Why do property taxes go up if your property value goes down?

By Kirk Mason (mason@wsbt.com)

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Cities around Michiana are seeing a growing number of foreclosures and abandoned homes. (WSBT photo)

By Beth Boehne

Story Created: Aug 19, 2009 at 3:13 PM EST

Story Updated: Aug 19, 2009 at 3:13 PM EST

ELKHART — There are spots around the country and locally where the value of homes are dropping.

Dawn Randall of Elkhart has a Good Question: Why do property taxes go up if your property value goes down?

WSBT's Kirk Mason explains.

Mary Jane Michalak from Indiana's Department of Local Government Finance says property taxes represent a property owner's portion of local government spending.

Increases or decreases depend on a local government's fiscal management, the assessed value of your home and local tax rates.

Michalak says if the value of your home decreases but your property tax bill increases, usually that means local spending is up, so there is a higher tax rate.

But government spending could hold steady and you could still get stuck with a higher bill.

For example, more foreclosed homes or vacant business properties — things that happen more often during a recession — shift the taxpayer burden on fewer people.

That's unless local governments cut their spending.

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