MADISON, Ind. (January 2004) A reasonable property tax
rate was one of the selling points that drew Ann and Larry Johnson
from Chicago to Madison, Ind., three years ago. The Johnsons had planned
for some time to open a bed and breakfast when they retired, and after
scouting out locations in Indiana and surrounding states, the couple
selected Madison as their new home. In 2001 they purchased the Schussler
House Bed and Breakfast in the downtown historic district.
If the taxes had been what they are now, we probably wouldnt
have bought here, said Larry Johnson, one of many property owners
upset about the sudden and dramatic rise in property taxes last year.
The Johnsons property tax bill increased by 126 percent, more
than twice what they had paid two years ago. In 2002, their property
tax bill was $1,260; it ballooned in 2003 to $2,848.
I was stunned completely stunned, Johnson
said about his reaction to the tax statement he received last October.
Robin Henderson was also shocked when he discovered the 110 percent
increase in property taxes on his downtown 1890-era home. We
would never had bought it, said Henderson, who moved with his
wife, Margot, to Madison a year ago. The couple own two downtown businesses,
Baskin-Robbins and Montpelier Inn restaurant. We moved here
because of high property taxes in Virginia. There, they were raising
at the rate of 20 percent a year over six years, said Henderson.
He is considering moving across the river to Kentucky if his property
taxes go up again in the next two years.
Its no secret by now that the reason so many saw a spike in
their property taxes last year is due to a change in the way property
was valued for taxes. In 1998, the Indiana Supreme Court ruled that
the former method used to assess property value in Indiana was unconstitutional.
Judges said that under the previous system, the tax burden was shouldered
by an unfair percentage of property owners, and that many were paying
less than they should because assessed property values were not based
upon objective standards. The court ruled that a new system be instituted.
To oversee the transition, it created the Department of Local Government
Left with a choice of options, this new agency chose a system based
on fair market value or the amount a property could bring
if sold, regardless of age or maintenance costs. The primary factor
in determining the assessed value became the homes condition,
thus increasing the assessed value of many well-kept and renovated
older homes. All counties in the state were required to re-assess
all properties according to these guidelines.
Every property had to be re-assessed, said Madison Township
Assessor Don Thompson. Thompson said his office used sales information
from July 1998 through July 2000 to perform a sales comparison ratio
study, as outlined by the new agency. Training was provided to local
assessors regarding the new system and a computer program certified
in advance by the state.
by Ruth Wright
House B&B owners Ann and Larry Johnson worry about rising
Although some property owners saw a decrease in their taxes, many
noticed a substantial increase, particularly homeowners. The
residential side of the equation picked up a greater amount of the
tax burden, Thompson said. In Madison, that included most historic
Its very serious for all of Madison and particularly the
historic district, said Madison Mayor Al Huntington. Huntington
voiced these concerns to representatives of the House Ways and Means
Committee, who met Nov. 12 in Madison. As local elected officials,
we are closest to our citizens. I have been listening to their tax
concerns and find that there are several issues. Paramount would be
the significant property tax increases many homeowners and business
property owners in the historic district have experienced as a result
of the court ordered reassessment, Huntington told those present
at the meeting.
It tends to be concentrated in communities that have historic
and older established neighborhoods, said John Molitor, a lobbyist
for the Historic Landmarks Foundation of Indiana. In some cases, according
to Molitor, taxes have tripled or quadrupled.
Its very hard for someone to absorb that type of tax increase
from one year to the next, Molitor said. And it really
interferes with the citys efforts to keep these holder neighborhoods
by Don Ward
Henderson's home on Main Street.
Historic Landmarks immediately drafted several suggestions that they
presented to legislators prior to a November meeting. The suggestions
(1.) that properties in historic districts or listed on the National
Register receive 10 or 15 percent exemption to reflect the fact that
they hold together the fabric of our communities and preserve our
history for generations to come;
(2.) that exemptions for improvements to homes 50 years and older
be increased from half of the cost to all of the cost for five years;
(3) that the cap on the income tax credit for rehabilitation be increased
to $2 million for commercial and residential properties;
(4.) that some tax exempt organizations, excluding schools and churches,
make payments in lieu of taxes for their police and fire protection;
(5.) and that stronger enforcement measures be initiated against delinquent
or non-paying tax payers who own commercial and rental properties.
While a substantial portion of the General Assemblys meeting,
a one-day organizational gathering that stretched to three
weeks, was dedicated to addressing the property tax issue, few immediate
measures were enacted. Temporary relief, including a filing deadline
extension for the Homestead Credit, while helping a few did not put
the issue to rest for the majority.
Nothing (was accomplished) that will save you any money right
now, said Larry Johnson.
Legislators will have the opportunity to revisit the issue when the
General Assembly reconvenes in January. And the question most are
asking is, what can or will be done to provide significant tax relief
Johnson said he would like to see some of the local organizations,
such as the Madison Area Chamber of Commerce, the Madison Main Street
Program and Madison Area Convention and Visitors Bureau, form a coalition
to demand swift action by legislators. I think were beyond
the asking phase. We have to demand that they do something,
Local officials, responding to the call of Johnson and others, in
November requested that the Visitors Bureau board draft a letter to
area state legislators requesting relief from rising property tax
re-assessments that they said threaten future preservation efforts
in Madison. The letter, drafted by the board and dated Dec. 1, was
sent to Rep. Markt Lytle, and Sens. Jim Lewis and Johnny Nugent.
We understand that exempting historic districts from the market
value assessments merely shifts the tax burden to others; however,
we hope that you can initiate discussion among Indianas leaders
to come up with a create solution to this problem
such as a
phase-in of increases, the letter read.
Local legislators will have the opportunity to revisit such requests
when the General Assembly convenes. And what do individuals like the
Johnsons hope to see accomplished this year? The first thing
theyd like to see legislators do is re-visit the way taxes are
calculated, and change what they believe is a faulty system.
Were not saying keep it the same (as it was before), but
be fair, said Johnson. And we dont think theyve
been fair to the people living in historic Madison.