Senate Bill 623 – Property Tax Matters
Authored by Sen. Brian Buchanan (R-Lebanon)

Provides that a county assessor or township assessor (if any) may request the Department of Local Government Finance (DLGF) to perform a state conducted assessment of a particular commercial building or structure used for retail purposes. Full details.

The Latest: Amended and passed by the Senate Tax and Fiscal Policy Committee 13-1; awaits action by the full Senate.

Chamber Position: Oppose

Chamber Action/Commentary: The Chamber opposes this bill on the basis that it is both premature in attempting to address the issue – its substantive measures are not appropriate responses to the underlying issues it attempts to address – and because those provisions undermine the integrity and equity of our property tax assessment system in a manner that is certain to raise numerous legal challenges. Ironically, the latter is the very thing it is in part intended to reduce. By dictating a particular method of assessment be applied to a defined group of properties and excluding objective evidence that would typically be considered under generally accepted appraisal principles, this legislation represents a partial return to a structure for determining assessments that was ruled unconstitutional over 20 years ago.

The Chamber appreciates the concerns of local officials stemming from appeals of some of these type properties, being referred to as “big box” stores, but strongly opposes the manner in which this bill attempts to resolve those concerns. The bill overly restricts the rights of taxpayers to obtain a fair assessment of their property and is designed to arrive at an artificially high level of assessment. Senate Bill 623 is very similar to legislation that was passed in 2015 when the big box assessment controversy surfaced in the General Assembly.

That 2015 legislation was repealed in 2016 when it was determined to be inherently flawed. Replacement legislation was passed incorporating an appraisal concept known as “market segmentation” and the DLGF was directed to promulgate rules to govern implementation of that concept. The DLGF rule went into effect January 1, 2018. To date, local officials have failed to avail themselves of the potential market segmentation offers. Instead, they have clung to old arguments that have been rejected by the adjudicating bodies; consequently, they lose the appeals. The potential for market segmentation to lead to results that alleviate the local officials’ concerns, and discourage appeals, is not yet known because the law has simply not been effectively utilized. This circumstance renders the current proposal (to go back to a legally flawed system) simply premature.

The Chamber has gone to great lengths to communicate these points, and our testimony emphasized that this legislation does not represent the appropriate way of addressing the problems. If problems persist after some interpretation of market segmentation can be scrutinized, then the Chamber will reconsider our position. But for now, we will continue our efforts to maintain an equitable assessment system – one that does not dictate an assessment method for the sole purpose of realizing higher assessments for particular properties. With respect to SB 623, we will turn our attention to the House where we will continue our work to protect the fairness and integrity of Indiana’s assessment structure.

Resource: Bill Waltz at (317) 264-6887 or email: [email protected]