CROWN POINT | Lake County municipal leaders said they are weary of the prospect of another year of late property tax bills and the millions of dollars they must spend borrowing from banks to pay their bills.
The Munster Town Council sent Lake County Treasurer John Petalas a resolution objecting to his office's failure to get tax collections back on schedule this year.
Munster has paid more than $500,000 in interest fees to banks for interim funding -- otherwise known as tax anticipation warrants -- to cover its payroll and expenses while waiting for tax revenues that are typically four to six months late.
Griffith Clerk-Treasurer Ron Zafarczyk said he will ask his Town Council to pass a similar resolution. "We have put out a little more than $250,000 over that same period. Highland Clerk-Treasurer Mike Griffin said his town has borrowed more than $400,000.
Merrillville Clerk-Treasurer Eugene Guernsey said taxes have been capped and frozen while the cost of gasoline, utilities and other materials has gone up. "There is no place to go except to the bank, and that's killing us with the interest rate," he said. Merrillville will spend about $200,000 in borrowing fees this year, Guernsey said.
Jim Bennett, a financial consultant for county and municipal government, said, "Everybody is having to do it." He said late tax bills cost local government millions of dollars annually.
Property tax bills used to go to local property owners' homes in May, until the jarring 2002 reassessment of property values that gave Gary, Hammond, East Chicago and Whiting radically higher taxes. The ensuing controversy and litigation caused the once-smooth process to grind to a halt for many months.
Efforts to get it back on track have been frustrated by other new wrinkles in the property assessment system that have had state and county officials blaming each other.
Frustrated taxpayers have had to surge into the treasurer's office in the final days of 2007 and 2008 to pay belated property tax bills in time to qualify for income tax deductions.
Bennett said the tax collections have been tough on local government, too, as many for the first time have had to borrow at 3 percent to 4 percent interest. He said the problem only gets worse this year because the state is ending its policy of advancing state tax revenues to local government units so they can receive 20 percent of their eventual revenue.
"The banking crisis is hitting us, too," Bennett said. "Several banks have said they are not lending as much as they used to. It may get to the point where some municipalities won't be able to pay policemen because they have to pay bank loans. If you default on your bank notes, you can never borrow again."
Petalas said recently he hopes tax bills will be mailed earlier than the last two years.
Lake Station Clerk-Treasurer Brenda Samuels said, half-seriously, "We have talked about suing to get our money back."
