Proposed tax credit drop would increase property taxes

Your property tax would likely go up if the homestead tax credit is eliminated.
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Thousands of Marion County homeowners could pay more in property taxes next year.

As part of his 2013 city-county budget, Mayor Greg Ballard wants to eliminate the local homestead property tax credit. This does not involve homestead deduction worth $45,000, but a local tax credit the City-County Council adopted years ago to offset rising taxes. It's funded with revenue from the County Option Income Tax (COIT) - this year about $12 million.

Council Democrats call the move a tax hike. The mayor says it's getting rid of an outdated tax credit that will have a slight impact on property tax bills.

Sandy Price and Alice Smith, who live in Irvington, have been trying to make sense of the mayor's plans to eliminate tax credit since Ballard unveiled his budget Monday.

"I do not understand it, no, not entirely," Price said.

"I'd like to read more about it. I'd like the mayor to explain more," Smith added.

The two women, both semi-retired, suspect it means they'll have to dig deeper to pay their property taxes.

"It's not something you want; you really don't want to do it," said Price.

Getting rid of the credit would affect homeowners who have a homestead exemption, but haven't yet reached the one-percent property tax cap. The mayor's office says that's about 139,000 homeowners in Marion County. They say eliminating the credit would cost the average homeowner $24 more each year. That's based on a home assessed at less than $100,000 (though the mayor's office did not offer an exact figure).

Eyewitness News found that elimination of the tax credit would cost Price and Smith an extra $17.56.

"That's alright, that's okay," Price said, with Smith chiming in.

"Yeah, we can afford that," she said.

But Charlotte and David Cahill, who live in Washington Township, would pay an extra $107 a year if they lose the credit. The Cahills are retired and on fixed-incomes.

"We'd just have to cut down on something. Sometimes it hits our food budget," David said.

Charlotte says no matter what the mayor calls it, she calls it a tax hike.

"Well, someone has to pay for it. Who's it going to be? Homeowners, all the taxpayers?" she asked.

Jim LeGrand agrees it would be a tax hike. For him, it's an extra $146 a year, but he has no problem with that, especially when he sees improvements underway in his north side neighborhood.

"This whole stuff about not increasing taxes, well, how in the hell can we take care of infrastructure - I'm sorry for saying that - if not for increased taxes to maintain it?" he wondered.

The easiest way for homeowners to see how much their tax credit is worth is to check their property tax bills. The tax credit is listed on line 4a, just below the gross liability. The tax rate is roughly 4 percent. In general, multiply that by the gross tax and you wind up with the credit amount.

Most counties in Indiana do not have the local homestead property tax credit. Whether Marion County keeps its tax credit depends on a final budget vote.