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New property tax assessment could have bigger impact on the city

February 13, 2013

PLYMOUTH - Residents of Plymouth could be in for a surprise in their tax bill for the coming year.
Plymouth Clerk-Treasurer Toni Hutchings gave some numbers to the Plymouth Common Council Monday that point to what could be a difficult tax season. Marshall County had a reassessment of property in 2012 for taxes to be paid in 2013. The reassessment is the first in Indiana since 2002. The numbers coming back have given Hutchings a reason for concern.
The property tax rate for residents of the city of Plymouth will jump from 2.5448 to 2.8582 per $100 of assessed value.
“That number really surprised a lot of people,” said Hutchings.
Maybe a bigger surprise was the drop in assessed property value in the city from $439,535,587 to $376,541,798 - a drop of almost $63,000,000.
“Ordinarily the assessed value goes up, this was a real surprise to all of us,” said Hutchings. “In 2006, they started doing a thing called ‘trending’ which watches changes so that you have an idea of what to expect at reassessment so that there won’t be a big shock. Nobody expected this.”
The vicious cycle is this - when assessed value goes down, tax rate goes up to enable government to receive the same revenue to provide services such as road maintenance, and emergency personnel. The added wild card is the “circuit breaker” law enacted by the Indiana General Assembly that places a cap on the amount of property tax that can be collected.
With the higher tax rate it is likely that more tax payers will hit that limit. There is virtually no way for government to raise that lost revenue.
“It’s possible that this won’t affect the county as much,” said Hutchings. “There is a difference in how they calculate agricultural property so that assessed value hasn’t changed as much. It’s structures that have decreased so drastically. For example the assessed value of my house was considerably lower but the value of the land it’s on was actually a little higher.”
The bottom line in the city is with more structures than land, the overall assessed value will be lower forcing the tax rate higher.
The Plymouth city budget is $10,879,762. The normal tax levy the city expected to go towards that budget was $5,652,645. There are other revenues - state and county excise taxes and miscellaneous revenue - that go into the budget but no way to recover the funds lost from the property tax levy.
Another financial hit the city has taken is in TIF (tax increment financing) districts. Many properties in some of the districts have unpaid taxes or are paying their taxes late. That could cause problems in paying the bond issues they fund. Also, TIF District I in Plymouth has a new assessed value that is $10 million lower than previously.
Another concern is that new assessed values are varying widely. TIF District III - directly adjacent to TIF I - has seen little change in its assessed value.
“It does make me nervous about the coming year,” said Hutchings. “Until all the tax bills are out we really have no idea how this will play out and how much revenue we might lose when the circuit breakers kick in.
“I really hope it doesn’t have as much impact as I think it might.”

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