INDIANAPOLIS (WISH) — I-Team 8 found nearly one in three Indiana lawmakers has paid their property taxes late at some point during the last five years, a rate nearly three times higher than the state average.
Like other homeowners, lawmakers who paid late faced hefty penalties and late fees. Now, they’re also facing criticism from some taxpayers, asking: why can’t they pay on time?
DUE DATE APPROACHING
In Indiana, property taxes are due twice a year, once in the fall and once in the spring. This year’s spring installment is due on Friday, May 10 in all counties across the state, except for LaPorte County.
For homeowners like Elizabeth Boulton of Indianapolis, the first bill always serves as a reminder that spring is on the way.
“I paid [my property taxes] a few weeks ago,” she said, standing in her yard, with the sounds of landscapers at work surrounding her. “It’s a part of spring. It's nice to keep up the property for the neighbors and just for beauty in the world. And, it's absolutely my civic duty as a citizen of Indianapolis that I want to pay [my property taxes] early or on time.”
Boulton called on-time payments “critical” to her neighborhood.
“Because, when you don’t [pay on time], our school systems suffer. Our roads suffer. We want to support our police and firefighters and garbage collectors. We want to support the infrastructure of our city,” she said.
Not every homeowner is so enthusiastic.
According to data compiled for I-Team 8 by Indiana’s Department of Local Government Finance, 10 percent of Hoosiers were late on at least one of their property tax payments last year. Over the last five years, the average rate of delinquent payments is 10.9 percent, according to that data.
LATE PAYING LAWMAKERS
I-Team 8 spent weeks combing through property tax records to find out if Indiana lawmakers are paying on time. We requested five years worth of public tax records on homes, condominiums and businesses owned by every Indiana legislator and their spouse.
Our research uncovered a disturbing pattern: 26 percent of the House and 34 percent of the Senate made at least one late property tax payment in the last five years.
Some wrote their check just a day or two beyond the due date. Others let late payments drag out for months, or even years.
At least 17 of the legislators paid late more than once during that five year period, according to I-Team 8’s analysis.
“I think it's troubling,” said Julia Vaughn, director of Common Cause Indiana, a taxpayer advocacy group. “To hear that such a large percentage--a much larger percentage of legislators than the average citizen--is failing to follow the letter of the law, it's really disappointing.”
It’s also really costly.
In most counties, payments made after the due date get a 5 percent penalty tacked on. After 30 days, that penalty increases to 10 percent. Failure to pay after one year can result in a property being put up for county tax sale.
“There are penalties in every county [for paying late],” said DLGF Communications Director Jenny Banks. “The penalty is only going to come into play if they don't pay by May 10, and the same with the November date.”
I-Team 8’s analysis shows late payments among legislators over the last five years have totaled $20,375 in penalties and late fees. Records showed all lawmakers were current on their property tax payments as of early May.
More than one-third of the penalties assessed in that total come from an apartment building on the near north side of Indianapolis, owned by Dimani Properties, LLC. Sen. Greg Taylor (D-Indianapolis) told I-Team 8 he owns a 15 percent stake in Dimani, and that he and his business partner bought the building in order to renovate it.
“We invested about $350,000 to $400,000 into the property. We were going through a construction project, so we hadn't gotten our assessment yet. When it was reassessed, we had an overage we had to pay,” Taylor said.
Tax records show property tax payments were made on time each year on Taylor’s personal home. But, delinquent payment penalties were assessed on the Dimani owned property each year from 2007 through 2012.
Records show Dimani Properties has owned the apartment building since at least 2006.
Taylor said all of those penalties were fully paid off last year.
"We paid our penalties,” he said. “If we do something and we pay our penalties, I think we've done what we need to do.”
Other legislators, like Rep. John Bartlett (D-Indianapolis) freely admitted they simply forgot to pay on time. Records show Bartlett has paid at least four late penalties during the last five years.
Asked if he was aware of the late payments, Bartlett nodded.
“I did pay late,” Bartlett told I-Team 8. “But, when you get down here, you're so tied up into doing the people's business that you're late. And, statute says if you're late, you pay a penalty. And, I've done that.”
The penalties assessed on Bartlett’s home total $502 during the last five years, according to tax records. He said the late payments do not reflect his management of tax funding as a legislator.
“I think what this says is: he was working for us, and he didn't take care of his own business," Bartlett said. "It's my responsibility to do that. I’ve paid my penalties. You can look at it two ways: it's important to pay on time, or the state gets extra money if you don't pay on time. It just depends on how you look at it.”
University of Indianapolis Finance Professor Dr. Rachel Smith doesn't believe Bartlett's argument is valid.
“Paying on time is more important,” she said.
Smith, who studies government funding, said when taxes aren't paid timely government bills start to pile up.
“When that shortfall happens, we see things like having to borrow money or having to dip into reserves that are set aside. That's important. It can result in interest costs that are accrued by the state and the counties. It puts extra burden on them to have to finance those shortfalls, especially when you don't have a major surplus right now because of the economic situation we've been in,” she said.
Property taxes make up around 40 percent of Indiana’s total revenue, Smith said. About half of the money raised through them goes to fund schools and education. The rest is split among city and county services.
“Property taxes are the main source of funding for local government units. That includes counties, cities, towns, townships, special districts, fire districts, solid waste districts and well as libraries. If all those units can't get that money in, then they may have to take out a commercial loan or may have to make arrangements to do a fund transfer within their budget,” said Banks, of the DLGF.
