1. 1 Newly Elected Township Trustees Meeting Department of Local Government Finance Dan Jones Budget Division Assistant Director November 17, 2010

2. Discussion Topics Budget Process Budget Calendar Budget Forms, Hearings, and Notices Budget Approval Process Property Tax Issues and Trends Indiana Department of Local Government Finance 2

3. Budgeting 101 Introduction to Budgeting –Financial plan that includes both revenues and expense for specified period of time. –Legal control on a civil taxing units authority to “spend”. The control may be in addition to limiting the amount but also the purpose (or “line item”) Indiana Department of Local Government Finance 3

4. Budget Process Begins in early spring –Units evaluate future spending needs and the revenue trends Mid-summer (by June 30) Results of first half of CY operations First half of CY property tax distribution Indiana Department of Local Government Finance 4

5. Budget Process Using the information from the first half, the Trustee prepares the ensuing years budget –Begins with the June 30 cash figures and adds 2 nd half estimated revenues and subtracts estimated 2 nd expenses to project an ending fund balance at Dec. 31. –This balance is used to supplement next years budget Indiana Department of Local Government Finance 5

6. Budget Process Trustee works with the other agencies in the township to estimate the appropriate expense for the incoming year Revenues are also estimated, including property taxes and income taxes Trustee estimates maximum levy Trustee submits budget to the township board Indiana Department of Local Government Finance 6

7. Budget Process Township board deliberates and possibly amends the proposed budget –Cannot exceed the advertised levels Before adoption, the board submits the budget to the county council for a “non- binding recommendation” After receiving the recommendation, the board adopts the budget, tax rates, and tax levies (deadline – Nov. 1) Indiana Department of Local Government Finance 7

8. Budget Process Adopted budget is submitted to county auditor’s office, who forward to DLGF Budget is implemented on Jan. 1 DLGF will certify budget, property tax rates and property tax levies by Feb. 15 th Property taxes billed by Apr. 23 rd with due date of May 10 Taxes distributed by June 30 th Indiana Department of Local Government Finance 8

9. Role of the DLGF Involved from property assessment through the certification of property tax rates Reviews all tax-supported funds Enforces the maximum levy controls Certifies budgets, rates, and levies Indiana Department of Local Government Finance 9

10. Budget Calendar Deadlines for various actions –June 30 closing –Advertise budget by Sept. 2 & 9 –Give to county council by Sept. 17 –Sept. 20th is last day to file appeals –Adopt budgets by Nov. 1 Indiana Department of Local Government Finance 10

11. Budget Forms Form 1 – Budget (Appropriations) by Fund Form 2 – Estimated Revenues by Fund Form 3 – Notice to Taxpayers (Advertisement) Form 4 – Certificate of Appropriations (Signature Form) Form 4b – 16-Line Statement Form 5 – Budget Submission Letter Indiana Department of Local Government Finance 11

12. Budget Forms Forms are prescribed by DLGF Available online www.in.gov/dlgf/4952.htmwww.in.gov/dlgf/4952.htm Minor changes from year to year All forms are available to the public Only Form 3 is to be advertised Indiana Department of Local Government Finance 12

13. Budget Forms Budget Form 3 – Advertisement –Form has language in the heading and footing that is to be included –Describes the process for taxpayers to object to a budget, rate, or a levy –Includes a column for excessive levy appeals –Advertises public hearing and the adoption date Indiana Department of Local Government Finance 13

14. Budget Forms Budget Form 4b –16-Line Statement –Form is a cash flow statement covering the entire 18-month long budget cycle –Form prepared for each fund –Provides proof the budget is “funded” –Calculates an ending fund balance –Calculates a property tax rate Indiana Department of Local Government Finance 14

15. Public Hearings Opportunity for the public to express opinions on budget, tax rates, and tax levies Notice (advertisement) of the public hearing must be at least ten (10) and three (3) days before the public hearing Both advertisements must be published before Sept. 10 Indiana Department of Local Government Finance 15

16. Public Notice Failure to comply with requirements will result in denial of budgets. Denial will freeze the appropriations and property tax levy at the previous years levels Indiana Department of Local Government Finance 16

17. Budget Recommendation and Approval Process Non-Binding Review –Before budgets are adopted by the township boards, they must be submitted to the county council –Council will review budget and issue a “non-binding” recommendation –Budget is returned to township where they may incorporate recommendations into budget before adoption 17

18. Budget Recommendation and Approval Process Adoption –Township board will adopt the budget by fund in a public meeting on the advertised date –Adoption must be by Nov. 1 –Board must have a quorum –Adoption is by a simple majority 18

