From the Journal Gazette

Despite a property tax overhaul taking effect this year, most Allen County homeowners should expect to pay higher taxes when they open their property tax bills next week.

Homeowners in local cities and towns, except those in Huntertown and Zanesville, will pay more this year compared with 2008 tax bills. But homeowners in unincorporated areas will see tax bills shrink, according to the Allen County Auditor's office.

Tax bills are expected to be mailed next week. For the first time, the bills reflect new property tax caps and also reflect a smaller homestead deduction. Other changes like a new circuit breaker benefit for homeowners older than 65 also affected bills this year.

Those changes were part of an overhaul of property tax laws approved in 2008 whose goal was to reduce property taxes. The state sales tax was increased, and the state agreed to pay for some services like general funds for school districts.

Residents in Fort Wayne's portion of Wayne Township will see bills jump the most with a 29 percent increase for a home worth $100,000. Taxpayers in unincorporated Aboite Township will see their bills drop the most, a 19 percent decrease for a home worth $100,000, Auditor Lisa Blosser said.

Homeowners living in cities and towns will typically see double-digit percentage increases. Huntertown residents, however, will see tax bills drop about 5 percent and Zanesville homeowners will see bills drop 10 percent, according to the auditor's analysis.

In general, however, homeowners are paying less than they did two years ago, Blosser said.

The reason for the higher bills, compared with those of 2008, is a smaller homestead credit, Blosser said.

In 2008, the state provided $620 million for homestead credits. This year, the state provided $140 million in the form of homestead credits.

In Allen County, the homestead credit provided $88.6 million worth of relief last year compared with $17.9 million this year.

The state this year also eliminated the property tax replacement credit, which provided a smaller benefit to all properties.

The combined effect is that property owners are paying more of what they actually owe, Deputy Auditor Tera Klutz said.

The state essentially reduced those credits, increased the state sales tax and agreed to pay for several property tax-related services in an effort to provide relief to property owners.

The state picked up the tab for schools' general funds, child welfare, state forestry and several other small services that previously were paid for with local property taxes.

Because of those changes, property owners countywide will pay $109 million less in school property taxes this year compared with last year, Klutz said.

New caps that limit tax bills affected just 61 homes countywide. But the caps benefited the owners of rental property, saving them a combined $4.5 million.

Because of the caps, the 37 Allen County taxing units will have $4.7 million less to spend on local services this year.

Legislators phased in the caps, also known as circuit breakers, to limit homeowners' tax bills to 1.5 percent of a home's assessed value, 2.5 percent for rentals and 3.5 percent for commercial properties. In 2010, the caps will be 1 percent for homes, 2 percent for agricultural and rental properties, and 3 percent for other business property.

Most homes and commercial properties did not meet the caps this year, which also contributed to higher tax bills for homeowners and businesses, Klutz said.

Properties hitting the circuit breaker had the biggest effect on the city of Fort Wayne, followed by Fort Wayne Community Schools.

That effect will grow for Fort Wayne next year and will mean that city taxpayers are paying less for a high level of