The County-City Building in South Bend. Local governments and school districts have tightened their budgets brace for the so-called "fiscal cliff" in 2020. Staff file photo
The County-City Building in South Bend. Local governments and school districts have tightened their budgets brace for the so-called "fiscal cliff" in 2020. Staff file photo
SOUTH BEND — For years, local governments and school districts have tightened their budgets to brace for the so-called “fiscal cliff” in 2020.

That is when state-mandated property tax caps, which have already resulted in millions of dollars in lost revenue, will be fully implemented in the county.

But is the fiscal cliff as gloomy as it sounds? 

The term refers to the significant drop in property tax revenue that will be coming next year for several taxing bodies.

It will affect the county government, cities, towns, townships, school districts and libraries. But some will be hit harder financially than others.

What is the cause?

St. Joseph and Lake counties face the same dilemma as a result of a “circuit breaker” reform bill that was passed in 2008 to cap property taxes and provide relief to taxpayers.

Unlike the state’s other 90 counties, the bill allowed St. Joseph and Lake to exempt any long-term debt issued before July 2008 from the tax caps. The two counties were provided the temporary debt exemption because of their heavy reliance on property taxes to pay for services.

But in 2020, the exemption will expire. That means any remaining debt from before July 2008 will count toward the caps.

State law caps property taxes at 1 percent of the net assessed value for homesteads, 2 percent for rental homes and agricultural land, and 3 percent for commercial and personal property.

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