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Property Tax Caps Mean More Local Fees, Report Finds

By Alexander McCall

Posted December 8, 2015

Two new reports have found property tax caps have kept more money in taxpayers' pockets, but they've also forced local governments to generate revenue through new fees.

According to the Indiana Fiscal Policy Institute, property tax caps have cost local governments more than $760 million in potential revenue since they were implemented in 2009.

Institute Director John Ketzenberger says the lost revenue has hit some communities harder than others.

"The communities around Indianapolis have lost significant revenue to the property tax caps, but they are growing so quickly it doesn't affect them as much as it does a community like Terre Haute, which has lost a lot of its property tax base," he says.

With property taxes no longer viable as the sole source of income, communities have implemented other measures to make up the difference. Both user fees on services like waste removal and local income taxes have become popular, but Ketzenberger says there's no universal solution.

"The legislature has in effect said to local governments, ‘You can't raise as much in property tax as you once did,' and it has really forced local governments to take on a larger policy-making role when it comes to how they will pay for local services," he says.

Ketzenberger adds he hopes the new reports will help local governments make better decisions.

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