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Tax Caps: Impact on Local Government

Indiana's tax caps -- known as Circuit Breaker credits -- can save taxpayers money on their property tax bills. But if taxpayers see their bills cut, what happens to the lost revenue?

Local government units must absorb the loss. They may be able to offset the lost revenue through other funding sources, such as county income taxes. Or, they might have to cut back on their budgeted spending.

Based on the County Auditor-prepared tax abstract, the tax loss throughout Porter County due to Circuit Breaker credits totaled nearly $12.4 million in 2015. Here is a look at how individual tax units were impacted (numbers are rounded):

 Tax Cap Loss
 Porter County government  $2,061,375
 Beverly Shores town $31,076 
 Burns Harbor town $30.44 
 Chesterton town  $551,452 
 Dune Acres town $2,697 
 Hebron town $120,244 
 Kouts town $3,046 
 Ogden Dunes town $76,479 
 Pines town   $1,320
 Portage city $1,786,722 
 Porter town $281,389 
 Valparaiso city  $2,244,537 
 Boone Township Schools $506,451 
 Duneland Schools $703,163 
 East Porter County Schools $86,885 
 Portage Township Schools $1,603,381 
 Porter Township Schools $812 
 Union Township Schools $2,360 
 Valparaiso Schools $1,384,278 
 Porter County Library $283,916 
 Westchester Public Library $125,217 
 Porter County Airport $37,138 
(Not shown: townships, TIF districts)

For more details on the loss to individual funds within each Porter County taxing unit, click on the state report, Impact of Property Tax Caps, 2015.

Tax Caps: Northwest Indiana counties compared

The three Northwest Indiana counties of Lake, Porter, and LaPorte are impacted quite differently by the tax caps. Here are the 2015 tax cap credits in the three counties:

Lake County: $97,573,962
Porter County: $12,379,359
LaPorte County: $23,755,087

Not only are the dollar amounts quite different, but so too are the allocation of the credits -- in other words, what category of taxpayers enjoy the most savings from the tax caps? What category has the least amount of Circuit Breaker credits?

In Porter County, residential rentals and other property in the 2% category realize the most savings from the tax caps, with nearly $6.4 million in tax credits applied. Homesteads are next, with nearly $5.9 million in tax savings. The 3% category -- which includes businesses and personal property -- is the smallest category, with just $26,268 in tax savings.

tax caps porter county 2015.png

The situation is very different in Lake and LaPorte counties.

In Lake County, the 3% category is the top tax cap category, with $49.6 million in savings to businesses, personal property, and other property. The 2% category follows, with $38.4 million in tax cap savings.

tax caps lake county 2015.png

In LaPorte County, the residential rental category is the top tax cap category, with $12 million in tax credits, followed by the 3% category, with $7 million in savings to businesses, personal property and other non-residential property.

tax caps laporte county 2015.png