LEGISLATIVE SERVICES AGENCY
OFFICE OF FISCAL AND MANAGEMENT ANALYSIS
200 W. Washington St., Suite 301
Indianapolis, IN 46204
(317) 233-0696
iga.in.gov
FISCAL IMPACT STATEMENT
LS 6580 NOTE PREPARED: Feb 19, 2022
BILL NUMBER: HB 1260 BILL AMENDED: Feb 17, 2022
SUBJECT: Department of Local Government Finance.
FIRST AUTHOR: Rep. Leonard BILL STATUS: CR Adopted - 2
nd
House
FIRST SPONSOR: Sen. Bassler
FUNDS AFFECTED:XGENERAL IMPACT: State & Local
XDEDICATED
FEDERAL
Summary of Legislation: (Amended) Economic Stimulus Fund: This bill specifies provisions for federal
economic stimulus funds.
Religious Organization Personal Property: This bill provides that certain churches and religious societies
are not required to file a personal property tax return.
Property Record Cards: This bill provides that a county assessor shall provide electronic access to property
record cards on the county's official Internet web site.
Mortgage / Standard Deduction: The bill repeals the mortgage deduction for assessments and increases the
homestead deduction from $45,000 to $48,000 for assessments beginning January 1, 2023.
Utility Assessment Notice: This bill requires a local assessor to notify the Department of Local Government
Finance (DLGF) of all new fixed property owned or used by a public utility company that the local assessor
will begin assessing and the date on which the assessments will begin. It also requires the DLGF to notify
a company if any of the company's property that was previously assessed by the DLGF will instead be
assessed by the township assessor, or the county assessor if there is not a township assessor for the township.
Infrastructure Development Zone: The bill provides that the county assessor may exempt designated
infrastructure development zone broadband assets, including assets located in a designated infrastructure
development zone of a centrally assessed telephone company or cable company.
Property Tax Exemptions: The bill provides that the authority of a property tax assessment board of appeals
HB 1260 1 (PTABOA) is not limited to review the ongoing eligibility of a property for an exemption.
Property Tax Deductions: This bill provides timing clarifications for property tax deductions for taxpayers
who are over age 65 or who are disabled veterans, and for the over age 65 circuit breaker credit. It provides
that the assessor shall provide a report to the county auditor describing any physical improvements to the
property. The bill also increases the maximum assessed value of the real property for an individual at least
65 years of age to be eligible for a deduction from $200,000 to $300,000.
Assessment Appeals: The bill defines the term "taxpayer" for purposes of the procedures for review and
appeal of assessments and corrections of errors. It amends the burden of proof standard in a review or appeal
of a property tax assessment in the case of an increase of more than 5% over the assessment for the same
property for the prior tax year.
Certified AV Amendments: This bill provides that a county auditor shall submit a certified statement to the
DLGF not later than September 1 in a manner prescribed by the DLGF.
Maximum Levy Increase: The bill provides for a maximum property tax levy increase for Otter Creek
Township in Vigo County, Sugar Creek Township Fire Protection District in Vigo County, and Howard
County.
PTABOA Reports: For reports filed by PTABOAs with the DLGF, the bill changes the requirement for the
total number of "notices" to be filed to the total number of "appeals" to be filed. It requires additional
information to be filed in such reports.
Tax Representative: This bill provides that the term "tax representative" does not include an attorney who
is a member in good standing of the Indiana bar or any person who is a member in good standing of any other
state bar and who has been granted temporary admission to the Indiana bar in order to represent a party
before the PTABOA or the DLGF.
Assessor Complaints: The bill provides that the DLGF may not review certain written complaints if such a
complaint is related to a matter that is under appeal.
Jasper County LIT: This bill repeals a provision in current law that provides that a taxpayer that owns an
industrial plant located in Jasper County is ineligible for a local property tax replacement credit against the
property taxes due on the industrial plant if the assessed value of the industrial plant as of March 1, 2006,
exceeds 20% of the total assessed value of all taxable property in the county on that date.
