For those who don’t have the time for these sites, here is a quick summary. First of all, the property tax rate that appears on property tax bills is actually a sum of the property tax rates of several different local government entities. Depending on where your property sits, your tax rate will include the tax rate of the county, township, city or town, park board, library district, fire district, any other special districts, and the school district. In fact, the school system usually collects over half of your total property tax bill. Cities and towns collect less than 20% of the total tax bill. As it relates to the WRT reorganization, incorporation, or annexation, whatever changes take place will only effect a small portion of the overall tax bill. County taxes, school taxes, fire district taxes, and others will not be affected by any of these changes.

The property tax rate for each governmental entity is calculated using a simple mathematical equation. The Property Tax Rate is equal to the jurisdiction’s budget (called a Levy) divided by the Assessed Value of all the property within the jurisdiction. PTR=L/AV. The Levy is essentially the amount of money the governmental unit needs to collect to pay for services it provides to the people in its jurisdiction. For example, a library district may require $500,000 to pay for library facilities, utilities, books and media, and librarians. So, the Library Board sets its levy or budget at $500,000. The State imposes certain controls on all units of local government so they cannot significantly change levies from year to year without State approval. So, our fictitious library board cannot change its $500,000 levy to $750,000 next year without jumping through some hoops.

The assessed value of our library district is determined by the individual assessments of all property within the district. County assessors are generally in charge of determining the value of individual properties following rules established by the State. Different types of property (agricultural, residential, commercial) is assessed differently. Each type also has available to it various deductions such as mortgage or homestead deductions which reduce its taxable value.

Our library district’s tax rate is determined by dividing the levy by the assessment of the property in the library district. If the aggregate assessment is $50,000,000 and the levy is $500,000, then the rate for the sample library district would be 1% or $1 per $100 of assessed value. Someone owning a home worth $100,000 would owe $1,000. Someone owing a home worth $200,000 would owe $2,000 in tax. Of course, these numbers are just given as an example.

The important thing to note is the relationships between levies, assessed values, and tax rates. If the aggregate assessed values for a district go up and the levy stays the same, then the property tax rate will necessarily decrease. However, the inverse is also true. If assessed values decrease while levies stay the same, then tax rates must increase. However, it is not all bad. For an individual homeowner, if your assessed value decreases in the same proportion that your tax rate increases, you will end up paying the exact same amount in tax. Nothing actually changed except the numbers. Thus, a decrease in assessed values does not necessarily mean a decrease in property taxes. It is all relative. Those are the real facts about property taxes. It is the relationship of assessed value to levy that is truly important. Mr. Shaver appears to assume that tax rates will stay the same and WRT residents will pay the lion’s share of taxes in a new city because of higher assesed values. But, changes in assessed values and levies will affect the rates. It is complicated and that is why we need well informed individuals to research this issue and determine what the actual impact of a reorganization will be on assessments and tax rates.

In my opinion, the addition of the WRT assessed value to a New Greenwood would completely change the equation. Overall, City tax rates will likely decrease due to the growth in overall assessed value. Though levies will also have to increase to pay for new services in the WRT area, they will not increase proportionately to the increase in population. Despite Mr. Shaver’s comments, some economies of scale can be had. The addition of each new police officer will cost less then the first officer added because the administrative costs necessary to support the officer (a police chief, administrative staff, computer systems, some training costs) have already been paid.

Those in WRT will see the addition of the City tax rate to their tax bills, but the township rate will presumably dissapear from those bills. Overall, I suspect rates will increase for WRT residents because we will be recieving better services. We will be paying a little extra for better street repair, land use planning, police protection, parks, et al. But remember, we are still talking about changes on the fringes of the overall tax rate. School rates won’t be affected and they make up over half of the property tax rate.

Also, WRT residents need to consider (because Mr. Shaver apparently does not) the fact that a combined City of Greenwood/WRT will include electoral participation. It is not as simple as implying that WRT money will go to Greenwood and that we will have to beg for it back. If WRT combines with Greenwood, then we will all be in it together. WRT residents be able to influence the budget priorities for the New City. The New City residents, inlcuding WRT residents, will set the city’s levy and, depending on assessed values, determine the tax rate. This reorganization process gives us an opportunity to secure our voice in determining the future of this south suburban community (yes, our community is much larger than just WRT).

-Andrew Klinger, a resident of suburban White River Township, spent eight years in state and local economic development. He has worked with community leaders in several regions of the state and helped them stragically plan and coordinate their economic and community development efforts. He has conducted several economic and tax related analyses for various communities. Mr. Klinger holds degrees in economics and political science as well as a Master’s degree in Public Management, all from Indiana University. He also earned a J.D. from the the Indiana University School of Law – Indianapolis.