Hobart Chamber of Commerce - Economic Development

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The Economic Development Committee of the Hobart Chamber of Commerce has begun what it hopes will be a series of investigations into “economic questions” regarding our community. We hope to be able to explain these issues in simple easy to read short articles that we will publish in the Chamber newsletter. We are not trying to do any sort of in depth academic research. We are simply trying to explain the facts of an issue in simple terms everyone can understand. The first of these was titled simply “Where is the money for the new high school going? The feedback we got was very positive. Our second article is titled “A First Look At Property Taxes”. Again, your feedback is welcome. Please feel free to attend an Economic Development Committee meeting to participate in our next study if you like.

Dave Vinzant—Chairman
Economic Development & Website Committee

It seems that recently, there’s been lots of talk around town about property taxes. The 2005 payable in 2006 property tax rates were published in the newspaper in August. You’ve all probably seen one of these large spreadsheets of tiny numbers almost too small to read in the back of the paper. Each column represents a different taxing district and each row represents a part of the tax. This seems like a good place to start. Before we could get started, we had to figure out exactly how property taxes are calculated. Though there are lots of exemptions and variations possible, we used the basic homeowner with a mortgage and homestead exemption. The formula for calculating the tax on a house in the City of Hobart with Hobart Schools with an assessed valuation of $50,000 is:

Assessed Valuation
Less: Homestead Exemption
Less: Mortgage Exemption
Taxable Value
Tax Rate
Gross Tax
State PTRC
State PTRC

Homestead Credit Rate
Homestead Credit

Net Tax

50,000
35,000
$3,000
$12,000
4.3165%
$518
21.7659%
$113
($518—$113= $405)
17.4254%
$71

($518—$113—$71=$335)

(PTRC: Property Tax Replacement Credit)

First $35,000 and $3,000 are subtracted from the $50,000 assessed valuation. The $12,000 taxable value is then multiplied by the 4.3165% tax rate. This gives a gross tax of $518. Two credits of $113 and $71 are then subtracted to give a net tax of $335. The PTRC (Property Tax Replacement Credit) and the Homestead Credits vary from community to community. A town with a higher rate may end up paying a lower tax, if they have higher credits.

Using this formula, we then looked at what the tax bill would be for several different assessed valuations for houses in the City of Hobart with Hobart Schools. We found the following:

Assessed Valuation
$50,000
$100,000
$200,000
$400,000

Tax
$335
$1,729
$4,517
$10,094

The next thing we did was to compare the taxes for a variety of city/schools around Lake County. We picked communities that we thought were similar to Hobart.

City/School
Schererville/Lake Central
Dyer/Lake Central
Highland/Highland
Winfield/ Crown Point
Munster/Munster
Merrillville/Merrillville
Cedar Lake/Crown Point
Hobart/River Forest
Hobart/Hobart
Hobart/Merrillville

$50,000
$193
$222
$235
$269
$273
$285
$287
$317
$335
$342

$100,000
$996
$1,145
$1,215
$1,388
$1,409
$1,475
$4,484
$1,640
$1,729
$1,765

$200,000
$2,603
$2,993
$3,176
$3,627
$3,680
$3,853
$3,877
$4,284
$4,517
$4,613

We then looked at how the tax rate is derived. The 4.3165% rate for the City of Hobart with Hobart Schools is derived as follows:

State
Special
Township
Library
County Welfare
County
City
School
Total

Tax Rate
0.0024
0.0251
0.0563
0.1024
0.4989
0.6320
1.2027
1.7967
4.3165%

Percent
0.06
0.58
1.30
2.37
11.56
4.64
27.86
41.62
100.00%

From this you can see that the city portion of the tax rate is 1.2027 which represents 27.86% of the total tax rate, and the school portion of the tax rate is 1.7967 which represents 41.62% of the total tax rate. The state, county, website and county rates are the same for all the communities in Lake County. The Special, Township and Library rates, though not identical, are small as to be irrelevant. The real differences in the tax rates that different communities pay is in the city and school portion. The City rates of our sample communities are:

City
Winfield
Merrillville
Dyer
Schererville
Munster
Cedar Lake
Highland
Hobart

Rate
0.2403
0.4564
0.5504
0.5848
0.6029
0.6306
0.6338
1.2027

The school rates for our sample communities are:

School
Lake Central
Highland
Munster
Merrillville
River Forest
Crown Point
Hobart

Rate
0.9519
1.2572
1.3197
1.6231
1.7036
1.7244
1.7967

In the first look at property taxes, there were several things that popped out that were somewhat surprising to the committee:

Hobart’s City tax rate is substantially higher than the other communities we looked at. This might be because Hobart is the only city in the list with a full time fire department.
Hobart School’s tax rate, while seemingly high, is not substantially higher than some of the other schools we looked at.
The difference in the tax bill for homes with a $50,000 assessed valuation between the communities we looked at is rather small with a range between $193 and $342.
The difference in the tax bill for homes with a $400,000 assessed valuation between the different communities we looked at is quite large with a range between $5,817 and $10,307.
The difference in the tax bill for homes in Hobart with various assessed valuations is quite large with a range between $335 and $10,094.
Hobart City with Merrillville schools pays a slightly higher tax than Hobart City with Hobart schools because the PTRC and Homestead Credits are larger for Hobart City with Hobart Schools than for Hobart City with Merrillville Schools.

The Committee hopes this simple look at property taxes helps you better understand how they are calculated.