ATTORNEYS FOR PETITIONER:                        ATTORNEYS FOR RESPONDENT:
PETER J. AGOSTINO                                GREGORY F. ZOELLER
M. CATHERINE FANELLO                             ATTORNEY GENERAL OF INDIANA
ANDERSON AGOSTINO & KELLER, P.C.                 EVAN W. BARTEL
South Bend, IN                                   DEPUTY ATTORNEY GENERAL
                                                 Indianapolis, IN

______________________________________________________________________

                              IN THE
                        INDIANA TAX COURT
______________________________________________________________________
                                                                        Nov 12 2015, 3:00 pm
UNION TOWNSHIP,                       )
ST. JOSEPH COUNTY,                    )
                                      )
     Petitioner,                      )
                                      )
             v.                       )   Cause No. 71T10-1301-TA-00002
                                      )
STATE OF INDIANA,                     )
DEPARTMENT OF LOCAL                   )
GOVERNMENT FINANCE,                   )
                                      )
     Respondent.                      )
______________________________________________________________________

              ON APPEAL FROM TWO FINAL DETERMINATIONS OF
             THE DEPARTMENT OF LOCAL GOVERNMENT FINANCE

                                 FOR PUBLICATION
                                 November 12, 2015

WENTWORTH, J.

      Union Township challenges the two final determinations of the Department of Local

Government Finance (DLGF) that denied the two excess property tax levy appeals it

made in 2012. Upon review, the Court reverses those final determinations.

                           FACTS AND PROCEDURAL HISTORY

      Union Township is a civil taxing unit located in St. Joseph County, Indiana. In July
of 2012, Union Township, together with the Union-Lakeville Fire Protection Territory,

requested the DLGF’s permission to impose an excess property tax levy. (See Cert.

Admin. R. at 14-17.) Their appeal documentation asserted that due to a $40 million “error”

in calculating Union Township’s 2010 net assessed valuation, they each suffered a

property tax revenue shortfall in 2011. (See Cert. Admin. R. at 15.) More specifically,

they explained that the error was the result of the DLGF certifying Union Township’s 2011

budget based on a net assessed valuation of $159,424,430, but St. Joseph County

subsequently issuing the tax bills using a lower net assessed valuation of $119,968,732.

(See Cert. Admin. R. at 1, 14.) Union Township and the Union-Lakeville Fire Protection

Territory therefore requested the DLGF to “increas[e] the current [net assessed valuation]

by at least $40,000,000 and [] allow[] a levy for 2012 payable 2013 sufficient to make up

for the cumulative effect of th[at] error[].” (Cert. Admin. R. at 16.)

       On October 16, 2012, Union Township submitted a second request for the DLGF’s

permission to impose an excess levy. (See Cert. Admin. R. at 20.) This second appeal

again identified the $40 million error as the cause of a property tax revenue shortfall in

2011; it specifically sought a levy increase in the amount of $51,929.1 (See Cert. Admin.

R. at 24, 26-27.)

       On December 7, 2012, the DLGF issued two final determinations that denied both

excess levy appeals. (Cert. Admin. R. at 71-74.) On January 8, 2013, Union Township



1
  Presumably, Union Township submitted its second excess levy appeal because it had not yet
received a final determination with respect to the first. (See, e.g., Cert. Admin. R. at 17.) In early
November of 2012, the DLGF indicated to Union Township that it had never received the first
excess levy appeal; Union Township resubmitted the first excess levy appeal to DLGF via email
on November 20, 2012. (See Cert. Admin. R. at 87-97.)




                                                  2
initiated an original tax appeal. The Court heard oral argument on September 11, 2013

at the University of Notre Dame Law School.2,3 Additional facts will be supplied as

necessary.

                                    STANDARD OF REVIEW

       The party seeking to overturn a DLGF final determination bears the burden of

demonstrating its invalidity. See Brown v. Dep’t of Local Gov’t Fin., 989 N.E.2d 386, 388

(Ind. Tax Ct. 2013). This Court will reverse a DLGF final determination if it is arbitrary,

capricious, an abuse of discretion, unsupported by substantial evidence, or contrary to

law. See id.

                                              LAW

       Local government units pay their operating costs and expenditures, in part, through

the collection of property taxes.       Consequently, each unit is required, annually, to

formulate an estimated budget, proposed tax levy, 4 and proposed tax rates5 for the

ensuing year. See generally IND. CODE §§ 6-1.1-17-3, -5 (2010) (amended 2012).

