As higher property tax bills land in homeowners’ mailboxes, DeLaney urges reforms

With the coming property tax bills expected to wallop Hoosier homeowners, one Indiana Democratic lawmaker is faulting Republicans for not reforming the property tax system to prevent steep increases and is calling for a change in school funding to alleviate some of the pressure.

Rep. Ed DeLaney, D-Indianapolis, held a press conference Monday morning in the Statehouse where he said the “very significant increase” in property taxes is the result of the skyrocketing home valuations in 2021 fueled by the demand for houses. In Marion County, home valuations have increased an average of 18.9%.

“Our system is showing its age,” DeLaney said of the state’s property tax system, which includes a 1% cap. “It was essentially adopted in the year 2007, and we’ve never before had to deal with our property taxes at the same time, we’ve had dramatic increases in property values. The system is not, in my view, flexible enough to deal with that kind of a problem.”

Compounding the problem, the state has no way to soften the blow to homeowners this year.

Marion County is offering a credit of $150 for owners of homes assessed at $250,000 or below and $100 credit for homes valued between $250,000 and $400,000. Residents of other counties might not see similar relief, and they may have missed their chance to seek a new valuation since the deadline for appealing their assessments has passed in many places.

The representative said the Indiana General Assembly could make changes to address another somewhat smaller increase in property taxes that is expected to come.

“My friends in the majority should have seen this coming,” DeLaney said. “The property valuations’ increases over the last few years have been obvious. Some people have celebrated them, some people have cried about them, but we’ve known about this.”

To take pressure off the property tax system, DeLaney is advocating for a shift in the funding of k-12 public schools so more dollars come from the state rather than from the property tax pie. Property taxes are not adequate, he said, and schools are being “starved for funds” while homeowners are facing a nearly 20% increase in valuation. Moreover, schools are trying to cover the shortfall through tax referendums, but voters are not always approving the tax increases.

Delaney was not clear on exactly how lowering the schools’ allocation would give relief to homeowners.

He said the state has an obligation to support public schools since the Indiana Constitution requires a uniform system of common schools. By reducing schools’ dependence on property taxes, the pressure on such taxes would be alleviated and municipalities would have more money for things that are “truly local” like roads, police, firefighters, and libraries.

Asked how shifting school funding to the state would lower property taxes, DeLaney indicated the Statehouse would have to take additional steps.

“We do have the right to try to lower the property tax across the board,” he said. “I think we could try to do that but that just requires more state funding.”

The representative applauded a push by Republican Rep. Jeff Thompson, R-Lizton, chair of the House Ways and Means Committee, to funnel more state funds to schools. Thompson has proposed guaranteeing $1,500 to schools in property taxes for every student. If the property taxes come up short, then state dollars would be used to fill the gap.

Delaney said Thompson, recognizes the need to use state funds to replace property tax revenues going to schools. However, he is not optimistic the proposal will be included in the final budget bill.

“I don’t know that the Senate is prepared to deal with that,” Delaney said. “That’s a big idea by Indiana tax standards. The only big idea that the Senate has ever had is to cut a tax.”