Business owners and other taxpayers irate at huge increases in their property assessments met Friday morning to organize, pledging to fix whatever is broken and prompting the state to open a comprehensive review of Porter County’s property tax data.

More than 200 people attended a Friday morning meeting organized by Russ Adams, owner of the Strongbow’s restaurant who formed a new group called Indiana People Advocating Reasonable Taxation. Many of those in attendance were Porter County business owners who have been hit with soaring property assessments, which in turn caused their 2008 tax bills to skyrocket.

Just a few hours after the meeting on Friday, the Indiana Department of Local Government Finance said it concluded an internal review and found that the assessment increases in Porter County were justified, though more of the higher values should have actually been applied to the previous years’ tax bills.

This morning, however, DLGF spokesperson Mary Jane Michalak said the DLGF is reopening its review and is looking into a variety of issues: Assessed values dating back to 2006, a comparison of the county’s gross assessed values with the county’s certified AV, school general fund levies, sales data, all budget calculations, and assessor data compared with the ratio study that the DLGF approved last summer.

“Essentially, we’re taking a new look at the assessment, levy and tax rates in Porter County, because we want to make sure this is correct,” said DLGF spokesperson Mary Jane Michalak.

The DLGF began its review last week after contacted by State Rep. Ed Soliday, R-Valparaiso, about soaring assessed values, particularly among commercial properties. The DLGF decided to reopen its review of Porter County’s data after Soliday presented the agency with additional assessments in Porter County. The DLGF also met with Soliday this morning.

The tax bill deadline has been extended to March 27. However, Michalak said there is a possibility that the deadline will be extended further. She also said that the DLGF plans to give the Porter County Council information about possibly setting up an installment plan so that taxpayers would be able to pay their bills over a longer period of time.

Michalak said it’s too early to say when the state’s review of Porter County’s tax data will be completed.

“We have this as one of our top priorities. We want to get this issue resolved as soon as possible,” she said.

The DLGF’s initial review last week focused on the Valparaiso taxing district, where some commercial assessments went through the roof. The DLGF cited increased spending by local government as the reason why tax rates didn’t fall more than they did. For example, the DLGF data showed that the Valparaiso school’s tax rate fell 9 percent but its levy went up 13.8 percent, while the city’s tax rate fell nearly 16 percent but its levy went up 8.9 percent.

The assessment increases stem from the state’s annual adjustment known as trending, in which assessors look at actual sales data in given neighborhoods to set the new values. Sales from 2005 and ‘06 were used for the trending reflected on the most recent tax bills.

The year 2005 was a robust year in Porter County’s real estate market. Overall, Porter County’s certified assessed value climbed from $8.9 billion in 2007 to nearly $10.2 billion last year.

The DLGF found that trending wasn’t properly applied to the tax bills payable in 2007. More sales from 2005 were used to determine the assessed values for the ‘08 tax bills than for the previous year. If more 2005 sales were reflected on the 2007 tax bills, the assessments likely would have been higher in that year.

While many homes also saw their values surge, many homeowners’ net tax went down due to a big boost in the state’s homestead credit. But businesses and other property don’t get that credit and as a result, some of their tax bills skyrocketed.

At Friday morning’s meeting, Soliday said that if an error is found in the county’s numbers, the state could order that Porter County re-issue its tax bills or order a full-blown reassessment. Another possibility, he said, is that, if there are errors, they are not widespread, leaving property owners to have to appeal their assessed values on their own.

Soliday said even if the assessments are correct, the tax rates should have fallen more than they did. He cited the Valparaiso data: The total rate fell 11.9 percent, while the overall assessed value climbed by 32 percent. He said if the assessments are correct, tax rates should have fallen proportionately more.

Soliday clarified that the tax bill extension was not sought merely to give taxpayers more time to cough up their money -- or, as he put it, to send their kids into slavery -- but to give more time to find an error if there is one.

Speaker after speaker shared their tax bill woes.

Mark Bengel, owner of The Courts in Liberty Township, said his business cost about $2 million to build, but his assessed value was set at $6.8 million. Similarly, Joe Szymanski, owner of the “dome” in Valparaiso, the former Natural Ovens bakery, said he bought the business for $1 million when the appraised value was $1.4 million. But his most recent assessment placed the taxable value at $7 million.

“What our government is doing here is putting us out of business,” said another business owner, Bob Phillips of the Phillips Ace Hardware in Valparaiso, who said his business taxes went up 61 percent.

Some of those who spoke Friday questioned why businesses have to take the brunt of the local tax burden. Others questioned the state’s trending process and said it’s not a fair method to set assessed values. One man called for the repeal of property taxes; another called on the county to adopt the County Adjusted Gross Income Tax, which is used to lower property taxes across-the-board.

Porter County Assessor John Scott was among the elected county officials in attendance. Scott found himself on the hot seat at times, as he tried to explain how his office handled the assessments and what property owners have to do to appeal. He and his staff came prepared with a number of fliers for those in attendance.

Scott told the audience that his staff is only following the state’s new formulas in applying the assessed values. “We didn’t make up these numbers,” he said.

Soliday acknowledged that trending, the result of the Indiana Supreme Court decision that essentially forced Indiana to change its property tax assessment system, is “hugely complex” with a number of different factors that affect the final values. He noted that there is a bill pending in the Indiana Legislature that would tie assessed value increases to a formula similar to cost-of-living-adjustment increases.

Repeatedly, Adams told the audience: “We have a problem in Porter County and we have to fix it,” prompting large applause nearly every time.

Adams said he doesn’t think it’s fair to business owners that they have to make the choice of paying their tax, or laying off employees. He urged those in attendance to sign up to get on the contact list for INPART.

“We have to stand united,” he said.

Posted 3/16/2009