Indiana Governor Mitchell Daniels recently signed House Enrolled Act 1313 into law which enables a taxing body’s tax base to include incremental assessed value of any overlapping TIF districts for its own tax levies due to referendums held after April 30, 2010.  Prior to this amendment, only the base assessed value of TIF districts could be included in the tax base of overlapping taxing bodies.  An expanded tax base will effectively reduce the tax rate for referendum-approved tax levies.  In addition, under the amended law, a tax rate increase due to referendum will no longer change the amount of TIF dollars generated.

For example, if a school district with a tax base of $1,000,000 overlaps a TIF district with an incremental assessed value of $200,000, the school district’s tax base for any referendum-approved tax levies would be $1,000,000 under the previous law and $1,200,000 ($1,000,000 + $200,000 = $1,200,000) under the amended law.  For a referendum-approved school district tax levy in an amount of $12,000, the tax rate increase would be 1.2% ($12,000/$1,000,000 = 1.2%) under the previous law, but 1% ($12,000/$1,200,000 = 1%) under the amended law.  In addition, under the previous law, there would $2,400 ($200,000 * 1.2% = $2,400) incremental property tax collected by the TIF fund while there would be no additional tax collected by the TIF fund under the amended law.