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November 4, 2019

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Settling the Debate Over School Funding & Property Taxes

After more than a few spirited Facebook debates, I decided to do us all a favor and get the right answers from the right person to settle the school funding debate.  I contacted Robin Mills, the Chief Deputy Auditor at Hamilton County Government.  I sent Robin an email and have formatted it for you for easier reading.   

 

Ron Thomas:  I'm writing to ask for your help clarifying some questions concerning property taxes.  It seems there is some misinformation/confusion in my community, concerning which entities collect property taxes; which entities distribute them; and which entities receive them.

 

Question: The primary concern revolves around school funding.  Some claim the State of Indiana collects property taxes for the school systems throughout the state.  The State "pools" the money, and subsequently redistributes it based on  "some formula."  In turn, people that "wealthier" school systems effectively subsidize "poorer" systems.

 

Robin's Answer:  The State does not collect or distribute property tax, however the state does distribute State dollars through a school funding formula.

 

Question:  Others claim the County collects the property tax in which the property in located; distributes the money directly to each school district (or government entity) based on their tax rate, caps etc.  Effectively, each school district receives 100% of the revenue paid by the taxpayers (property owners) within the school district from which the tax revenue is collected.

 

Robin's Answer:  This is correct.

 

Question:  Does the State take the property tax revenue and distribute based on "some formula" or does the County collect revenue and does each school district receive 100% of the property tax revenue collected within each taxing district?

 

Robin's Answer:  School Districts receive 100% of Property Taxes collected in their school district.

 

Question:  Another point of confusion is TIF.  Some people claim that TIF Districts have NO impact on the revenues received by other taxing entities that over the TIF (i.e. schools, libraries, townships)

 

Robin's Answer:  TIF districts DO impact taxing entities.

 

Question:  Others claim that TIF diverts revenues from entities such as schools, libraries and townships.  In other words, these entities should receive the monies collected from all properties, but instead the revenue goes to the Redevelopment Commission/Authority for uses they deem desirable/necessary.  Can you explain this, please?

 

 

Robin's Answer:  Once an area is deemed a TIF District and a base assessed value is set, any assessed value growth is captured and those revenues normally go to bond payments or projects set out in the TIF District.  However, School Operating and/or Capital Referendums do pull out of the TIF Districts based on their rate.

 

Ron Thomas:  In closing, there are people who believe two completely different things.  I just wanted to clarify the issues and put them to bed.  Please be aware that I would like to use/share your response(s) by showing other community members.  Thank you for your assistance. 

 

And so, my friends and fellow community members, our answers have arrived.  We need not debate the issue any further.

 

 

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