Larry DeBoer
Professor of
Agricultural Economics
Purdue University

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Who Should Assess Taxable Property?

Indiana has a problem with assessing property for the property tax. Gov. Mitch Daniels said so in his State of the State address on Jan. 11. "Scattered authority produces bizarre tax assessments," he said. "Identical houses just blocks apart are taxed at widely different levels."

We know this is true in many counties, because the Indiana Fiscal Policy Institute completed an equalization study last October. The study compared property assessments to selling prices. We can do that now that we're effectively a market-value state, and assessed values are predictions of selling prices. You can see the study online at http://www.indianafiscal.org/study.html.

The study's experts said that Indiana had made a "good start," considering it was our first try at market-value assessment. But they also found that 85 percent of the counties did not meet the state's standard for assessment uniformity. Way too often, like-valued houses were not assessed alike.

One reason for this lack of uniformity is the "scattered authority" that the governor mentioned. Indiana has 1,100 assessing units-1,008 townships and 92 counties. This puts Indiana fifth on the list of total assessing units among the 50 states. In most states, assessing is administered by counties. It stands to reason that assessing property in 1,100 units means less uniformity than doing it in 92 units.

So, the governor recommended "the end of our archaic township assessment system and the transfer of this failed process to the level of our 92 counties." The General Assembly is meeting now, and House Bills 1001 and 1400 make this change. You can see these bills on the General Assembly's Web site, at http://www.in.gov/legislative. Click on "Bills and Resolutions" and type 1001 or 1400 in the box.

Most townships with more than 5,000 people have elected township assessors. They work full time on assessment administration. There are 177 elected township assessors. The township trustee performs the assessing duties in the other 831 smaller townships. There aren't enough parcels of property in these smaller townships to keep a trustee assessor busy for a full year. Most trustees are paid very little, so they have other jobs. And, trustees also administer poor relief, rural fire protection and other functions.

This means that most trustees don't have the time or the incentive to get the education they need to assess property accurately. The state's Department of Local Government Finance offers education on assessment practice. Officials can become certified level I assessors by taking 30 hours of coursework every four years. They can become level II assessors with 45 hours of coursework. Seventy-one of the 92 county assessors are level II assessors, and another eleven are level I assessors. More than half of the 177 elected township assessors are certified level II. But only 63 township trustees are level II assessors, and only 68 are level I. This means just 16 percent of all trustee assessors have any certification at all. (These numbers come from the Legislative Services Agency's fiscal note on HB 1001. This is also on the General Assembly's Web site.)

Moving assessing duties to the county would put assessment in the hands of better-educated assessors. HB 1400 moves all assessing to the county and eliminates the office of elected township assessor. HB 1001 keeps the elected township assessors-most of them are certified, after all. It shifts the trustees' assessing duties to the county.

Where I live, in Tippecanoe County , at least two of the trustees are undeniably expert assessors. Shifting assessing duties to the county probably won't improve assessment quality in their townships. HB 1001 allows the level II trustees to contract with the county for assessing duties. This could keep them in the loop.

There may be some economies of scale in property assessment. A few full-time county employees may be able to do the work of many part-time township trustees. But we'd have to pay those county employees more. Part-time trustee assessors work very cheaply. Probably, centralizing assessment at the county level will cost more.

So, both bills are likely to improve assessing practices but at higher cost. We'll probably get what we pay for. But we will have to pay.




Writer: Larry DeBoer
Editor: Cindie Gosnell