       In order to make these formulations, each unit relies on information it receives from


2
  At the same time, the Court also conducted a hearing on the DLGF’s Motion to Dismiss Union
Township’s original tax appeal. In an opinion issued concurrently with this one, the Court has
denied the DLGF’s Motion. See Union Twp., St. Joseph Cnty. v. State of Indiana, Dep’t of Local
Gov’t Fin., Cause No. 71T10-1301-TA-00002, slip op. at 6 (Ind. Tax Ct. Nov. 12, 2015).

3 The Court wishes to thank the staff and students at the University of Notre Dame Law School
for hosting the oral argument.
4
   Property taxes in Indiana are budget-driven; the term “levy,” therefore, describes the aggregate
dollar amount of revenue needed – and subsequently imposed through property taxes – in order
to fund a given operation of local government. See, e.g., U.S. Steel Corp. v. Lake Cnty. Prop.
Tax Assessment Bd. of Appeals, 785 N.E.2d 1209, 1212 (Ind. Tax Ct. 2003), rev’d in part on other
grounds, 820 N.E.2d 1237 (Ind. 2005).
5
  In a budget-driven property tax system, tax rates are mathematical results. Id. In other words,
once a budget is agreed upon, the amount of the budget is divided by the taxing unit’s assessed
value; the resulting quotient is the tax rate. Id.
                                                3
its county auditor regarding the assessed valuation of property within its taxing district

and the resulting estimated tax collection. See generally IND. CODE § 6-1.1-17-1(a), (c)

(2010) (amended 2012).        More specifically, the units rely on a certified statement,

prepared and distributed by the county auditor no later than August 1 of each year,

containing:

          (1) information concerning the assessed valuation in the political
              subdivision for the next calendar year;

          (2) an estimate of the taxes to be distributed to the political subdivision
              during the last six (6) months of the current calendar year;

          (3) the current assessed valuation as shown on the abstract of
              charges;

          (4) the average growth in assessed valuation in the political
              subdivision over the preceding three (3) budget years, adjusted
              according to procedures established by the [DLGF] to account for
              reassessment under IC 6-1.1-4-4 or IC 6-1.1-4-4.2;

          (5) the amount of the political subdivision’s net assessed valuation
              reduction determined under section 0.5(d) of this chapter;

          (6) for counties with taxing units that cross into or intersect with other
              counties, the assessed valuation as shown on the most current
              abstract of property; and

          (7) any other information at the disposal of the county auditor that
              might affect the assessed value used in the budget adoption
              process.

I.C. § 6-1.1-17-1(a). The county auditor must also provide a copy of this statement to the

DLGF. I.C. § 6-1.1-17-1(a).

       A unit is then required to conduct a series of public hearings on its proposed

budget, tax levy, and tax rates for the ensuing year. See, e.g., I.C. §§ 6-1.1-17-3, -5, IND.

CODE § 6-1.1-17-13 (2010). The unit then forwards its proposed budget package to the

DLGF for its review and “certification” (i.e., approval). See IND. CODE § 6-1.1-17-16 (2010)

                                              4
(amended 2012).

                                         ANALYSIS

       Union Township contends that the DLGF erred in denying its two excess levy

appeals. Specifically, it asserts that both of the DLGF’s final determinations must be

reversed because they are arbitrary, capricious, an abuse of discretion, and not in

accordance with the law. (See generally Pet’r Br. at 6-7.)

                                              I.

       As previously indicated, Union Township submitted its first excess levy appeal with

the Union-Lakeville Fire Protection Territory. (See Cert. Admin. R. at 14-17.) Their

appeal documentation explained that although they formulated their budgets based on

the St. Joseph County Auditor’s certified statement that the county’s net assessed

valuation was $159,424,430, the tax bills were subsequently issued using a net assessed

valuation of only $119,968,732. (See Cert. Admin. R. at 1-2, 14-16.) This $40 million

“error” resulted in a property tax revenue shortfall in 2011. (See Cert. Admin. R. at 1-2,

15.)   Union Township and the Union-Lakeville Fire Protection Territory therefore

requested the DLGF to “increas[e] the current [net assessed valuation] by at least

$40,000,000 and [] allow[] a levy for 2012 payable 2013 sufficient to make up for the

cumulative effect of th[at] error[].” (Cert. Admin. R. at 16.)

       In its final determination, the DLGF denied this excess levy appeal for three

alternative reasons. First, the DLGF stated that because Union Township failed to

present its information using the DLGF’s “prescribed appeal template,” it failed to present

the information required by the DLGF under IC 6-1.1-18.5-12. (Cert. Admin. R. at 71.)

