Indiana Tax Court denies budget and tax levy appeals; two local units gave improper notices, one erroneously argued that poor planning was correctable error

Indiana Tax Court denies budget and tax levy appeals; two local units gave improper notices, one erroneously argued that poor planning was correctable error

Improper hearing notices prevented formation of Fire Protection District

      Township’s improper hearing notice prevented the formation of a Fire Protection Territory.

The Indiana Tax Court has issued three decisions in the first half of 2014 relating to appeals of final determinations by the Department of Local Government Finance (DLGF) regarding budgets and tax levies for local taxing units.  In the first two cases, the local units failed to provide proper hearing notices, nullifying their budget requests.  In the last case, a shortsighted decision in 2007 costs the county millions of dollars of tax revenue in later years.

Townships burned by inadequate notice regarding formation of fire protection territoryVan Buren Township, Madison County, Boone Township, Madison County, The Summitville Fire Protection Territory, Cause No. 49T10-1104-TA-27 (May 16, 2014).  In 2010, Van Buren and Boone Townships established the Summitville Fire Protection Territory, and the Townships needed the DLGF’s approval to impose a tax levy to fund the Territory’s budget.  By statute, the Townships were required to give notice of and conduct a public hearing to receive public comment on the creation of the Territory.  Notice was issued, the hearing held, and a tax levy request submitted to the DLGF – which rejected the request due to Van Buren Township’s inadequate hearing notice.

The Tax Court first explained that fire protection territories are a means by which two or more contiguous jurisdictions may pool resources for the purpose of providing fire protection and prevention services.  To establish a territory, Indiana Code § 36-8-19-6 provides, among other things, that notice of a public hearing to consider an ordinance or resolution to establish the territory must include certain things:

(1) A list of the provider unit and all participating units in the proposed territory.

(2) The date, time, and location of the hearing.

(3) The location where the public can inspect the proposed ordinance or resolution.

(4) A statement as to whether the proposed ordinance or resolution requires uniform tax rates or different tax rates within the territory.

(5) The name and telephone number of a representative of the unit who may be contacted for further information.

Here, the Townships admitted that Van Buren Township’s notice failed to designate: (1) which Township was the territory’s provider unit and which Township was the participating unit; (2) the location where the public could inspect the proposed resolution creating the territory; and (3) who could be contacted for further information and how.  They further conceded that the Van Buren Township notice erroneously included Duck Township.  Moreover, the notice erroneously identified the title of the person posting the notice as “Lafayette Township Trustee” instead of “Van Buren Township Trustee.”  The Townships argued that these errors were not misleading, because when read together the Boone and Van Buren Township notices – published on the same day in the same newspaper – contained all the necessary information.  The Court could find no merit to this argument, because the administrative record was “completely devoid of any evidence demonstrating that the two notices were in fact published on the same days in the same newspaper.”  Slip op. at 6.  Therefore, the Court could not find that the DLGF’s final determination was improper. Id.

Tax Court says “no way” to Speedway Library’s budget appeal, affirming DLGF’s denial of budget due to lack of proper hearing notice.  The Speedway Public Library v. Indiana Department of Local Government Finance, Cause No. 49T10-1103-TA-22 (June 24, 2014).  In January 2011, the DLGF notified the Library that its 2011 budget could not be approved because of inadequate notice for a Speedway Town Council hearing in September 2010 adopting the budget.  The Library conceded that no notice was issued for the Town Council meeting.  However, the Library asserted that notice was not required because the Town Council merely reviewed and did not adopt the budget.

The Court disagreed, observing that one provision relied upon by the Library applied only to public libraries with budgets approved under the “Unigov” structure.  Slip op. at 6.  In 1969 the General Assembly adopted “Unigov” to consolidate governmental functions of Marion County and Indianapolis.  The Town of Speedway is located within Marion County but is excluded from Unigov’s jurisdiction.  Therefore, the Town Council is responsible for reviewing and adopting (but can’t increase) the Library’s proposed budget and tax levy.  The Court also concluded that, while the Town Council may have simply approved and accepted the Library’s budget, it nevertheless adopted the final budget.  Id.  The Town Council was obligated to conduct a hearing on the Library’s proposed budget and tax rates, and it was required to issue proper notice of that meeting.  Slip op. at 6-7.  Accordingly, the Tax Court affirmed the DLGF’s final determination.  Slip op. at 8. 

County’s failure to plan did not constitute a correctable “error in data” or in interpreting data Clark County v. Department of Local Government Finance, Cause No. 39T10-1102-TA-9 (June 25, 2014).  In 2007, the Clark County Council intentionally voted not to levy the maximum amount of property taxes permitted by statute for the 2008 budget year, because it had nearly $4 million in a rainy day fund and wanted to “take some of the burden off of the homeowners.”  The DLGF warned the County at that time, however, that taking such action would negatively impact what could be levied in the future.  By 2010, Clark County had depleted its cash reserves and suffered other financial setbacks.  The County therefore petitioned the DLGF for permission to impose an excess property tax levy in the amount of $7.2 million.  The additional levy was appropriate, the County reasoned, due to a correctable “data error.”  The DLGF denied the levy appeal, stating that “no error occurred, but rather that Clark County intentionally lowered its levy in 2008.”

The County argued that the Council made a data error, correctable under Indiana Code § 6-1.1-18.5-14, because the Council “could not have foreseen any of the unexpected financial expenses and setbacks that would occur in 2009 and beyond.”  But the statute allowed only for the correction of objective errors, the Court explained.  Slip op. at 7.  In 2007, the Council had accurate numbers and was advised by the DLGF that a reduced levy could reduce the maximum levy in 2009, “regardless of what the future held.”  Id. (emphasis in original).  The Court observed:  “This was not an ‘error in data,’ nor was it even an error in interpreting data. Instead, it was simply a failure on the part of the Council to plan for budgetary contingencies.”  Id.  The Court also concluded that the plain language of an amendment in 2011 to the “use or lose it” provision of the maximum levy formula was not retroactive and therefore could not provide the County relief.  Slip op. at 9.  Finally, the Court held that the DLGF was permitted – but not obligated – by statute to conduct a hearing on the County’s levy appeal; the County was not deprived of due process when the DLGF declined to hold a hearing on its appeal.  Slip op. at 10.

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