Monroe County Property Tax Levies – Where Does Your Property Tax Go?

In a post two days ago (2012 Budget Orders for Monroe County Released – Property Tax Rates for Monroe County), I wrote about the aggregate property tax rates for each taxing district in Monroe County for 2012. These rates include funding for all of the units of government that serve each district — county government, municipal government, township government, schools, libraries, solid waste management districts, etc.

In this post, though, I want to call attention in particular to the tax levies and rates associated with funding Monroe County Government in particular. All property owners in Monroe County (except for those that are tax-exempt) pay these rates.

The following table shows the budget, tax levy, and tax rate for each of the 5 funds under the so-called “frozen levy”. The frozen levy refers to the fact that, under some property tax restructuring back in 1973, all units of local government had their tax levies frozen at their 1973 levels, and were only allowed to increase by a small “cost of living increase” amount per year based on overall income growth statewide. There are exceptions to this — growing communities, for example, are able to apply for what are called “excess levies” to accommodate this growth. Monroe County received an excess levy to create two new courts back in 2007.

Fund Budget Levy Tax Rate
General Fund  $29,373,803  $14,516,322  $0.2318
2015 Reassessment  $-  $488,470  $0.0078
Cumulative Bridge  $422,318  $1,333,898  $0.0213
Health  $966,365  $513,520  $0.0082
Aviation/Airport  $794,135  $413,321  $0.0066

By and large, thought, the total frozen levy (the total of the “Levy” column in the above table) remains constant other than that the cost of living adjustment (in 2012, that allowed increase was 2.9%). Also note that the frozen levy is different from the so-called “property tax caps” that were enshrined in the Indiana Constitution in 2010.

The funds under the frozen levy are:

  • General fund — funds most aspects of county government operations, including the courts, sheriff, jail, prosecutor and public defenders’ offices, auditor, treasurer, etc.  As you can see, the property tax levy covers about half of the general fund’s budget; the rest comes from income taxes and other miscellaneous revenues (fees,interest income, etc.)
  • 2015 Reassessment — funds the upcoming property reassessment in 2015. Since the reassessment isn’t until 2015, the budget for this fund is 0 — meaning that the point of this levy is to accumulate enough money in the fund to perform the reassessment when it is required. The state mandates that the County Council levy $488,470 in 2012 for this fund.This method of funding reassessments will change, though, based on some legislation just passed in 2012, which will allow so-called cyclic reassessments (in which part of the property in the county is reassessed each year, rather than having one big reassessment of everything every 5 years).
  • Cumulative Bridge Fund — funds maintenance on all of the bridges in the county, including those within city or town limits. The budget in this fund is significantly less than the levy — the reason is that Cumulative Bridge projects are funded as projects, rather than in the annual budgeting process.
  • Health — funds the Monroe County Health Department. Again property taxes only fund around half of the budget of this department; the rest is funded through fees (septic permits, birth certificates, etc.).
  • Aviation/Airport – funds the Monroe County Airport (BMG). Similarly, property taxes fund about half of the budget of this department, with the rest coming from landing fees, surcharges on fuel, etc.

The County Council essentially has the ability to decide how to allocate the tax levies and rates within these funds in the frozen levy (as long as they add up to no more than the allowed amount). There are some exceptions to this — as I mentioned earlier, the reassessment levy amount is set by the state, and the Cumulative Bridge Fund is what is known as a “rate-controlled fund”, so the Council sets a rate for it, and then whatever that rate generates comes out of the remaining frozen levy amount. I will make another post about this Cumulative Bridge Fund issue in the future.

There are also several tax levies for Monroe County Government that are outside of the frozen levy.

Fund Budget Levy Tax Rate
Debt Payment  $924,000  $1,653,283  $0.0264
County Fair  $-  $81,412  $0.0013
Cumulative Capital Development  $2,683,123  $1,978,929  $0.0316

I’ll briefly describe each of these funds:

  • Debt Payment — this is the levy to service the mortgage for the Showers building purchased by the County in 2011. Note that this is the only debt that Monroe County Government has. Monroe County has always been very frugal about taking on debt. The budget for the debt payment is less than the levy because only one of the bi-annual bond payments are actually due in 2012 — the second 2012 payment is actually due in January of 2013.
  • County Fair — this is a required levy, and the county does not actually have any control over this at all. The County Fair budget is controlled by the Fair Board, not by the County Council.
  • Cumulative Capital Development (CCD)– this levy is to support large capital purchases, such as equipment, infrastructure, building, furniture, and police vehicles. The types of things that the CCD fund can be spent on are strictly enumerated in the statute. In particular, these funds cannot be spent on personnel or salaries — with one exception: the statute allows information technology (IT)/computer-support positions to be paid out of this fund.