Second, the DLGF explained that even if Union Township had used the prescribed appeal



                                              5
template, “it failed to substantiate the alleged error.” (Cert. Admin. R. at 71.) Finally, the

DLGF reasoned that “even if [Union] Township had supplied the required data and

demonstrated that an error occurred, [it] failed to request relief . . . with sufficient

specificity.” (Cert. Admin. R. at 72.)

                                             A.

        Indiana Code § 6-1.1-18.5-12 not only establishes the parameters by which Union

Township was to initiate its excess levy appeals, but also sets forth the parameters by

which the DLGF was to review those appeals. That statute provides, in relevant part,

that:

          (a) Any civil taxing unit that determines that it cannot carry out its
              governmental functions . . . under the levy limitations imposed by
              section 3 of this chapter may . . . appeal to the [DLGF] for relief
              from those levy limitations. In the appeal the civil taxing unit must
              state that it will be unable to carry out the governmental functions
              committed to it by law unless it is given the authority that it is
              petitioning for. The civil taxing unit must support these allegations
              by reasonably detailed statements of fact.

          (b) The [DLGF] shall immediately proceed to the examination and
              consideration of the merits of the civil taxing unit’s appeal.

          (c) In considering an appeal, the [DLGF] has the power to conduct
              hearings, require any officer or member of the appealing civil taxing
              unit to appear before it, or require any officer or member of the
              appealing civil taxing unit to provide [it] with any relevant records
              or books.

IND. CODE § 6-1.1-18.5-12(a)-(c) (2012). Nothing in this statute required Union Township

to present its excess levy appeal to the DLGF using a particular form (i.e., “a prescribed

appeal template”). But see, e.g., IND. CODE § 6-1.1-17-3 (2010) (mandating that a political

subdivision formulate its estimated budget, tax rates, and tax levy “on the form prescribed

by the department of local government finance” (emphasis added)). Consequently, the



                                              6
only question to be answered is whether Union Township’s first excess levy appeal

provided the DLGF with the information it was required to provide by Indiana Code § 6-

1.1-18.5-12. See UACC Midwest, Inc. v. Indiana Dep’t of State Revenue, 629 N.E.2d

1295, 1298-99 (Ind. Tax Ct. 1994) (explaining that when the use of an administrative

agency’s “prescribed” form is not mandated by statute, a taxpayer’s claim should be

considered as long as it timely provides the agency with the information required by the

statute).

       Indiana Code § 6-1.1-18.5-12 required Union Township to “state that it w[ould] be

unable to carry out the governmental functions committed to it by law unless it [was] given

the authority [to impose an excess levy]” and “support [its] allegations by reasonably

detailed statements of fact.” See I.C. § 6-1.1-18.5-12(a). The certified record in this case

demonstrates that when Union Township presented its first excess levy appeal to the

DLGF, it provided documentation establishing that:

            1) it formulated its 2011 budget package using the St. Joseph County
               Auditor’s certified statement that the county’s 2010 net assessed
               valuation was $159,424,430;

            2) the DLGF certified Union Township’s 2011 budget using that
               number;

            3) the county’s 2010 pay 2011 tax bills were subsequently issued
               using a lower net assessed valuation of $119,968,732;

            4) this error resulted in a $51,992 property tax revenue shortfall in
               2011;

            5) the Union-Lakeville Fire Protection Territory’s financial reserves
               were completely depleted in 2011;

            6) since 2011, Union Township has been utilizing its own financial
               reserves to cover the Union-Lakeville Fire Protection Territory’s
               operational expenses;



                                             7
         7) with the $51,992 shortfall, Union Township’s ability to fund its
            operating budget, let alone that of the Union-Lakeville Fire
            Protection Territory, was negatively impacted.

(See Cert. Admin. R. at 1-2, 7, 9, 14-16.) Because this information satisfied Union

Township’s requirements under Indiana Code § 6-1.1-18.5-12(a), the DLGF erred in

denying the first excess levy appeal on this basis. See, e.g., Board of Comm’rs v. Vincent,

988 N.E.2d 1280, 1281 (Ind. Tax Ct. 2013) (explaining that a DLGF final determination is

arbitrary and capricious if it is “patently unreasonable and is made without consideration

of the facts and in total disregard of the circumstances and lacks any basis which might

lead a reasonable person to the same conclusion” (internal quotations omitted)).

                                            B.

