worked at CBER as a research and GIS graduate assistant. After graduation from a master s program, she continued her GIS work as a research associate and GIS specialist. BALL STATE UNIVERSITY CENTER FOR BUSINESS AND ECONOMIC RESEARCH Center for Business and Economic Research Ball State University (WB 149) 2000 W. University Ave. Muncie, IN 47306-0360 Phone: 765-285-5926 Email: cber@bsu.edu www.bsu.edu/cber CENTER FOR BUSINESS AND ECONOMIC RESEARCH 10 BALL STATE UNIVERSITY MAY 2013