All of these three funds are outside of the frozen levy described above — but all of them are still inside the property tax caps in the constitution.

As an aside, there is a common belief that additional development means additional property taxes for local government. However, because of the frozen levy, this simply is not true. Of all of the tax levies described above, the Cumulative Capital Development fund is the only levy that actually increases as assessed value increases. So additional development does provide a small amount of additional revenue for county government to provide infrastructure and buy “stuff” — but does not provide one additional dollar of revenue to support that development — to provide police and criminal justice services, for example.

So broadly that’s where your property tax dollars go in supporting Monroe County Government.

2012 Budget Orders for Monroe County Released – Property Tax Rates for Monroe County

Monroe County and other local units of government in the county just received their budget orders from the Indiana Department of Local Government Finance. This is the official notice of state approval of the budget, property tax levies, and property tax rates for all funds that receive property tax revenues.

Overall the following table from the budget order shows the 2012 property tax rates for each taxing district in Monroe County (the tax rate from 2011 for each district is also shown for comparison).  The tax rate you see there (under “2012 District Rate”) is the sum of all of the tax rates for all of the units of government serving that tax district. So for example, the Ellettsville Bean Blossom Township taxing district is served by Monroe County Government, the Town of Ellettsville, Richland Bean-Blossom School Corporation, the Monroe County Public Library, Bean Blossom Township, and the Monroe County Solid Waste Management District.

Taxing District 2012 District Rate 2011 District Rate Change % Change
Ellettsville Bean Blossom Township                       2.4539                          2.4182      0.0357 1.5%
Ellettsville Town                       2.4504                          2.4141      0.0363 1.5%
Bloomington City-Richland Township                       2.3710                          2.4348    (0.0638) -2.6%
Bloomington City-Van Buren Township                       1.9766                          1.9836    (0.0070) -0.4%
Bloomington City – Bloomington Township                       1.9395                          1.9472    (0.0077) -0.4%
Bloomington City-Perry Township                       1.9390                          1.9474    (0.0084) -0.4%
Stinesville Town                       1.7597                          1.8045    (0.0448) -2.5%
Bean Blossom Township                       1.6685                          1.7556    (0.0871) -5.0%
Richland Township                       1.6680                          1.7463    (0.0783) -4.5%
Bloomington Township                       1.4208                          1.4420    (0.0212) -1.5%
Polk Township                       1.3944                          1.4284    (0.0340) -2.4%
Van Buren Township                       1.3719                          1.3778    (0.0059) -0.4%
Salt Creek Township                       1.3506                          1.1716      0.1790 15.3%
Clear Creek Township                       1.3016                          1.3133    (0.0117) -0.9%
Perry Township                       1.2695                          1.2794    (0.0099) -0.8%
Indian Creek Township                       1.2017                          1.2144    (0.0127) -1.0%
Benton Township                       1.1679                          1.1893    (0.0214) -1.8%
Washington Township                       1.1583                          1.1868    (0.0285) -2.4%

The relative ranking of taxing districts by tax rate shouldn’t be too surprising. Incorporated municipalities all have higher tax rates than unincorporated areas, because the municipalities are also served by municipal governments in addition to the county, township, school, library, and solid waste management districts that serve everyone. Within the municipalities, Ellettsville districts have the highest tax rates by a long shot, followed by Bloomington, followed by tiny Stinesville. After the municipalities are the unincorporated areas. Bean Blossom and Richland Township tax rates are substantially higher than the others.

The primary reasons why both Ellettsville and unincorporated Richland and Beanblossom Townships have the highest tax rates is that the cost of their governments (particularly the Town of  Ellettsville and RBB School Corporation) are relatively high compared to their lower tax bases. The City of Bloomington and Monroe County Community School Corporation, for example, have a much higher tax base to support their budgets, which pushes the rates down. 

Also of note is that most districts’ tax rates went down from 2011 to 2012, reflecting primarily a substantial increase in assessed value.

In a future post, I will discuss the individual components of the tax levy that supports Monroe County Government.

The full Monroe County 2012 Budget Order is available here: Monroe County 2012 Revised Budget Order

Update on Monroe County TIF Districts

Monroe County TIF Districts

After yesterday’s posts about Monroe County’s Tax Increment Finance (TIF) districts, several readers asked for more details about the three districts. Here are maps and annual reports for each of the three TIF districts.

Westside Economic Development Area

The Westside Economic Development Area is also frequently referred to as the Richland TIF. It has been tremendously successful for Monroe County, and many business have located there, including Cook, Tasus, BioConvergence, Printpack, and GE. Ivy Tech is also located in the Westside TIF.


Annual Report

Bloomington Township State Road 46 TIF District

The Bloomington Township State Road 46 TIF District is also called North Park, or more informally, Criderville.There has been very little development in this TIF to date, and thus very little revenue. However, in this TIF, the developer is backing the bonds, so he is on the hook for any shortfalls in revenue.