19. Budget Recommendation and Approval Process –After adoption, budget is forwarded to county auditor within three days –Auditor provides copies for the DLGF –DLGF review the budgets and applies the most recent information regarding revenues and assessed values to formulate the budget, rates, and levies. –DLGF schedules a public hearing to hear public comment on each budget in the county. Indiana Department of Local Government Finance 19

20. Budget Recommendation and Approval Process –DLGF issues a “1782 Notice” to each civil taxing unit in the county. –This notice indicates all changes by the DLGF to any part of the budget –The “1782” is for all property tax supported funds –Unit must respond to the DLGF within 10 days Indiana Department of Local Government Finance 20

21. Budget Recommendation and Approval Process –After the “1782 Notice” period expires, the DLGF certifies the budgets, tax rates and tax levies for each unit and each fund in the county –DLGF provides the county auditor with certified tax rates so they can calculate and prepare property tax bills –Tax rates are advertised three (3) times by the county Indiana Department of Local Government Finance 21

22. Property Tax Rates Ratio between Assessed Value (AV) of property and the property tax levy. Expressed per $100 of AV Formula: Tax Rate=Tax Levy/(AV/100) Indiana Department of Local Government Finance 22

23. Property Tax Levy Amount of revenue a civil taxing unit charges property owners Amount that may be charged is limited to the amount charged last year plus a growth factor –“Controls” do not apply to debt service –Few exceptions to levy “controls” –“Controls” are called “maximum levy” Indiana Department of Local Government Finance 23

24. Township Funds Townships have a fund structure similar to other forms of governments: –Operating(Levy controlled) General Township Assistance Fire(Controlled separately) –Capital(Rate controlled) –Debt(Not controlled) Indiana Department of Local Government Finance 24

25. Budget Amendments and Modifications Budget Amendments –Certified budgets can be increased by the township board with approval of a resolution and the proper public notice –Requires ten and three day notice –Subject to available funding –Must be filed with DLGF for approval –Process also applies to reductions Indiana Department of Local Government Finance 25

26. Fire and Emergency Medical Services Funding Emergency Medical Services –Generally accepted that this is function of the (township) fire department and is budgeted as a part of the fire department Combined (or Consolidated) Dispatch –Trend is to consolidate at the county level Fire District and Fire Territories –Creating a district or territory gives units an opportunity to consolidate for greater efficiency Indiana Department of Local Government Finance 26

27. Circuit Breaker Credits Limit the amount of property taxes that can be charged at a percentage of the property’s gross assessed value The caps provide a dual benefit to all taxpayers Predictability and protection A credit on the property tax bill of a taxpayer that is charged above the cap Indiana Department of Local Government Finance 27

28. Local Option Income Taxes Legacy –Three (3) Types: COIT, CEDIT, CAGIT New –Levy Freeze –Property Tax Relief –Public Safety Adopted by either the county council or the county income tax council Indiana Department of Local Government Finance 28

29. 2929 Gateway: Online Budget Program  Development of online portal – 3 budget forms   Form 1, Form 2, Form 4B – Automatic load for reporting utilities  Piloted in 7 counties (178 units)  Will be live for 2012 budget cycle  Annual report to SBoA to be filed electronically

30. 3030 General Reassessment Began July 1, 2010 Affects 2012-pay-2013 property tax bills Schedule: –December 1, 2010: ¼ parcels done –May 1, 2011: ½ parcels done –October 1, 2011: ¾ parcels done –March 1, 2012 – all parcels done On-Time billing priority

31. Indiana Department of Local Government Finance 31 DLGF Resources New Officials Packet - www.in.gov/dlgf/8813.htmwww.in.gov/dlgf/8813.htm Memos - www.in.gov/dlgf/2444.htmwww.in.gov/dlgf/2444.htm –Additional Appropriation Memo –Cumulative Fund Memo –Budget Calendar Memo –Fire District and Territory Memo Team members - www.in.gov/dlgf/2338.htmwww.in.gov/dlgf/2338.htm Listservs - www.in.gov/dlgf/7063.htmwww.in.gov/dlgf/7063.htm

32. Indiana Department of Local Government Finance 32 For More Information Dan Jones, Assistant Budget Division Director –Telephone: 317-232-0651 –Email: djones@dlgf.in.govdjones@dlgf.in.gov Contact the DLGF –317.232.3777 –“Contact Us”: www.in.gov/dlgf/2338.htmwww.in.gov/dlgf/2338.htm