       In the alternative, the DLGF stated that it was denying the excess levy appeal

because Union Township “failed to substantiate the alleged error.” (Cert. Admin. R. at

71.) The DLGF then stated:

         The [DLGF] notes that during the 2010 Pay 2011 cycle, Marshall
         County certified its net assessed values before St. Joseph County did,
         resulting in the [DLGF] having to use St. Joseph County’s previous
         year’s abstract assessed value to issue the [Union] Township’s budget
         in a timely manner. This action was based on . . . IC 6-1.1-17-1[(a)(6)]
         requiring the certified statement from each county auditor . . . to
         contain “for counties with taxing units that cross into or intersect with
         other counties, the assessed valuation as shown on the most current
         abstract of the property.” This [provision i]s intended to address
         situations where a county has submitted its assessed values to the
         [DLGF] but a neighboring county sharing a cross-county taxing unit
         has failed to submit [its] assessed values[.]

(Cert. Admin. R. at 72 (footnote added).) The DLGF’s purported “rationale,” however,

fails on at least two grounds.

       First, Indiana Code § 6-1.1-17-1(a)(6) has nothing to do with the DLGF’s authority

to “issue” (i.e., certify) budgets. Indeed, Indiana Code § 6-1.1-17-1(a)(6) merely required

                                            8
the St. Joseph County Auditor to include in its August 1 certified statement to Union

Township the assessed valuation of all property located in intersecting Marshall County

taxing units “as shown on the most current abstract of property[.]” See I.C. § 6-1.1-17-

1(a)(6). The inclusion of this data in the certified statement enabled Union Township’s

fiscal officers to base their budget, tax rate, and tax levy formulations using the assessed

valuation of all property that was subject to taxation: property located in both Union

Township, St. Joseph County and Marshall County. See, e.g., IND. CODE § 6-1.1-17-7

(2010) (providing that when “[t]he boundaries of a political subdivision cross one (1) or

more county lines, the budget, tax levy, and tax rate fixed by the political subdivision shall

be filed with the county auditor of each affected county” and that “the county which

contains the largest portion of the value of property taxable by the political subdivision,

as determined from the abstracts of taxable values last filed with the auditor of state, has

jurisdiction over the budget, tax rate and tax levy to the same extent as if the property

taxable by the political subdivision were wholly within the county”).

       Second, the DLGF has not answered “the $40 million question:” whether or not

an “error” existed. Indeed, even assuming that 1) the St. Joseph County Auditor failed to

timely certify Union Township’s 2010 pay 2011 net assessed valuation and 2) the DLGF

was therefore authorized to certify Union Township’s 2011 budget using its 2009 pay

2010 net assessed valuation does not explain why the St. Joseph County Auditor

subsequently issued the 2010 pay 2011 tax bills using a number that was $40 million

lower.6


6
  The administrative record reveals that Union Township’s 2010 budget was certified by the DLGF
using a 2009 pay 2010 net assessed valuation of $159,323,137 – a number presumably culled
from the appropriate abstracts and certified by the St. Joseph County Auditor. (See Cert. Admin.
R. at 6.) See also IND. CODE §§ 6-1.1-17-1(a), 6-1.1-17-16 (2010) (amended 2012).
                                               9
       It is plausible that the St. Joseph County Auditor amended its certified statement

and reduced Union Township’s 2010 pay 2011 net assessed valuation sometime after

August 1 of 2010. See IND. CODE § 6-1.1-17-0.5 (2010) (amended 2012); I.C. § 6-1.1-17-

1(d)-(f) (describing generally the reasons and procedure by which an auditor may amend

her certified statement). Nonetheless, the St. Joseph County Auditor would have had to

provide notice of the reduction to Union Township, the DLGF, and the general public. I.C.

§ 6-1.1-17-0.5; I.C. § 6-1.1-17-1(d)-(f). Union Township has indicated that it received no

such notice. (See, e.g., Cert. Admin. R. at 1, 15 ¶ 6; Pet’r Br. at 3, 14-15.) Moreover, the

DLGF has failed to direct the Court to any evidence in the administrative record that would

support a finding that the St. Joseph County Auditor made such a reduction. 7

       The DLGF’s second reason for denying Union Township’s first excess levy appeal

– that Union Township failed to demonstrate that the $40 million discrepancy was the

result of an error – is neither on point nor supported by any evidence. Accordingly, the

DLGF erred in denying Union Township’s first excess levy appeal on this basis as well.

See, e.g., Perry v. Indiana Dep’t of Local Gov’t Fin., 892 N.E.2d 1281, 1282-83 (Ind. Tax

Ct. 2008) (explaining that any factual findings made by the DLGF must be supported by

substantial evidence).