Residential Property Definition: This bill provides that for certain airport development zones and allocation
areas established after June 30, 2024, "residential property" refers to the assessed value of property that is
allocated to the 1% homestead land and improvement categories in the county tax and billing software
system, along with the residential assessed value as defined for purposes of calculating the rate for the local
income tax property tax relief credit designated for residential property.
Referendum Question: The bill provides formulas for school corporations that propose to impose property
taxes under a referendum tax levy.
Cumulative Funds: This bill removes the remaining cumulative funds for the requirement or adjust maximum
tax rates after reassessment or annual adjustment.
HB 1260 2 Pro Bono Legal Services Fee: The bill changes the sunset provision for pro bono legal service fees from July
1, 2022, to July 1, 2025.
County Surveyor Relocation Notice: This bill allows a county surveyor to send relocation requirements for
a proposed regulated drain by either registered mail or certified mail (current law requires the relocation
requirements be sent by registered mail).
County Purchasing Agency: The bill provides that the county executives of Lake County and St. Joseph
County have jurisdiction over the county purchasing agency. (Under current law, the county legislative body
of these counties has jurisdiction over the county purchasing agency.)
Property Tax Exemption: The bill provides that a property owner may submit a property tax exemption
application before September 1, 2022, for any real property that:
(1) is owned, occupied, and used by a taxpayer that is a church or religious society;
(2) was purchased by the taxpayer in 2019; and
(3) would have been eligible for a property tax exemption for the 2020 and 2021 assessment dates, if an
exemption application had been properly and timely filed for the property.
Repeal: The bill also repeals various property tax provisions and makes conforming changes.
Effective Date: (Amended) Upon passage; January 1, 2020 (tetroactive); July 1, 2022; January 1, 2023.
Explanation of State Expenditures: (Revised) Economic Stimulus Fund: The bill makes changes to the
structure of the Economic Stimulus Fund.
Tax Representative: This provision could reduce DLGF workload. The DLGF will no longer be charged with
granting authority to out of state attorneys to represent a client before the county PTABOAs and the DLGF.
Under the bill, an out of state attorney may represent clients as long as they have been granted temporary
admission to the Indiana bar.
Assessor Complaints: Under current law, a taxpayer may submit a written complaint to the DLGF if the
taxpayer has reason to believe the assessing official failed to adhere to Uniform Standards of Professional
Appraisal Practice (USPAP) or does not have the necessary competency to perform the assessment. This bill
provides that the DLGF may not review such a complaint if related to a matter currently under appeal. This
provision could delay the review of some complaints until the related appeal has been adjudicated.
Airport Loans: This provision may reduce DLGF workload. Under current law, the DLGF must review
airport loan contracts and either approve, disapprove, or reduce the amount of the loan. The DLGF will no
longer review these contracts under the bill.
Lease Agreements: This provision may reduce DLGF workload. Under current law, the DLGF must approve
all noncapital leases with a term exceeding 10 years. The DLGF will no longer review these leases under the
bill.
Sale-Leaseback: This provision may reduce DLGF workload. Under current law, the DLGF must approve
all sale-leaseback transactions. The DLGF will no longer review these under the bill.
Utility Assessment Notice: This provision will minimally add to the workload of the DLGF. Under current
HB 1260 3 law, the DLGF assesses all utility distributable property. Under this provision, the DLGF must notify a utility
if any property previously assessed by DLGF will now be assessed locally.
Additional Information: Economic Stimulus Fund– HEA 1123-2021 created the Economic Stimulus Fund
for the deposit of all discretionary funds received by the state. It defined "discretionary funds" to mean
federal economic stimulus funds received under federal legislation granting the state authority to determine
the amounts and manner in which the federal economic stimulus funds may be expended.
Explanation of State Revenues: (Revised) Pro Bono Legal Services Fee: The courts will continue through
June 30, 2025, to collect this fee from persons who pay a civil filing fee, a probate fee, or a small claims
filing fee. [Current law provides that this fee will not be collected beginning in FY 2023.]
