By VICKI URBANIK

Questions continue to swirl over last week’s announcement that 18 taxing units in Porter County must repay $3 million due to erroneous property tax distributions received in 2005.

The tax error has largely been blamed on a mistake made when the value of a small home in Valparaiso was inadvertently changed to about $400 million early last year.

The $400 million snafu has put Porter County in the spotlight of some amusing Chicago media attention. But it isn’t the sole issue and the discovery of the mistake isn’t clearing up all the questions still lingering.

According to various officials, it is known that in January or February of last year, an outside firm using the county’s enhanced access tax system accessed an obsolete software program and inadvertently changed the Chicago Street home’s value. The error was discovered two weeks later, the county’s software program was removed, and the tax bill for the home was corrected.

But, officials also say that the $400 million figure was never corrected in the books in the Porter County Auditor’s office. The faulty figure was included in the calculations when County Auditor Sandy Vuko made the 2005 property tax distributions in the summer and again in December, including the two state-funded credits that offset a break in property taxes.

The $400 million error only affected tax distributions in the Valparaiso taxing district: the Valparaiso city and schools, Center Township, the East Porter County Schools, the County Library System and the county government’s own general fund. All of those units are now having to pay back the erroneously high tax funds and state credit funds received.

That $400 million error didn’t at all affect the taxing units in the Duneland community that now have to repay tax funds. Instead, the over-distribution for the towns of Chesterton, Porter, Duneland Schools, Westchester Public Library and Westchester Township has been attributed to the large number of tax appeals and refunds issued stemming from the last reassessment.

County Assessor Shirley LaFever strongly disputed a comment made in newspaper stories, including in this newspaper, that stated that the $400 million house error was included in the certified assessed valuation figures that the state used to set the budgets and tax rates.

As it turns out, the $400 million was included in the county-certified AV for the ‘06 budgets and tax rates -- not last year’s.

LaFever shared assessment information showing that the $400 million was never included in the numbers that the assessors gave to the county audtior’s office. In 2004, for taxes payable in ‘05, the value of both real estate and personal property in Valparaiso was $1.78 billion. In ‘05 for taxes payable in ‘06, that figure is $1.79 billion -- an increase but nowhere near a $400 million jump.

LaFever further noted that the property tax record card for the Chicago Street home, on file at the Center Township Assessor’s office, clearly contains the right valuation.

LaFever said the public needs to understand that township and county assessor staff were not at all at fault in the tax error, and that the ‘05 tax rates were never impacted as it’s been suggested.

Porter County Information Technology Services Director Sharon Lippens said that’s true.

The faulty number was corrected on the Valparaiso home owner’s tax bill last spring, and the obsolete computer software was removed from the county’s system right after the error became known. However, because the number was never corrected in the auditor’s records, the figure was included both in the tax abstract for tax distribution purposes and again in the AV that Vuko certified to the state for the 2006 tax rates and budgets. The state caught the error, so the 2006 rates won’t be affected. The discovery of the error also led to the determination that the 18 taxing units received more than they should have during 2005.

The state has yet to certify the Porter County tax rates for 2006. In addition to the faulty AV, it will also need to correct an assortment of tax rate errors that were discovered last fall.

Valparaiso Clerk Treasurer Sharon Emerson Swihart agrees that the certified AV for her city never included the $400 million. So, contrary to some media reports, the city wasn’t banking on property tax funds in 2005 based on that incorrectly high AV.

However, the city still has some serious concerns about its 2005 tax distribution.

Swihart said when the city received its tax distribution from the auditor’s office in December, the amount totaled a 101 percent property tax levy while the city was short on its excise tax funds. She said the 101 percent distribution came as a surprise. Due to tax appeals and based on the first distribution of 2005, she actually expected a bit of a shortfall, resulting in around a 97 to 98 percent collection.

But once the city returns the $1 million to the county coffers as directed by the state due to the $400 million house error, the city will end up with a 92.5 percent tax collection, resulting in quite a large shortfall.

The Chicago Street house error was made well after the city set its budget for 2005, so the discovery of that mistake doesn’t explain why the city is still seeing a shortfall.

In a sense, Swihart said, “I don’t see how the house is the issue.”

In Chesterton, Clerk-Treasurer Gayle Polakowski also has questions.

Unlike other municipalities, she said Chesterton didn’t get 101 percent tax distribution. The amount was less than 95 percent.

She agrees that the overdistribution to Chesterton likely relates to the tax appeals that have been issued. Even so, she said she expected to get another $150,000 distributed from the county in the final tax draw — not to have to repay $13,438 as the state now says.

Posted 2/13/2006