Annual Report

Fullerton Pike Economic Development Area

The Fullerton Pike TIF was created to provide the infrastructure for and capture the increment from Monroe Hospital. It is actually the smallest TIF district in the state, at the moment.


Annual Report

New Commission to Study TIF Districts in Marion County — Should Monroe County Do the Same?

Yesterday, the Indianapolis City-County Council voted to create a commission to study TIF districts and their impact on other local units. Today’s Indianapolis Star reports that:

On Monday, the council also voted 27-0 to create a commission to examine the city’s use of dozens of special funds intended to support economic development in certain areas.

Called the Tax Increment Financing Study Commission, the panel is charged with issuing preliminary recommendations by April 30 and a final report by June 30.

Critics say overuse of TIF districts diverts too much tax money from schools, libraries and other government units.

Ballard has expressed concern that the commission’s work could sap city officials’ time and delay council action on pending TIF-related proposals.

TIF (Tax Increment Financing) districts are special districts in which a bond is taken out to upgrade the infrastructure (roads, sewers, trails, etc.) within the district, with the idea of making that district more desirable for economic development. Any property taxes from the increased value (the “increment”) resulting from that infrastructure (i.e. new businesses, housing) are diverted from the surrounding taxing units and placed in a special fund where they are used to pay back the bond used to fund the infrastructure. The funds can also be used for other projects that add to the value of the TIF district.

Monroe County has three TIF districts: the Westside Economic Development Area (sometimes called the Richland TIF), the Bloomington Township State Road 46 TIF District (also sometimes called North Park or Criderville), and the Fullerton Pike Economic Development Area. The City of Bloomington has six: Adam’s Crossing, Tapp Road, Thomson/Walnut/Winslow, Downtown, N. Kinser Pike/Prow Road, and Whitehall/West Third.

TIF districts, and the property taxes collected in them are under the control of the Redevelopment Commission (Monroe County and the City of Bloomington each have a Redevelopment Commission). Theoretically, after the bond obligations are met (i.e. the payments are made), excess funds collected by the TIF district can go back to the surrounding units that would have collected the taxes had there been no TIF district. The Redevelopment Commission is required by law to provide written notice to the local government each year for each TIF as to whether there is any excess valuation in the TIF district that isn’t needed, and can therefore be sent back to other local units of government. As a matter of practice, it probably isn’t much of a surprise that inevitably the Redevelopment Commissions can’t spare a dime from the TIF funds, and that all revenues are needed for the TIF.

TIF can be a very effective technique for economic development, as it is essentially “self-financing”, and doesn’t require any commitment of general funds. However, there are also a couple of legitimate criticisms of TIF financing.

1. The purpose of TIF districts is to spur development at a higher level than would be supported by the existing infrastructure of an area. The concept is that any additional valuation from new development is a result of the new TIF-funded infrastructure, and would not have occurred otherwise. Therefore, the surrounding governments (cities, townships, county, library, schools) aren’t actually losing anything that they otherwise would have had. However, in some areas, governments have been accused of creating TIF districts in areas that were already going to see significant development — thereby creating an even wealthier TIF, but diverting taxes that otherwise would have gone to local governments. I don’t think this has occurred in Monroe County — but it probably has in other areas, and local governments and residents should be vigilant that it doesn’t happen.

2. The new development in TIF districts can also create additional demands on the services provided by local governments, while denying those local governments any additional property taxes to meet the demands. For example, if a new subdivision goes into a TIF district, the residents may require additional police services –but the surrounding city or county would not receive additional revenue to provide those services. A new business may increase the need for fire protection, without providing the local (city, township, or other) fire department with additional revenues. This is a complex issue, and clearly the additional demands on units of government differ according to the type of development: a new factory requires little additional policing, and no additional demand on the library or schools but may need more highway maintenance and fire protection; a retail store requires additional policing; a subdivision may not create as much additional road maintenance burden, but may put additional demands on the schools and libraries, etc.

It was these sorts of issues that the Indianapolis CIty-County Council is trying to sort out in creating its commission. Although I don’t think the problem is as great in Monroe County, I also don’t think most residents — or even most government officials — really have any idea of the economic impact, both positive and negative, of their TIF districts. There are important questions out there: are TIF districts effective in creating the kinds of economic development that residents want (or maybe economic development that residents DON’T want)? What are the impacts of this new TIF-funded development on units of local government?  TIF financing and the decisions made by Redevelopment Commissions largely operate under the radar (not through any intentional lack of transparency — just because the media doesn’t seem to pay attention).

Monroe County ought to seriously consider creating a similar commission to answer these important questions.

The original Indianapolis Star article can be found here.