Clerks of circuit courts, city and town courts, small claims courts, and township courts collect this fee and
forward it to the Auditor of State. The Auditor’s office then transfers the revenue to the Indiana Bar
Foundation, which administers the proceeds to assist or establish approved pro bono legal services programs.
The revenue that has been collected from this fee since FY 2018 is shown in the following table.
Pro Bono Fee Revenue Collected by Fiscal Year
2018 2019 2020 2021
$341,105$368,275$304,839$291,596
Explanation of Local Expenditures: Property Record Cards: This provision will result in an additional
expense for computer services in a small number of counties. Most counties already provide access to
property record cards through their website. There are currently 17 counties that do not do so. The estimated
cost for a county to add online property record cards to their website is about $600 per county.
Certified AV Amendments: This provision has little to no fiscal impact. Under current law, county auditors
must certify assessed values (AV) to the DLGF by August 1 of each year. Auditors are permitted to amend
their certifications before the DLGF certifies tax rates. This provision specifies that amended AV
certifications must be submitted to DLGF by September 1 of each year.
Additionally, current law requires that the county auditor must hold a public hearing before making the
amended certification unless the amendment (1) corrects a mathematical error, (2) adds the AV of omitted
property, or (3) will not result in a tax rate increase. This provision deletes the exceptions and requires a
public hearing in all cases.
PTABOA Reports: This provision may increase workload for county PTABOAs. Under current law,
PTABOAs must prepare and submit an annual report regarding assessment appeals to the DLGF and the
Legislative Services Agency. This provision adds additional detail to the reports.
Referendum Question: This provision may increase some county auditors’ workloads. Under current law,
the county auditor must calculate the estimated average property tax increase percentage that a homestead
and a business would pay to the civil taxing unit or school corporation seeking a controlled project, school
operating, or school safety referendum levy. Those increase percentages are included in the public question.
This provision applies the same requirements to a referendum to extend a levy and changes the computation
HB 1260 4 of the business increase percentage to start with the average business AV rather than the average homestead
AV.
Redevelopment Commission Property Disposal: This provision may reduce the number of public hearings
that a redevelopment commission must hold. Under current law, a redevelopment commission must hold a
public hearing before it may dispose of any real property. This provision limits the need for a public hearing
to:
(1) Property that was acquired by the commission to carry out a project; and which the commission
has, at a public hearing, decided that the property is not needed to complete the activity in the project
area;
(2) Real property acquired that is not in a project area;
(3) Parcels secured from the county that were acquired by the county in the tax sale process; and
(4) Real property donated or transferred to the commission.
Religious Organization Personal Property: This provision will reduce the number of business personal
property tax returns that local assessors must process, reducing local workload. For taxes payable in CY
2021, there were just over 6,000 totally exempt tax returns filed by organizations claiming a religious
exemption.
Property Tax Deductions: This provision will add to the workload of local assessors. The assessors will be
required to notify the county auditor of any substantial renovation or new improvements to properties
receiving the over 65 deduction, the totally disabled veteran deduction, or the over 65 tax cap credit.
County Surveyor Relocation Notice: This provision could result in reduced expenditures for county
surveyors. Under current law, county surveyors must notify public utilities by registered mail if the surveyor
determines that a new or reconstructed regulated drain will cross utility lines and the utility equipment will
interfere with the drain. This bill will permit the surveyor to send the notice via certified mail if the surveyor
chooses to do so. In addition to regular postage, the USPS fee for registered mail is $13.75 whereas the fee
for certified mail is $3.75.
(Revised) Utility Assessment Notice: This provision will minimally add to the workload of local assessors.
Under current law, the fixed property of a utility is assessed locally. Under this provision, local assessors
must notify the DLGF of any new utility fixed property that the assessor will begin to assess.
