When the Carmel City Council passed its 2016 budget in October, it included a tax rate of 71.43 cents per $100 of assessed property value for homeowners, only about a penny increase from the 2015 rate of 70.07 cents.
But now that the property tax bills have reached Carmel mailboxes, residents are finding out that the actual rate for 2016 is 83.56 cents per $100, or 19 percent greater than the rate attached to the budget. For a home valued at $300,000, that’s about $400 more a year in city property taxes.
Despite the tax increase, Carmel still has the 15th lowest city tax rate in the state out of 123 cities, according to data from the state of Indiana.
Carmel Mayor Jim Brainard said there are a few reasons for the increased number.
For one, a rate cap resolution — which would have capped the city tax rate at 70.07 cents with no increase at all— died when the city council voted it down in October 2015, 3-4.
Carmel’s 2016 budget was passed at $125 million, up from around $120 million the year before.
“The budget sets the rate,” Brainard said.
In addition, the council appealed to the state to recoup more than $4 million in miscalculated taxes during the annexation of West Clay. That accounts for about 6 cents per $100 of the 2016 city rate increase.
Brainard said it’s a small increase. Homes valued at more than $345,000 are already at a property tax cap set by the state, so rates for those homeowners can’t go up. In addition, it’s only the city tax rate that’s going up. Other parts of the total tax rate have decreased, which means the overall tax rate for Carmel homeowners only increased from $1.9569 per $100 of assessed value in 2015 to $2.0706 per $100 in 2016. County and township property taxes slightly decreased.
“These are very small percentages,” Brainard said. “So a very small dollar increase can seem like a lot in terms of a percentage increase.”
Three city councilors had expressed concerns about the size of the budget: Rick Sharp, Eric Seidensticker and Luci Snyder. All three were voted out of office in May but were finishing out their terms.
Sharp, Snyder, Seidensticker and Councilor Carol Schleif were all sponsors of a rate cap resolution bill that would have prevented any increase. At that the October 2015 meeting, Schleif decided to remove her name as a sponsor and vote against the rate cap resolution.
“I just felt at the time that we needed more flexibility when it comes to revenue,” she said.
Brainard said growth was important for the city and that taxes are still very low.
“Most communities don’t use rate caps,” Brainard said. “I was one of the first to use rate caps 20 years ago, and we didn’t have the votes to get one that would work for us this time. It was set too low. So we raised rates a little higher, but the excess levy will come off this year, so that’s six cents less, and I’m proposing for 2017 we keep the rest of the rate where it is, which is still one of the lower of all cities in the state. It’s not the lowest, but one of the lowest.”
After the rate cap resolution died, the council voted on the budget. Snyder ended up voting for the budget because she said it was the “mayor’s budget.” Sharp and Seidensticker voted against it.
Larry DeBoer, an economics professor at Purdue University and longtime property tax expert in Indiana, said that not every municipality utilizes rate cap resolutions.
“In most cities, from what I know, homeowners generally find out the rate when you get the bill,” he said. “But in a lot of cities, the tax rate is set right near the maximum so people aren’t shocked.”
Carmel has lower city rates than Noblesville at $1.1358 per $100 but Fishers has a lower city tax rate with 63.02 cents per $100 and Westfield has a lower rate at 78.39 cents per $100.
The overall tax rates in those municipalities — when township and school taxes are included — are higher than Carmel’s.
Brainard said Fishers and Westfield haven’t invested in infrastructure to the degree that Carmel has. He also noted that Carmel has a larger daytime population because of its many corporate headquarters and commuting workers.
“They do have a slightly lower city rate,” he said. “They also have about $600 million in unfunded highway improvements, which we have made, so it’s a lot easier to get around in Carmel than Fishers.”
That being said, school district taxes are higher in Fishers, which brings the overall rate for living in the area higher than Carmel. A Fishers/Fall Creek Township homeowner pays an overall rate of $2.1175 per $100 compared to $2.0706 per $100 in Carmel Clay. A Fishers/Delaware Township homeowner pays $2.1380 per $100, a Westfield homeowner pays $2.8546 per $100 and a Noblesville homeowner pays $2.7811 per $100.
Brainard said the lower school rates for Carmel are a result of dense commercial development that leads to property tax revenue for schools, offsetting Carmel homeowners’ amount. In addition, Carmel has only one public high school, while other nearby cities have more than one.
Carmel City Council President Ron Carter said that Carmel has spent far more on local amenities, such as public parks, economic development and the performing arts.
“You really have to examine what value you are getting for your tax dollars,” Carter said. “I believe that Carmel provides some of lowest taxes while providing one of the highest quality of life for our residents.”[gview file=”http://youarecurrent.com/wp-content/uploads/2016/07/2016-07-08-Where-Carmel-ranks-PL-Carmel-comp-2.pdf”]