                                              C.

       In its final determination, the DLGF provided yet another alternative reason for

denying Union Township’s first excess levy appeal. Indeed, the DLGF stated that:

          even if [Union] Township had supplied the required data and
          demonstrated that an error occurred, [it] failed to request relief from

7
  Even if the St. Joseph County Auditor made a reduction under the guise of Indiana Code § 6-
1.1-17-0.5 and Indiana Code § 6-1.1-17-1(d)-(f), the validity of such reduction is questionable.
See I.C. § 6-1.1-17-0.5(e) (2010) (amended 2012) (indicating that the amount of the reduction
may not exceed 2% of the net assessed valuation for a particular year).
                                              10
            the [DLGF] with sufficient specificity. The Township requested “an
            Order from the [DLGF] correcting the error in the [net assessed
            valuation] . . . by increasing the current [net assessed valuation] by at
            least $40,000,000.00, and by allowing a levy for 2012 payable 2013
            sufficient to make up for the cumulative effect of the errors.” The
            Department cannot competently grant appropriate relief without
            specificity from [Union Township] as to the exact fiscal consequences
            of the alleged error.

(Cert. Admin. R. at 72.) The Court does not find this argument persuasive.

          Here, it is abundantly clear what relief Union Township seeks: it wants to recoup

the $51,992 in property tax revenue it was unable to collect in 2011 as a result of the $40

million discrepancy. (See Cert. Admin. R. at 1-2, 14-16.) Consequently, the DLGF erred

in denying Union Township’s first excess levy appeal on the basis that its request for relief

lacked specificity. See Amax Inc. v. State Bd. of Tax Comm’rs, 552 N.E.2d 850, 852 (Ind.

Tax Ct.1990) (explaining that an agency’s final determination is not supported by the

evidence if the reviewing court determines that a reasonable mind would not accept the

evidence contained in the administrative record as adequate to support the conclusion at

issue).

                                               II.

          The sole reason the DLGF denied Union Township’s second excess levy appeal

was because in presenting its appeal package, Union Township failed to provide it with

the actual County Forms 127CER and 17TC. (See Cert. Admin. R. at 73-74 (explaining

that while Union Township provided it with the information purportedly contained on those

reports, it “relies only on the actual county reports to ensure that [the property tax revenue

shortfall] calculations are based on accurate and official data”), 119.) (But see Pet’r Br.

at 17; Cert. Admin. R. at 99-101, 120-21; Oral Arg. Tr. at 22, 24-25 (all demonstrating that

Union Township maintains that it did provide the DLGF with the actual forms completed

                                               11
by St. Joseph County).) The Court, however, need not determine today whether the

DLGF erred in denying Union Township relief for this stated reason.

       The basis for Union Township’s second excess levy appeal was that, again, the

alleged $40 million error caused a property tax revenue shortfall in 2011.        (See Cert.

Admin. R. at 24, 26-27.) To the extent that both Union Township’s first and second excess

levy appeals intersect at the question of whether a $40 million error gave rise to a property

tax revenue shortfall, the DLGF – not the Tax Court – is the appropriate finder of fact.

                                      CONCLUSION

       For the above-stated reasons, the Court REVERSES the final determinations of

the DLGF. The matter is REMANDED to the DLGF so that it may determine whether an

error caused the $40 million discrepancy between the net assessed valuation used to

certify Union Township’s 2011 budget and the net assessed valuation the St. Joseph

County Auditor used in issuing the property tax bills related to that budget. If an error did

in fact occur, the DLGF shall order “[a] correction . . . to be applied to [Union Township’s]

levy limitations, rate, and levy for the ensuing calendar year to offset the cumulative effect

that the error caused[.]” See IND. CODE § 6-1.1-18.5-14(b) (2015).

       As an aside, the Court notes that this case demonstrates yet another instance

where infirmities in the DLGF’s fact-finding process have hindered the Tax Court’s review

of the final determination and certified administrative record. See also, e.g., City of

Greenfield v. Indiana Dep’t of Local Gov’t Fin., 22 N.E.3d 887, 892 (Ind. Tax Ct. 2014);

Gary Cmty. Sch. Corp. v. Indiana Dep’t of Local Gov’t Fin., 15 N.E.3d 1149, 1150 n.3

(Ind. Tax Ct. 2014). The Court strongly encourages the DLGF to correct these infirmities

so that its adjudicatory process can develop all the relevant facts and legal arguments for



                                             12
possible review by the Court.




                                13