Explanation of Local Revenues: (Revised) Mortgage / Standard Deduction: Effective with taxes payable
in CY 2024, this provision repeals the mortgage deduction and increases the standard deduction for
homesteads by $3,000 of assessed value (AV). This provision will reduce net assessed value (NAV) for most
homeowners without a mortgage deduction, increase NAV for homeowners with a mortgage deduction and
increase NAV for non-homeowner taxpayers who currently claim a mortgage deduction.
The following table summarizes the change in NAV and net tax depending on whether a taxpayer had a
mortgage and/or standard deduction for taxes payable in CY 2021. The table includes both real and personal
property.
HB 1260 5 Mortgage
Deduction
Standard
Deduction
Parcel
Count
Net AV
Change (M)
Net Tax
Change (M)
Yes Yes 1,108,754 1,365.9 $18.2
Yes No 40,828 130.0 $1.2
No Yes 725,925 -1,097.6 -$12.7
No No 2,148,543 0 -$3.0
Total 4,024,050 398.3 $3.7
Overall, NAV will rise resulting in lower tax rates and increased local revenues due to tax caps. However,
there are places where NAV will decline and revenues will be reduced. The total estimated revenue change
is as follows.
Estimated Revenue Change ($M)
Unit Type CY 2024CY 2025
Counties 0.7 0.7
Townships 0.1 0.1
Cities and Towns 1.7 1.6
School Corporations 1.5 1.4
Libraries 0.2 0.2
Special Units 0.1 0.2
TIF -0.5 -0.5
Total 3.7 3.6
Total Without TIF 4.2 4.1
The estimated net tax change by property type is as follows.
Estimated Net Tax Change ($M)
Property Type CY 2024CY 2025
Homesteads 5.3 5.1
Farmland -0.1 -0.1
Other Residential 0.6 0.8
Apartments 0.0 0.0
Ag Business 0.1 0.2
Other Real -1.2 -1.4
Personal Property -1.0 -1.0
Total 3.7 3.6
The mortgage deduction currently equals up to $3,000 in AV, limited to (1) the amount of mortgage
indebtedness, and (2) one half of the gross AV of the property. For taxes payable in 2021, there were 1.15
M mortgage deductions totaling $3.4 B AV. Of those, 41,000 mortgage deductions were claimed by non-
homeowners.
HB 1260 6 The bill will increase the standard deduction from $45,000 AV to $48,000 AV. The standard deduction is
limited to 60% of a homestead’s gross AV. Homesteads with a gross AV of more than $75,000 will see an
increase in this deduction. For taxes payable in 2021 there were 1.8 M homesteads claiming $77.0 B in
standard deductions. The total standard deduction will increase by $4.7 B under this provision.
An increase in the standard deduction will cause a reduction in the supplemental standard deduction. The
supplemental standard deduction equals 35% on the first $600,000 of net AV after the standard deduction
plus 25% of the net AV that exceeds $600,000. So depending on the homestead’s AV, the supplemental
standard deduction will decline by either 25% or 35% of the amount by which the standard deduction
increases. For taxes payable in 2021 there were 1.8 M homesteads claiming $77.1 B in supplemental standard
deductions. The total supplemental standard deduction will decline by $1.7 B under this provision.
(Revised) Jasper County LIT: Jasper County currently imposes a local income tax (LIT) rate of 0.85% that
is dedicated to property tax relief credits for all real and personal property in the county. However, the credits
do not apply to a taxpayer that owns an industrial plant that had a 2006 AV that exceeded 20% of the total
AV in the county. This provision removes the exclusion and makes that industrial property eligible for
property tax credits beginning in CY 2023.
In CY 2022, the total LIT distribution for property tax credits was $6.9 M. This provision will not change
the total amount of credits available, but it will shift about $900,000 of the credits to the large industrial
taxpayer from all other taxpayers in the county. This will result in increased tax bills for county taxpayers
who are not yet at their tax cap and a reduced tax bill for the large industrial taxpayer. Revenue losses due
to tax caps may rise for some taxing units in the county and could be reduced for those serving the large
industrial taxpayer.
