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State Board of Accounts Releases Guidance on MVH 50% Spending Requirement

By Paige E. Sansone, CPA, Partner, June 14, 2017
Latest News

On June 12, the Indiana State Board of Accounts (“SBOA”) released guidance on the provision in HEA 1002 that requires that at least 50% of the state distribution for Motor Vehicle Highway (“MVH”) be used for construction, reconstruction, and maintenance of highways. The SBOA provides a direct response to a question that most of us have been asking…can personnel expense be included as part of the 50% requirement?

According to the guidance “The SBOA will not take audit exception to the payment of personnel expense that can be tied directly to one of these defined expenditure types (construction, reconstruction, and maintenance of highways) through the use of a prescribed or approved form and adequate supporting documentation.” Documentation is required to support that at least 50% of the MVH distribution is used for the restricted purposes which will require a more detailed tracking of expenditures from the MVH Fund. The SBOA has developed prescribed forms to use to track and allocate expenditures. Samples of these forms were made available with the Memo from the State Examiner emailed to County Auditors, City Controllers, and Clerk-Treasurers on June 12, 2017.

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Part 2:  Assessing the Impact of Property Tax Appeals on Your Community

By Matt Eckerle, Principal, June 01, 2017
Latest News

In a recent edition, I discussed the impact property assessment appeals using the “dark store” theory can have on your tax base, tax rate, potential to increase tax cap losses and even reduce the revenues from a TIF area. In this edition I’ll look at the concept of market segmentation and provide you options to mitigate or evaluate property tax appeals.

During its 2016 session the General Assembly directed the Department of Local Government Finance to create new assessment rules requiring properties be evaluated and assessed based upon their market segments. In other words, comparable property cited for an assessment must be in the same market or submarket as the property being evaluated. Details for the new DLGF market segmentation rule are expected soon (or synopsis of the rule if released in time.)

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Do You Have a CCD Fund?

By Paige E. Sansone, CPA, Partner, June 01, 2017
Latest News

If not, you may have noticed a reduced levy for 2017.

Beginning in 2017 the Cumulative Capital Development (“CCD”) fund will be the only cumulative fund that will be allowed an adjustment outside the maximum levy limit. Before legislation passed in early 2016, taxing units were given a positive adjustment to the maximum levy for a CCD fund. In other words, a taxing unit with an existing CCD fund could generate additional property tax above the maximum levy limit. Taxing units without a CCD fund were also eligible for a positive adjustment to the maximum levy if it had other cumulative funds, but the adjustment was typically less than what could have been with a CCD fund.

2016 Legislation Removed Adjustment

New legislation removed the adjustment for all other cumulative funds except CCD. This is not an issue for those that currently have CCD funds. However, taxing units that do not have an existing CCD fund can no longer generate property tax above the maximum levy for the other cumulative funds. How do you keep that ability?

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New Road Funding Legislation - What to Expect

By Paige E. Sansone, CPA, Partner, May 24, 2017
Latest News

Road funding certainly seemed to get most of the attention during the recent legislative session. So what actually got passed? The new legislation raises the gas, special fuel and motor carrier surcharge taxes effective July 1 resulting in a projected increase to road funding distributions to local government.

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Do You Have a Financial Roadmap?

By Paige E. Sansone, CPA, Partner, May 18, 2017
Latest News

Many communities across Indiana, large and small, are facing financial challenges due to rising costs, declining revenues, lack of economic growth, and property tax losses due to Circuit Breaker Tax Credits. All of these factors are changing the way we budget. Taking a short-term approach to budgeting is no longer sufficient. There is a greater need to extend planning horizons beyond one year and develop long-term cash flow projections to identify potential budget deficits and cash flow shortages before they occur.

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Your Nearby “Dark” Retail Store Could Devalue Assessments

By Matt Eckerle, Principal, May 17, 2017
Latest News

Common sense says that a retail store going out of business on one side of town wouldn’t affect the assessed property value of an operating store on the other side of town – but it could. The operating store’s assessment could be assessed at the same level as the “dark” store.

Retailers ranging from the big box stores to national drug chains have used the property values of closed or vacant stores to file assessment appeals on operational stores. As a result, the assessed value of operational stores can be reduced significantly to that of comparable vacant buildings in other areas. The dark store valuation, which has typically been applied to retail appeals, could also apply to other market segments.

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Funding Fire Services

By Paige E. Sansone, CPA, Partner, May 04, 2017
Latest News

Are you struggling to fund fire services? It happens throughout the state, and the consequences of insufficient funding can indeed pose dangers to life, health and property.

There are five options for funding fire services:

1. Fund fire services out of current available revenue.
2. Extend your tax base.
3. Enact a Public Safety Local Tax Income (LIT).
4. Fire Service Consolidation (Territory or District).
5. Fire Protection Territories and Fire Protection Districts are not the same.

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Creating Economic Improvement Districts

By Andrew O. Mouser, Manager, May 04, 2017
Latest News

We are often asked by our clients, “How can we fund public infrastructure for a designated area?” One option is an economic improvement district.

Municipalities (except townships) can establish economic improvement districts to assist financing public improvement projects such as roads, drainage, landscaping, lighting, parking facilities, sidewalks, residential improvements, utilities and other infrastructure.

A district has defined boundaries made up of multiple parcels and landowners. For example, a district could be a residential subdivision that needs street repairs.

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New Indiana Farm Ground Tax Valuation Reduction

By Curt W. Pletcher, CPA, Partner, April 06, 2017
Latest News

If you are surrounded by luscious green farm ground dotted by herds of cattle or other livestock you need to be aware about changes to future farm ground assessed base value. The base value per acre for taxes payable in 2016 was $2,050 per acre and was reduced to $1,960 per acre for taxes payable in 2017. The Department of Local Government Finance base rate for taxes payable in 2018 has been certified at $1,850 per acre. Proposed legislation, Senate Bill 308, is estimated to further reduce the base value to $1,500-$1,600 per acre by year 2020. That’s an overall reduction of 20 to 25 percent in farm ground net assessed value.

The change may assist agri-business but it shifts the tax burden to homeowners, rental property, retail, commerce and industrial property. The change may also increase tax rates, tax caps and other revenue reductions with the overall reduction in net assessed value.

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Rising Interest Rates and Utility Capital Projects

By Andre J. Riley, Manager, April 06, 2017
Latest News

The economy continues to improve and with that we have seen short-term interest rates starting to rise and a resetting of the long-term interest rates beginning around November 2016. In addition, during December 2016 the Federal Open Market Committee (FOMC) of the Federal Reserve System increased the key interest rate benchmark (Federal Funds Rate) for only the second time in the past ten years , and again recently the FOMC raised the benchmark an additional .25 percentage points on March 15th. All indications seem to lead us to suspect that the FOMC will implement additional rate hikes in the future.

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