Local governments do plan on some property tax payments being late, Banks said. But, in an average year, the number of late payments far exceeds what they’ve set aside.
“They usually hold back about two percent to be allocated for those delinquent property taxes,” Banks said. “[After that], those commercial loans might come into play, as well as transfers between their different funds.”
When local governments are forced to borrow money, taxpayers are the ones stuck paying the interest.
“THERE IS USUALLY A REASON”
Few know the price of borrowing better than Sen. Karen Tallian (D-Portage). As a member of the Senate Appropriations committee, she helps craft the state's multi-billion dollar bi-annual budget.
Porter County tax records show Tallian has had late penalties assessed on her home at least three times in the last five years, totaling more than $750.
“When people are late, there's usually a reason,” Tallian said. “And, I think that probably happens a lot more often than not. It just shows that legislators are regular people too.”
Tallian said at least one of the late payments was an oversight.
“Last year I did a [re-financing] that was supposed to be done by the end of November. We were going to pay the taxes, and they put the thing off, so I ended up being late like two weeks. My mortgage company didn't used to escrow my taxes. There are a lot of people in that situation. So, I had to make sure that I got it there and done on time. And, I do think we should all pay our taxes on time. But, that’s the reason for penalties,” she said.
Records show Rep. Milo Smith (R-Columbus) paid $203 in late fees on his home. But, Smith says the records don’t tell the whole story.
At least two of the late payments were made because of a bank error that caused checks that were written on time to bounce. Smith paid the late penalties, but got that money back.
“It was our error,” confirmed Old National Bank Market President Zach Nelson. “We refunded the penalty amount and overdraft fees to him.”
Smith did admit to paying late in 2008, but blamed late mailing of tax bills that year for the oversight.
“On occasion, I have had to pay them late,” Smith said. “But, that’s why the legislature implemented the penalty system. If you have a business and you don't have the money generated, I think it's fair to pay the penalty and be charged the penalty. I don't think I've ever asked to be excluded from the penalty. If I was late, I paid the penalty."
Rep. Bob Morris (R-Fort Wayne) declined an on camera interview, but told I-Team 8 that late property tax payments last year on a house he owns in Fort Wayne were not his responsibility, even though his name still appears on the deed to the property. Morris said he rented the house out, and the contract he signed with renters specified that they were responsible for paying the property taxes on it.
Morris declined to share a copy of that contract, but said when he discovered multiple installments on those taxes went unpaid for more than a year, he paid the taxes himself--plus penalties--in March.
Several other legislators who were assessed late penalties during the five years studied had a different explanation for their overages.
In their cases, county treasurers said payments were made on time, but were made provisionally. Penalties were assessed, the treasurers said, because re-assessments were performed and not enough money had been paid.
Those penalties were not included in the total compiled by I-Team 8.
But, in other cases, treasurers said appeals were not paid on time.
Records show Rep. Peggy Mayfield (R-Martinsville) paid $434 in penalties during the last five years on both her home and a building in Mooresville that houses her insurance agency. Mayfield also declined an on camera interview, but told I-Team 8 she appealed several assessments on her business, which were eventually lowered.
Morgan County Treasurer Julie Minton told I-Team 8 that even if assessments are appealed, taxes must still be paid in full as billed. Any adjustments made after that appeal would then be refunded, she said.
"If penalties were assessed, that's because payments were not made in time or in full by the due date," Minton said.
Mayfield said a late payment on her home in 2008 was an oversight.
“I was wrapped up in the election and it just slipped my mind. When I realized it was overdue, I paid it,” she told I-Team 8.
“A MAJOR IMPACT”
The collection of late payments and penalties should serve as food for thought, Smith said.
“Let's say it got to 30 percent or 40 percent [of all homeowners] that had the same mentality [of paying late]. Then, you're going to see the interest costs quickly rise and the opportunity costs for investments missed to a greater level. If everybody had the same mentality in the masses, it would have a major impact,” she said.
Vaughn, of Common Cause Indiana, said focus should not be on the amount assessed in penalties.
“To me, it’s just a general irritation with the attitude: do as I say, not as I do,” she said. “Those who write the laws have to be held to a higher standard.”
Several lawmakers I-Team 8 spoke with promised they will pay more attention to property tax due dates in the future.
“Since you’re going to have me on Channel 8 news, yes,” replied Bartlett, when asked if he planned to pay on time in the future.
“The bank now escrows my mortgage payments,” Tallian said. “So, I hope I personally will never have to have this happen again.”
“Somebody's history is fair game when it comes to politics,” Vaughn said. “And, it's absolutely fair game if somebody running against them would bring this issue up. I think it's something that voters would pay attention to.”
It’s happened before.
Republicans ran attack ads against the late Congresswoman Julia Carson (D-Indianapolis) in 2002 after learning she was late paying some of her property taxes. Polls at the time showed the issue did hold weight with some voters.
Vaughn said it all boils down to trust.
“We all expect those who write the laws to follow the laws,” she said. “It’s disconcerting when we discover otherwise.”
“I hope [taxpayers] can still trust me to do my job handling their money and all the other things that we do here,” Tallian responded. “Is it a campaign issue? I don't know. People will have to decide that. I guess we’ll see.”
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