(Revised) Maximum Levy Increase - Sugar Creek Fire : This provision permits the Sugar Creek Township
Fire Protection District in Vigo County to petition the DLGF for a permanent increase in their CY 2023
maximum levy limit. Before the district requests the increase, it must first hold a public hearing and make
available a fiscal plan and estimated effects including the impact on taxpayers. If requested, the increase will
be up to $100,000. Sugar Creek Fire’s 2022 maximum levy is $474,806. Increased property tax levies provide
a revenue increase for the adopting units but may reduce revenue for intersecting taxing units due to tax cap
losses.
(Revised) Maximum Levy Increase - Otter Creek Township : This provision permits Otter Creek Township
in Vigo County to petition the DLGF for a permanent increase in their CY 2023 maximum levy limit. Before
the township requests the increase, it must first hold a public hearing and make available a fiscal plan and
estimated effects including the impact on taxpayers. If requested, the increase will be up to $75,000. Otter
Creek Township’s 2022 non-fire maximum levy is $51,336 and its 2022 fire maximum levy is $153,198.
Increased property tax levies provide a revenue increase for the adopting units but may reduce revenue for
intersecting taxing units due to tax cap losses.
(Revised) Maximum Levy Increase - Howard County : This provision permits Howard County to petition the
DLGF for a permanent increase in its CY 2023 maximum levy limit. Before the county requests the increase,
it must first hold a public hearing and make available a fiscal plan and estimated effects including the impact
on taxpayers. If requested, the increase will be up to $97,293. Howard County’s 2022 maximum levy is
$23,556,930. Increased property tax levies provide a revenue increase for the adopting units but may reduce
revenue for intersecting taxing units due to tax cap losses.
HB 1260 7 Maximum Levy Appeals: This provision will allow more taxing units to qualify for a higher maximum levy
because of high unit AV growth. Current law allows taxing units to appeal for a higher maximum levy if their
three year average AV growth percentage exceeds the statewide growth percentage by at least 2%. The
formula includes transitional calculations that adjust for the implementation of the statewide inventory
deduction (2007) and the supplemental standard deduction (2008). Now, after the transition, these
calculations skew the actual AV growth percentage. The DLGF reports that 168 taxing units were eligible
for a three year growth appeal for taxes payable in 2020, and an additional 50 units would have been eligible
without the transitional adjustments. If more taxing units become eligible and receive higher maximum
levies, their tax rates will increase, potentially causing increased tax cap losses for those units and
intersecting units.
(Revised) Assessment Appeals: This provision defines the term “substantially correct” in the context of AV
in appeals where the assessor has the burden of proving the assessment. It is uncertain as to what overall
effect this provision will have on assessments and appeals.
Under the bill, an assessor’s valuation of property is deemed to be substantially correct if the assessor proves
that the value of the property is within 5% of the appealed assessment. A taxpayer’s contention of value is
deemed to be substantially correct if the taxpayer proves that the value of the property is within 5% of the
contended assessment.
If the assessment has increased by more than 5% over the prior year’s assessment, then the assessor has the
burden of proving that the assessment is substantially correct. In the absence of such proof, the taxpayer may
introduce evidence to prove a substantially correct assessment. If the taxpayer contends that the assessment
should be greater than the prior year’s assessment, then the final assessment may not be less than the
taxpayer’s contention of value. These changes will apply to all pending appeals and reviews that have not
yet had an evidentiary hearing and to all new appeals and reviews.
Residential Property Definition: This provision clarifies the definition of residential property as it relates to
the base AV in a TIF area. Most TIF areas exclude residential AV from the TIF increment. To do this, all
residential AV is added to the base AV for the allocation area. For new TIFs established after June 30, 2024,
the bill defines residential property as all homesteads plus the residential value that would qualify for the
nonhomestead residential local income tax (LIT) credit. This clarification does not apply to any existing TIF
areas.
