Property tax: Where does the money go?

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Kevin Rader/Eyewitness News

Marion County - Your property taxes are going up an average 23 percent. So where is all the money going? Indiana currently ranks third in the size of local governments.

You can tell property taxes are due just by the signs. Notes posted at the auditor's and treasurer's offices both take great pains to explain to homeowners that they do not have taxing authority, nor do they determine the amount taxpayers owe. Myron Mitchell's property taxes went up almost fifty percent, prompting this question.

"I got a 50-percent increase in what I paid to the town but they can only get five percent, so who gets the other forty five percent? They get the five percent cap on the levy for operating expenses, but if they have any capital improvements for buildings that is outside that five percent," said Mitchell, a Pittsboro resident who had to pay his bill Monday.

The answer to the question is not easy. It varies not only in every county but in every taxing district.

Currently there are 2,370 property taxing units in the state. Everyone has at least five in their district such as Library, Township, County, City or Town and Schools. Schools have five different variables within that unit such as debt service, transportation, special education, capital projects and general fund. If you break it down by percentage the average would be around fifty percent for schools while the remaining four units make up the rest.

"Here is the county unit which has a rate of its own. The school unit which has a rate of its own. Here's the city or town. There geographic boundaries may be different but this particular property is in this district so everyone in the district pays the same rate," aid Steve Johnson, Indiana Fiscal Policy Institute.

The best way to address the problem, according to Johnson, is to downsize government.

"I know the town I live in is not going to get a 50-percent increase in what I am paying, but where is the 45 percent going?" Mitchell asked.

The goal is to make it all more affordable and more understandable. To underscore that point, the Indiana Fiscal Policy Institute says there are no less than 26 public officials making decisions that affect your property taxes in every taxing district.

Learn more about how property taxes work