By VICKI URBANIK

The state of Indiana has blamed local government for property tax problems, but the state’s constantly changing rules makes it nearly impossible for counties to keep up and get their bills out on time.

That was the message Tuesday from a very frustrated Porter County Council, which not only announced that the county won’t issue provisional bills as expected in May but which also unanimously agreed to explore its options for filing a lawsuit against the state.

“It’s almost like they’re trying to make us fail,” Porter County Council president Robert Poparad, D-1st, said of state officials, as he pointed out that counties throughout Indiana are once again late with their property tax bills.

The council earlier this year agreed that Porter County would issue provisional bills in May, which would at least allow tax funds to flow to local government units. The provisional bills were to reflect 45 percent of last year’s bills, with the final amount reconciled in or about November.

But County Auditor James Kopp said provisional bills might not be ready until August or so, due to changes in the billing process imposed by the state.

An emergency rule issued by the Department of Local Government Finance last week directs counties that issue provisional bills to include language stating that the reason for the unofficial billing is because the county did not complete its tax abstract work by the normal March deadline.

But Poparad said even though the state has no problem blaming counties for the tax mess, “nobody wants to point the finger at them.” Counties, he said, “can’t keep playing the game if they keep changing the rules.”

Poparad opened Tuesday’s meeting by reading a statement that outlined how Porter County has hired tax consultants to try to get the county’s property tax system back on track and how the council agreed to issue provisional bills to avert the “fiasco” that happened last year, when the county’s towns, schools and other taxing units were forced to borrow and collectively pay about $3 million in interest costs.

But his statement then cited at least five obstacles contributing to the delay both in the provisional bills and the regular tax bills.

He noted that not one 2008 budget in Indiana has been approved yet, despite a state law requiring the DLGF to set tax rates in February of each year. “The DLGF Commissioner has failed to approve and issue tax rates for any county. She is holding hearings now, this week, rather than last fall, further delaying the process,” he said.

The delay in setting rates means that not one county in Indiana is going to be able to send out a regular tax bill in May. Further, the state has required that every county gets state-certified assessing software, but the state has yet to certify any software, he said.

“To add insult to injury, and add another ridiculous piece to the puzzle, the DLGF is proposing that the provisional bills be sent out on an odd-size paper, and the state informs us that no company has this size paper, that we may have to have this paper specially made, and may even have to purchase special printers for the tax bills,” Poparad’s statement said.

Further, Poparad said the state sent counties guidelines for the provisional bills but then announced that they are changing those guidelines, while also requiring counties to bill for only 35 percent of last year’s levels, lower than the typical 45 percent billing.

Poparad, who is a candidate in the Democrat primary for 10th district state representative against incumbent Greg Simms and Charles Moseley, said he has to question if all the delays and changes amount to a “ploy” to mislead taxpayers “just to help the incumbents retain their office in the State of Indiana this year.” He said taxpayers might be led to think their bills are being drastically cut if they receive a bill for only 35 percent in the spring, or no bill at all, with the final bill possibly issued after the November election.

Poparad said he acknowledges that county departments are not blameless for tax problems, but that when the county proposed a solution -- issuing provisional bills on time as it did a few years ago -- the state puts up roadblocks. “No matter what we do, we can’t keep up,” he said.

Immediately after he read his statement, council member Michael Bucko, D-4th, made a motion that the county file a lawsuit against the DLGF. But council attorney David Hollenbeck said he would prefer that the council first direct him to investigate legal options. Exactly what issue the council would sue over would be one of the areas that would be studied first, Hollenbeck said.

Bucko amended his motion to direct that legal review, and the motion passed unanimously, with Democrats Poparad, Bucko, and Rita Stevenson and Republicans Jim Burge, William Carmichael and Karen Conover all voting in support. Council member Dan Whitten, D-at large, was absent.

Back to Borrowing

Later in its meeting Tuesday, the council dealt with one fallout of the late tax bills: The need to borrow.

By a 5-1 vote, the council directed Hollenbeck to obtain a short-term loan, known as a tax anticipation warrant, of up to $10 million to keep the county government operating.

Only Carmichael voted no. He suggested tapping the interest earned on the hospital sale proceeds, saying that he can’t see why the county should pay interest on a loan if it’s collecting interest from the hospital sale. “It’s not good business,” he said.

Poparad said Carmichael’s premise is correct. But a concern was raised that the county would use up all its interest earnings just to solve a cash flow problem. The approximately $142 million in hospital sale proceeds has so far generated about $3.1 million in interest, which is just slightly more than the monthly general fund expenses of county government.

Consultants Paid

The council unanimously approved a $150,000 appropriation from the county’s income tax fund to pay the four consultants now working with the auditor, assessor, and treasurer to resolve computer software issues, tax settlement discrepancies, and other issues related to property tax billing and collection.

Poparad said the $42,000 already billed by the consultants -- Schuckit & Associates, PSC Associates, Crowe Chizek and Lorraine Harmon -- will come out of that appropriation. He said he doesn’t expect the county to end up using all of the $150,000, and that that amount is the maximum that will be spent for the tax help.

Posted 4/23/2008