Purdue Cooperative Extension Service The Recession and Indiana Public Libraries Larry DeBoer Department of Agricultural Economics Purdue University May 3, 2011 For more information DeBoer s Indiana Local Government Information website: www.agecon.purdue.edu/crd/localgov
TAX CAP CREDITS Recession and Tax Caps Recession reduced property prices in 2009 in many counties Trending incorporates reduced prices into assessed values in 2010, used for property tax bills in 2011 Lower assessed values require higher tax rates to raise a particular levy Higher tax rates make more taxpayers eligible for tax cap credits Tax cap credits are revenue lost to local governments 2010 Tax Cap Credits, County Totals, District 1 Cnty County Levy 1% 2% 3% Elde rly T ota l Circ Brk a s % of Le vy 20 Elkhart 216,486,891 4,216,792 7,316,066 3,347,219 72,422 14,952,499 6.9% 37 Jasper 25,048,517 0 0 0 11 11 0.0% 43 Kosciusko 70,835,458 304,364 552,633 0 34,334 891,331 1.3% 45 Lake 753,290,598 8,582,858 38,486,814 53,897,586 116,935 101,084,193 13.4% 50 Marshall 39,877,084 181,780 565,315 7,255 15,238 769,587 1.9% 56 Newton 15,151,366 36,887 262,901 17,946 14,460 332,195 2.2% 64 Porter 185,952,861 1,130,629 2,657,341 0 38,302 3,826,272 2.1% 66 Pulaski 10,134,304 0 5,580 0 307 5,888 0.1% 71 St. Joseph 333,009,064 4,711,442 15,727,809 15,106,015 33,705 35,578,971 10.7% 75 Starke 17,293,729 32,299 319,842 0 2,102 354,243 2.0% District 1 1,667,079,872 19,197,051 65,894,303 72,376,022 327,816 157,795,191 9.5% Indiana Total 6,510,739,773 100,243,885 221,750,555 142,235,095 2,441,124 466,670,658 7.2% 2011 Tax Cap Credits, County Totals, District 1 Cnty County Levy 1% 2% 3% Elde rly T ota l Circ Brk a s % of Le vy 20 Elkhart 216,315,195 5,594,684 8,086,524 7,252,785 50,251 20,984,244 9.7% 37 Jasper 25,018,262 0 0 0 3,544 3,544 0.0% 43 Kosciusko 72,872,850 330,939 487,669 0 40,204 858,811 1.2% 45 Lake Lake data not yet available 50 Marshall 40,515,957 246,250 562,442 0 21,760 830,452 2.0% 56 Newton 15,360,768 66,182 260,829 14,614 20,508 362,132 2.4% 64 Porter 192,386,058 3,834,885 3,979,030 0 96,122 7,910,037 4.1% 66 Pulaski 10,186,574 184 6,373 0 5,752 12,310 0.1% 71 St. Joseph 343,345,563 7,088,326 18,514,285 19,615,559 51,742 45,269,912 13.2% 75 Starke 17,278,081 50,721 372,251 0 2,580 425,552 2.5% 1
THE PROPERTY TAX MAXIMUM LEVY GROWTH QUOTIENT Recession and the Maximum Levy The maximum levy limits non-school, non-debt property tax levies in most jurisdictions The annual increase in the maximum levy is calculated using the six-year average growth in Indiana non-farm personal income; the same growth quotient is used for the whole state The data enter the formula with a two-year lag For 2011, the income growth rate for 2003 was dropped, and the rate for 2009 was added The 2009 growth rate was negative, because of the recession The growth quotient dropped to 2.9%, its lowest level ever 9.0% 7.0% Calculation of Property Tax Maximum Levy Growth Quotient 2003-2011 and estimates 2012-14 Growth Quotient: Six-year Average Growth, 2-year lag 2-year lag: 2011 Quotient based on 2004-2009 income growth 5.0% 3.0% 1.0% Income Estimates -1.0% -3.0% 1995 1997 1999 2001 2003 2005 2007 2009 2011 Annual Growth Rates, Indiana Non-Farm Personal Income (Statewide) 2
INDIANA S LOCAL INCOME TAXES Local Income Tax Distributions, 2009 Based on tax returns reported from July 1 2007 to June 30 2008 Returns from income earned in 2007 Distributions from state paid out of income tax withholdings and payments from 2009 Distributions exceeded withholdings and payments in many counties Special distributions depleted balances in counties state accounts Local Income Tax Distributions, 2011 Based on tax returns reported from July 1 2009 to June 30 2010 Returns from income earned in 2009 2009 was the worst year of recession, so distributions declined by 16%, on average Balances are negative in many counties; distributions will be frozen in future years until balances are restored No Tax End-of-2009 Balances as Percent of Collections Less than -5% -5% to 5% More than 5% 3