Cumulative Funds: This provision could increase tax rates for taxing units that would not otherwise re-adopt
their cumulative fund after rate adjustment. Under current law, the maximum tax rates for the fire territory
equipment replacement fund, cumulative township vehicle fund, and township park and recreation
cumulative fund must be adjusted each year to neutralize the increases in assessed value from annual
adjustments and general reassessments. After the tax rate is reduced, a taxing unit may re-adopt their
cumulative fund at the maximum statutory rate. Under this bill, the maximum rates will no longer be
adjusted, eliminating the need for the taxing units to re-adopt their cumulative funds.
(Revised) Property Tax Exemptions: This provision has little to no fiscal impact. The bill clarifies that the
county PTABOA is not prohibited from reviewing the ongoing eligibility of a property for an exemption.
Religious Organization Personal Property: This provision has no impact on local revenues. Churches and
religious societies that have filed business personal property tax returns for five years and who were exempt
HB 1260 8 from taxes in those years will not have to file returns going forward unless there is a change in ownership
or a change that makes the organization ineligible for the exemption.
(Revised) Property Tax Deductions: Under current law, a taxpayer who qualifies for the over 65 deduction,
the totally disabled veteran deduction, or the over 65 tax cap credit does not lose their deduction or credit
if the assessed value (AV) of their property later exceeds the statutory AV limit and the increase is not
attributable to physical improvements to the property. Under this provision, the deduction or credit will not
be lost if the increase is not attributable to substantial renovation or new improvements. This provision
should have little to no impact on local revenues.
The bill also increases the AV eligibility for the over 65 property tax deduction from $200,000 to $300,000.
The expansion of the eligibility for the over 65 property tax deduction will result in an estimated $8.8 M to
$10.6 M in combined property tax shifts to other taxpayers and revenue losses to local units. While the bill
impacts property taxes beginning in 2024, it could take a couple years to reach the full impact as taxpayers
who are currently ineligible become aware they are eligible for the deduction. The bill’s provisions also
represent a workload increase for assessors.
The over 65 deduction reduces the net AV by $14,000 for qualified recipients. The bill is expected to
increase the number of recipients of the over 65 deduction by an estimated 25,300 to 30,600 annually,
resulting in $354 M to $428 M in new deductions.
(Revised) Infrastructure Development Zone: Current law permits an Infrastructure Development Zone (IDZ)
exemption for broadband and certain other utility property. This provision clarifies that the county assessor
may apply an IDZ exemption for broadband infrastructure to the state certified distribution of utility AV. It
also clarifies that a broadband provider includes a telephone or cable company. In addition, the bill requires
a telephone or cable company seeking an IDZ broadband exemption to submit an annual report to the county
assessor that identifies the subject property.
(Revised) Property Tax Exemption: The cancellation of property taxes will reduce property tax distributions
to local civil taxing units and a school corporation. One property in Lake County has been identified as being
affected by this provision, although there could be additional unidentified affected properties in any county.
Data received from the county auditor indicates that the total amount of taxes due on the property for CY
2021 is $19,666. Property tax bills for CY 2022 are not yet available. The local units and school corporation
will forego this revenue from CY 2021 and CY 2022.
State Agencies Affected: Department of Local Government Finance; Indiana Board of Tax Review.
Local Agencies Affected: County auditors; Local assessors; County property tax boards of appeal; Local
civil taxing units and school corporations; Clerks of circuit, city and town, small claims, and township small
claims courts; County surveyors; Sugar Creek Township Fire protection District; Otter Creek Township;
Howard County; St. Joseph County; Jasper County.
Information Sources: Emily Crisler, General Counsel, DLGF, 317-232-3777; Auditor of State; USPS.gov.
Fiscal Analyst: Bob Sigalow, 317-232-9859; Corrin Harvey, 317-234-9438; Randhir Jha, 317-232-9556;
Austin Spears, 317-234-9454.
HB 1260 9