The commissioner of the Indiana Department of Local Government Finance defended the most recent assessments in Porter County, but still urged taxpayers to appeal, saying that the state’s system of mass appraisals cannot possibly achieve perfection in all cases.

DLGF Commissioner Tim Rushenberg, accompanied by several top staff members, traveled to Porter County Thursday to outline their findings in a comprehensive review of Porter County’s assessment data used in the most recent tax bills that are due Monday.

The state’s review was prompted by outcry from business owners and others who saw their assessments, and thus their overall taxes, skyrocket.

The DLGF concluded that the assessment data is overall correct. But, because of errors made by assessing officials in the previous year, the tax hikes that hit many businesses for 2008 taxes should have actually been spread out over 2007 and ‘08, instead of all at once, the DLGF has found.

Rushenberg emphasized, however, that Indiana uses a mass appraisal method, where perfection is impossible to attain. That’s the reason for the appeal process, he said, so that taxpayers concerned that their assessments might be in error can seek a remedy individually.

“If you don’t agree, appeal,” he said.

The appeal deadline is this Monday. Taxpayers can appeal later, but any changes in their values wouldn’t be reflected until the following year’s tax bills.

The DLGF public meeting Thursday was held in a large meeting room at Valparaiso University -- where Rushenberg, incidentally, graduated from law school -- and attracted many of the same taxpayers at a meeting last month at Strongbow’s. But the turnout Thursday was considerably less. It also appeared that only two elected officials from the county level, Porter County Auditor Jim Kopp and Council member Karen Conover, were in attendance.

The relative no-show among county officials was blasted by audience member James Snyder, who noted that just the night before, the Porter County Council pulled out of the Northwest Indiana Regional Development Authority. Snider said county officials claim to be concerned about taxes, but didn’t show up for the DLGF meeting.

A similar comment was made by Russ Adams, owner of Strongbow’s, who also cited the RDA decision and said that he and others “have lost faith in our county government.”

Most of the comments throughout the night, however, focused not on politics but on soaring tax bills, as audience members peppered the DLGF officials with questions, some technical and some general but nearly all wanting advice on how to handle their steep tax hikes.

The owner of a Valparaiso muffler shop said that his taxes went up 110 percent, a jump that he cannot pass on to his customers. Another taxpayer said she’s at risk of losing some of her rental businesses because the assessments are just too high.

State Rep. Ed Soliday, R-Valparaiso, cited pending proposals in the Indiana Legislature that would tie assessments for businesses to cost-of-living increases as well as to cap assessment hikes to no more than 5 percent each year.

But he also noted that Porter County does not have a county income tax in place dedicated to property tax relief. While saying he’s not necessarily advocating a new tax, he also said that income taxes are the most progressive tax and are effectively used in most Indiana counties to keep property taxes lower. But citing the resistance in Porter County to new taxes, Soliday said part of the problem in Porter County is “due to the unwillingness of county officials” to adopt a local income tax specifically for property tax relief.

DLGF officials underscored the problems caused when there are large gaps in updates in property values.

Rushenberg explained the difference between trending and reassessment. The latter is a comprehensive effort that involves onsite visits by assessors to update property characteristics; the next reassessment statewide is set to begin this year for taxes payable in 2012. Trending, meanwhile, is a new state process that began in 2006 for the taxes due in ‘07, in which assessors adjust the values annually based on actual comparable sales.

Rushenberg noted how many taxpayers saw large increases in their values with previous reassessments, such as the one that was reflected on taxes payable in 2003. Trending is intended to adjust property values by smaller increments, serving as a supplement, but not a replacement for, reassessment.

“It’s to ensure there’s not that big sticker shock,” Rushenberg said.

But the big problem in Porter County was that trending for commercial properties wasn’t applied accurately for the tax bills payable in 2007, the DLGF determined. Many homeowners saw their assessments climb that year, but many commercial properties didn’t. Instead, the big hit came on the 2008 tax bills.

The DLGF officials reviewed how local assessing officials erred by not including four commercial sales in Center Township dating from 2004 and ‘05 in the county’s 2006 ratio study for taxes payable in 2007. The DLGF did certify that erroneous ratio study. However, they didn’t know about the missing parcels until they conducted the side-by-side review of the two years of ratio studies, said DLGF communication specialist Amanda Stanley.

That side-by-side review showed that the parcels were not assessed correctly for the 2007 taxes, which in turn affected other commercial assessments that year. “Correcting these errors caused a large increase in the assessed value of commercial properties in 2007 pay 2008,” states the DLGF report.

Looking forward, Rushenberg said the DLGF will re-emphasize in all counties the sampling size of the sales data used. He said it’s “very, very, very problematic” to set land values based on only one or two sales.

Also emphasizing the importance of good data, Rushenberg said the DLGF found problems with the recordkeepng and data management in the assessors’ office and, to a lesser extent, the auditor’s office. Specifically, he said the DLGF found a lack of property records, missing sales disclosure forms, and inconsistent sales validation data.

The DLGF has also ordered Porter County to resubmit its ratio study for the taxes payable in 2009, specifically to include underassessed or omitted residential properties. The county’s 2008/09 ratio study for the Shorewood Forest subdivision west of Valparaiso lumped lakefront parcels with non-lakefront properties, which Rushenberg said needs to be corrected.

If the county doesn’t resubmit a new ratio study acceptable to the DLGF by June 1, the DLGF could opt to do the re-trending work itself before the 2009 tax bills can be issued. The DLGF has already agreed to handle the trending for taxes payable in 2010.

“The purpose is to get Porter County caught up” in its tax billing work, he said.

Posted 4/10/2009