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Union Township v. State, Department of Local Government Finance

Tax Court of Indiana

November 12, 2015

UNION TOWNSHIP, ST. JOSEPH COUNTY, Petitioner,
v.
STATE OF INDIANA, DEPARTMENT OF LOCAL GOVERNMENT FINANCE, Respondent

         As Corrected November 25, 2015.

          ATTORNEYS FOR PETITIONER: PETER J. AGOSTINO, M. CATHERINE FANELLO, ANDERSON AGOSTINO & KELLER, P.C., South Bend, IN.

         ATTORNEYS FOR RESPONDENT: GREGORY F. ZOELLER, ATTORNEY GENERAL OF INDIANA, EVAN W. BARTEL, DEPUTY ATTORNEY GENERAL, Indianapolis, IN.

          OPINION

Page 524

          ON APPEAL FROM TWO FINAL DETERMINATIONS OF THE DEPARTMENT OF LOCAL GOVERNMENT FINANCE

         WENTWORTH, J.

         Union Township challenges the two final determinations of the Department of Local Government Finance (DLGF) that denied the two excess property tax levy appeals it made in 2012. Upon review, the Court reverses those final determinations.

         FACTS AND PROCEDURAL HISTORY

         Union Township is a civil taxing unit located in St. Joseph County, Indiana. In July of 2012, Union Township, together with the Union-Lakeville Fire Protection Territory, requested the DLGF's permission to impose an excess property tax levy. (See Cert. Admin. R. at 14-17.) Their appeal documentation asserted that due to a $40 million " error" in calculating Union Township's 2010 net assessed valuation, they each suffered a property tax revenue shortfall in 2011. (See Cert. Admin. R. at 15.) More specifically, they explained that the error was the result of the DLGF certifying Union Township's 2011 budget based on a net assessed valuation of $159,424,430, but St. Joseph County subsequently issuing the tax bills using a lower net assessed valuation of $119,968,732. (See Cert. Admin. R. at 1, 14.) Union Township and the Union-Lakeville Fire Protection Territory therefore requested the DLGF to " increas[e] the current [net assessed valuation] by at least $40,000,000 and [] allow[] a levy for 2012 payable 2013 sufficient to make up for the cumulative effect of th[at] error[]." (Cert. Admin. R. at 16.)

         On October 16, 2012, Union Township submitted a second request for the DLGF's permission to impose an excess levy. (See Cert. Admin. R. at 20.) This second appeal again identified the $40 million error as the cause of a property tax revenue shortfall in 2011; it specifically sought a levy increase in the amount of $51,929.[1] (See Cert. Admin. R. at 24, 26-27.)

         On December 7, 2012, the DLGF issued two final determinations that denied both excess levy appeals. (Cert. Admin. R. at 71-74.) On January 8, 2013, Union Township initiated an original tax appeal. The Court heard oral argument on September 11, 2013 at the University of Notre Dame

Page 525

Law School.[2],[3] Additional facts will be supplied as necessary.

         STANDARD OF REVIEW

          The party seeking to overturn a DLGF final determination bears the burden of demonstrating its invalidity. See Brown v. Dep't of Local Gov't Fin., 989 N.E.2d 386, 388 (Ind.Tax Ct. 2013). This Court will reverse a DLGF final determination if it is arbitrary, capricious, an abuse of discretion, unsupported by substantial evidence, or contrary to law. See id.

         LAW

          Local government units pay their operating costs and expenditures, in part, through the collection of property taxes. Consequently, each unit is required, annually, to formulate an estimated budget, proposed tax levy,[4] and proposed tax rates[5] for the ensuing year. See generally Ind. Code § § 6-1.1-17-3, -5 (2010) (amended 2012).

         In order to make these formulations, each unit relies on information it receives from its county auditor regarding the assessed valuation of property within its taxing district and the resulting estimated tax collection. See generally Ind. Code § 6-1.1-17-1(a), (c) (2010) (amended 2012). More specifically, the units rely on a certified statement, prepared and distributed by the county auditor no later than August 1 of each year, containing:

(1) information concerning the assessed valuation in the political subdivision for the next calendar year;
(2) an estimate of the taxes to be distributed to the political subdivision during the last six (6) months of the current calendar year;
(3) the current assessed valuation as shown on the abstract of charges;
(4) the average growth in assessed valuation in the political subdivision over the preceding three (3) budget years, adjusted according to procedures established by the [DLGF] to account for reassessment under IC 6-1.1-4-4 or IC 6-1.1-4-4.2;
(5) the amount of the political subdivision's net assessed valuation reduction determined under section 0.5(d) of this chapter;
(6) for counties with taxing units that cross into or intersect with other counties, the assessed valuation as shown on the most ...

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