Consultant: rising home values, caps and new deductions will shape Elkhart Community Schools' property-tax revenue

Barry Gardner, a consultant with Policy Analytics, told the Elkhart Community Schools Board of Trustees on Feb. 25 that recent home-price gains, statutory deductions and Indiana'-era property-tax caps are the primary drivers of the district's property-tax revenue outlook.

Gardner said the district has a "very diverse" assessed-value mix and that assessed-value growth in recent years has been driven primarily by residential property. He described the tax system as "a very complicated system" and said his firm provides parcel-level projections to help districts model revenue scenarios and long-range financial capacity.

The presentation explained three mechanics that shape revenue: gross assessed value (the market-based valuation of property), statutory deductions that reduce the net assessed value the district actually taxes, and the circuit breaker mechanism that caps what some taxpayers may pay. Gardner said the district faces circuit-breaker losses of about $3,400,000 under the modeled scenario.

Gardner highlighted a 92-cent example tax rate the district has managed recently and pointed out that homeowners in many parts of the district are at statutory caps. "If a district were to lower the rate in that situation, that taxpayer may not feel any relief in an area that has high, tax cap impact," he said. He also showed that the district's debt-service tax rate is relatively low (about 29 cents) compared with some peers and that reducing debt-service rates does not translate dollar-for-dollar into operations-fund gains because of circuit-breaker interactions.

Gardner reviewed the effect of recent legislation: he said House Bill 1499 (passed in 2023) raised the homeowner supplemental deduction from 35% to 40% in 2024, which reduced taxable net assessed value growth for that year and will phase back in subsequent years. "That deduction pulled some of that AV away," Gardner said, adding that the deduction's scheduled rollback will cause some of that value to return to the tax base in later years. He cautioned the board to monitor ongoing bills at the Statehouse, including proposals that would change deductions or eliminate personal-property taxes on business equipment.

Gardner described sample scenarios the firm runs for the district, using parcel-level assessed-value histories, building permits and median-sales-price trends in Elkhart County. He said his firm projects assessed-value growth using that granular data and then models certified levy, projected circuit-breaker loss and net revenue to the operations and debt-service funds.

The presentation closed with Gardner urging the board to consider modeling multiple legislative outcomes and noting that even without district action, changes in deductions or other state-level policy could raise the certified tax rate the district must levy to generate the same dollars.

Board members asked questions during and after the presentation; no formal action was taken at the Feb. 25 meeting. Gardner and district staff said they will continue to refine models as legislation moves through the Statehouse.