INDIANAPOLIS — Nearly every Indiana county has failed to send property tax bills on time this year, forcing many local governments and schools to borrow millions and providing further proof that Indiana's tax system is still a work in progress more than a decade after a court ordered a massive overhaul.

Only two of the state's 92 counties sent tax bills on time, and 17 were more than six months late sending out the first of this year's two bills, according to an Associated Press review of data from the Department of Local Government Finance, which regulates the property tax system.

Some counties still haven't billed.

The delays in 2008 and this year have caused cash-flow problems for school districts and other local government agencies.

"It's been an ulcer and it's definitely not just for us," said Sharon Qualkenbush, finance director for the Porter Township Schools, which borrowed $10.8 million last year and about $6 million this year because of the late tax bills.

Much of the money has come from the Indiana Bond Bank, a state agency that issues short-term and long-term loans to schools and local governments.

Executive director Dan Huge said the bond bank typically issues $250 million to $350 million in loans a year. But borrowing in 2008 spiked to more than $1 billion, and so far this year local units have borrowed almost $600 million. The increase in borrowing is due almost entirely to late property tax bills, he said.

Borrowers must repay the loans with interest. The Porter Township school system has paid some interest on this year's loan but will owe another $34,644 by Dec. 31, Qualkenbush said.

The billing delays stem in part from a years-long effort to overhaul Indiana's property tax system.

In 1998, the Indiana Supreme Court ruled a decades-old, subjective property tax system unconstitutional. The state then switched to one that based assessments on market values, as most other states do. A general assessment was done in 2002 to evaluate individual parcels.

In 2006, the state moved to an annual system called trending in which counties use sales data to update assessed values each year. But problems implementing the changes led the state to order do-overs in some counties, which led to further delays.

Along the way, legislators have made countless other changes in the way counties handle their tax bills, including implementing new property tax caps.

"We have had some major historical changes to the way assessments are done in Indiana," said Allen County Assessor Stacey O'Day, whose county sent out its first bills this summer with a due date 101 days late.

O'Day said the new caps on property tax bills required counties to change software and take other steps to ensure the properties were taxed properly. That contributed to delays, she said.

Department of Local Government Finance spokeswoman Mary Jane Michalak said many local offices have used different computer systems that make transferring data difficult — even within the same county.

"When one step is delayed, it's a domino effect on the rest of the system," Michalak said.

This year, only Owen and Kosciusko mailed their first bills on time so that payments were due May 10, the date set by law. Eighteen counties were between three and six months late with their billing, the Department of Local Government Finance data showed.

Some counties are so late that they have combined two bills into a single installment. Jackson, Porter and St. Joseph counties are sending single bills due in December. Other counties, including Brown, White and Clinton, have yet to set billing dates.

Betsy Marks, a Boone County resident, is tired of the delays.

Boone County's first bills were due 50 days late, and it's not the first time, she said.

"They were late more than this year," she said. "They were late prior to that, too."

The government finance group says the delays are improving. In 2008, counties were a combined 13,416 days late with their spring bills, an average of 147 days.

So far this year, counties are averaging about 85 days late, the agency says, and many counties are already ahead on several prebilling deadlines for next year. The agency predicts that as many as 75 counties will mail their spring tax bills on time in 2010 and then meet a Nov. 10 deadline for second bills to be due.

David Bottorff, executive director of the Association of Indiana Counties, said local officials better understand the system now. The DLGF also has hired more statisticians, enhanced training and purchased new software to help speed up the billing process.

DLGF Commissioner Timothy Rushenberg recently sent an e-mail to county officials detailing the progress and encouraging more counties to meet deadlines.

"2010 must be 'The Year of No Excuses,'" he wrote.