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Tax revenues mismatched at county schools

BY Carolyn Muyskens - cmuyskens@chronicle-tribune.com

When the county’s school districts received semi-annual property tax revenue this week, figures at all five schools missed the target set for them by the state’s Department of Local Government Finance (DLGF).

Marion Community Schools took in over half a million dollars less than anticipated, while the four other county schools received hundreds of thousands more than expected, according to figures provided by the Grant County Auditor’s Office.

For each school corporation, the DLGF provides a certified levy, a calculation of how much the corporation can receive in tax payments over the year.

The school uses that levy figure to predict its annual revenue and to budget for the year.

According to Auditor Roger Bainbridge, Marion received $598,131.34 less than anticipated in 2018, or 93 percent of the certified levy.

Eastbrook Community Schools took in $327,093 more than the levy, Oak Hill received $298,711 more, Mississinewa received $106,368 more and Madison-Grant $211,109 more, according to Bainbridge.

Some of Marion’s loss can be attributed to delinquent tax payments, but it’s also possible that tax revenue losses due to property tax caps, also called circuit breakers, and losses due to tax increment finance (TIF) districts inside the city could have caused the gap between the tax collection and the levy.

TIF districts capture any increase in the value of the properties inside the district and redirect that property tax money, often toward paying off a bond used for investment.

In a TIF district, the amount in property taxes received by taxing units are based off the value of the properties when the TIF was created.

Bainbridge said that the contrast between Marion Community Schools and the other more rural school districts leads him to believe TIFs may have had an impact on the gap between the levy and the actual funds received.

“In the urban areas where there are the TIFs, that’s where the school isn’t getting what they’re expecting to get. If there isn’t a correlation, then it’s a terrific coincidence,” Bainbridge said.

Tax caps also have a greater impact inside Marion city limits because property tax rates are higher inside the city than outside. It’s possible a DLGF formula for tax cap loss underestimates Marion’s losses while overestimating the losses outside city limits, according to Bainbridge.

The C-T contacted DLGF Friday afternoon for information about the levy formula and the differences between actual and anticipated revenue. A DLGF representative said the department would look at the school’s situation early next week. 

As for the four school corporations that received more than their levy, some but not all of that excess can be accounted for as late tax payments.

At Madison-Grant, for example, Bainbridge said $77,819 of the tax money the school corporation received was from late tax payments that didn’t make it into the previous tax draw. But Madison-Grant received over $200,000 more than its certified tax levy.

Again, Bainbridge’s best guess to account for the excess is that the DLGF formula for the levy may not factor in the difference between circuit breaker effects in the city versus the county.

At Eastbrook, Business Manager Lisa Baker said taking in more money than anticipated isn’t a problem for the school.

The school already budgets conservatively, Baker said, and although it can’t simply spend the money, because it hasn’t been budgeted for, Baker said the good thing about extra revenue is that if the school needed to make an emergency expense it could request an additional appropriation to use the extra cash.

But typically, Baker said, Eastbrook doesn’t rely entirely upon the DLGF levy estimate.

“We use that estimate as a tool, but it’s just one piece of information,” Baker said.

Managing Editor Spencer Durham contributed to this report.