INDIANA S STATE BUDGET AND EDUCATION Indiana State Budget Summary, FY 2000-2013 (millions of dollars, Senate's Proposed Budget as of 4/21/11, with April 2011 Revenue Forecast) Revenue Forecast Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual Budget Senate Budget Avg. Ann. Change 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2000-09 2009-11 2011-13 Start of Year Balances 1,991 1,638 910 534 720 533 750 1,089 1,286 1,413 1,420 831 797 829 Revenues Sales Tax 3,651 3,687 3,761 4,172 4,721 4,960 5,226 5,379 5,686 6,153 5,915 6,214 6,518 6,796 6.0% 0.5% 4.6% Individual Income Tax 3,753 3,780 3,541 3,644 3,808 4,213 4,322 4,616 4,838 4,314 3,876 4,390 4,774 5,051 1.6% 0.9% 7.3% Corporate Income Tax 985 855 709 729 645 825 925 987 910 839 592 673 687 692-1.8% -10.5% 1.4% Gaming - - - 431 602 585 590 625 583 621 680 681 700 667 4.7% -1.0% All Other 810 801 784 1,072 1,143 905 1,370 1,096 1,187 1,125 1,255 1,211 1,156 1,193 3.7% 3.8% -0.7% Total 9,200 9,123 8,796 10,049 10,918 11,489 12,434 12,703 13,203 13,052 12,317 13,168 13,834 14,400 4.0% 0.4% 4.6% Appropriations K-12 Education 3,905 4,182 4,185 4,380 4,247 4,512 4,582 4,647 4,830 6,169 7,450 7,584 7,286 7,354 5.2% 10.9% -1.5% Higher Education 1,331 1,390 1,411 1,440 1,474 1,528 1,544 1,588 1,654 1,744 1,725 1,755 1,678 1,695 3.0% 0.3% -1.7% Medicaid 1,042 1,144 1,171 1,249 1,266 1,383 1,455 1,525 1,587 1,664 1,848 1,874 1,848 2,013 5.3% 6.1% 3.6% Property Tax Relief 1,057 1,154 1,180 1,157 2,097 2,143 2,153 2,189 2,308 1,699 136 36 - - 5.4% -85.5% -100.0% Health & Social Services 757 774 858 855 767 768 836 860 943 1,237 1,354 1,354 1,227 1,232 5.6% 4.6% -4.6% Public Safety 621 623 678 681 695 697 718 718 721 801 781 796 767 775 2.9% -0.3% -1.3% All Other 1,005 923 824 1,136 763 719 787 831 943 1,122 1,089 1,052 1,015 1,095 1.2% -3.2% 2.0% Total 9,718 10,190 10,307 10,898 11,310 11,750 12,075 12,359 12,986 14,436 14,383 14,450 13,820 14,164 4.5% 0.0% -1.0% Current Year Surplus/Deficit (518) (1,067) (1,511) (850) (392) (262) 359 345 217 (1,384) (2,066) (1,282) 13 236 ARRA Medicaid 405 573 466 - - ARRA Fiscal Stabilization 587 110 35 - - ARRA Total 992 683 501 - - Transfers from (to) Other Funds 30 236 617 376 138 257 12 70 19 73 165 1 - - Reversions 134 103 145 323 63 222 125 119 133 357 630 747 19 13 Payment Delays (Reversals) - - 374 337 3 - (156) (337) (241) (31) - - - - Total Adjustments 165 339 1,135 1,036 204 479 (20) (148) (89) 399 794 747 19 13 End of Year Balances General Fund 833 19 0 137 0 119 411 537 593 55 831 796 825 1,070 Education Fund 265 265 265 305 291 291 317 317 400 942 - - - - Medicaid Reserve - 100 - - - 24 34 88 58 58 - - - - Rainy Day Fund 540 526 269 279 242 317 328 344 363 365-1 5 8 Total 1,638 910 534 720 533 750 1,089 1,286 1,413 1,420 831 797 829 1,078 Total Balances % of Revenue 17.8% 10.0% 6.1% 7.2% 4.9% 6.5% 8.8% 10.1% 10.7% 10.9% 6.7% 6.1% 6.0% 7.5% 5% of Revenue 460 456 440 502 546 574 622 635 660 653 616 658 692 720 Payment Delay Liability - - 372 711 712 726 622 286 31 - - - - - Appropriations less Reversions 9,584 10,087 10,162 10,575 11,247 11,528 11,950 12,240 12,854 14,079 13,754 13,704 13,801 14,151 447 Percent Change 5.2% 0.7% 4.1% 6.4% 2.5% 3.7% 2.4% 5.0% 9.5% -2.3% -0.4% 0.7% 2.5% 0.032634 Prepared by Larry DeBoer, Department of Agricultural Economics, Purdue University and Purdue Cooperative Extension Service, April 2011. 4
Indiana State Budget, Appropriations, Fiscal Year 2011 Total Appropriations: $14,450 million All Other Public Safety 7% 6% Health & Social Services 9% Medicaid 13% K-12 Education 53% Higher Education 12% 16,000 Indiana State Budget Revenues and Appropriations, Actual 2000-10, Budgeted 2011 and Senate Budget 2012-13 (millions of dollars) 14,000 12,000 10,000 8,000 6,000 4,000 2,000 - Revenues + Stimulus Own Revenues (no Stimulus) Appropriations Appropriations Less Reversions 2000 2002 2004 2006 2008 2010 2012 5