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Several local government leaders warned members of the Senate Tax and Fiscal Policy Committee on Tuesday that Gov. Mike Braun’s ambitious property tax reform proposal could harm critical services, pushing back against assertions that local governments could heavily curb spending without significant service cuts.
Sen. Travis Holdman, R-Markle, is carrying Braun’s tax plan as Senate Bill 1, which Senate Republicans said was their priority bill this legislative session. The bill includes expanded homestead deductions and tight tax bill caps with targeted relief.
Since Braun debuted his tax plan on the campaign trail, local government and school leaders have expressed unease about how municipalities could make up the lost revenue. Property taxes are a primary mechanism to fund local government and schools.
The tax cuts could result in $1.2 billion in property taxes cut from local governments across the state in 2026, according to the bill’s fiscal note, and that cost is expected to compound each year. No revenue replacement alternative, such as an appropriation of state funds, has been seriously considered in legislation at this stage.
On the campaign trail and now in the Statehouse, Braun has repeatedly opined that government spending cannot outpace its constituents’ ability to pay for it. In last Wednesday’s State of the State address, Braun said local governments will need to tighten their belts and do more with less.
“Kosciusko County is expected to drop $12 million,” County Commissioner Sue Ann Mitchell told lawmakers. “That’s a pretty big belt-tightening for us.”
Nuts and bolts
Under SB 1, a homeowner with an assessed value of more than $125,000 would see that amount be reduced by 60% under a revamped homestead deduction. Those with homes valued under that threshold would see both the current standard deduction of 48,000 and a 60% deduction of the remaining value.
With the deduction, homeowners with a home valued at $500,000 with a 1% tax rate could see their tax bill drop from $4,520 to $2,000 without considering any other deductions.
The legislation would also institute a cap on property tax bill growth for certain Hoosiers.
If a government or school district seeks to hold a referendum to raise the tax rate, it must take place during a general election in an even-numbered year. The bill would also require ballot language to include the estimated increase to the school corporation’s property tax levy.
The Department of Local Government Finance would also need to build a transparency portal so Hoosiers can access tax rates and compare proposals.
Local pushback
Opposition to the bill was bipartisan. Carmel Mayor Sue Finkam, a Republican, and Terre Haute Mayor Brandon Sakbun, a Democrat, testified together during Tuesday’s hearing.
They both gave examples of how their municipalities have prioritized spending and found savings in the past to lower the taxpayer burden. They each also expressed concerns that largely hinged on adequately funding public safety, which is typically one of the largest local expenses.
“We are going to find ways, any way possible, to make sure that public safety is number one so we can take care of those who we’ve been elected to take care of,” Finkam said. “We’ll figure it out, but it’ll be devastating to our community for every other aspect of service that we provide.”
Finkam said the bill would revert Carmel’s property tax revenue collections to the 2019 level, amounting to an estimated $2.7 billion in total assessed value deductions and a $26.1 million loss to its general fund.
Mitchell rebuffed state lawmakers’ statements that local governments can increase income taxes as a revenue replacement option.
“Income tax would not help us dig out that hole of what we’ve lost,” Mitchell said.
Officials from Owen, Kosciusko, Huntington and Knox counties also testified against the bill. Multiple organizations, including Accelerate Indiana Municipalities and the Indiana School Boards Association, were also opposed.
A handful of Republican lawmakers seemed to question the validity of the argument that local governments cannot cut any more, asking them about other spending cut opportunities and what they thought would be a better alternative to the bill’s current terms.
Sen. Chris Garten, R-Charlestown, was among those who pressured some of the opposing officials to provide more details about budgeting and potential cuts.
“The same voters that elected you overwhelmingly elected Gov. Mike Braun that ran on property tax reform,” Garten said. “Look at those same voters right now and speak to them and tell them what’s acceptable [property tax reform].”
Multiple homeowners testified in support of the bill, with a few calling for eliminating the property tax altogether for some Hoosiers.
Holdman, the chair of the Senate Tax and Fiscal Policy Committee, said the bill would likely be brought back for a vote next week if amendments are completed. The committee typically meets at 9 a.m. on Tuesdays.
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Maybe if Mayor Finkam & Carmel cut back on roundabout art and repaving roads that are just fine, they wouldn’t have a problem with the cuts. Carmel had outsize tax increases with last year’s tax bills, yet we don’t see any increase in resident services.
I can think of a few $$MM projects that didn’t need to happen in Fishers. They’ll be fine.
Towns that have invested in infrastructure and schools are booming. They are where people want to live. Census numbers don’t lie. Put another way, that’s why Fishers is growing and Markle isn’t.
But, sure, let’s have a senator from a dying part of Indiana make the decisions for the state.
Yes! Make Carmel roads look just like Indy. That will attract new residents!!! (this is sarcasm)
Braun seems to think he can mimic his hero in the white house and talk about “concepts of plans”, but who would have thunk it – details matter!
“Braun has repeatedly opined that government spending cannot outpace its constituents’ ability to pay for it. ”
Constituents have been getting tax cuts for decades now. Constituents have seen their houses get a massive increase in value the last few years.
The problem has never been the ability to pay for it.
What are they doing with all this extra money they’re getting due to increased property assessments? After the recent articles talking about the number of rental properties in the state and them charging them twice as much property taxes with no deductions there should be plenty of money to go around for everybody.
You think the costs to government have stayed the same?
No Joe I don’t but the rate of assessment is going up much faster than the rate of inflation. Not to mention I’m paying much more than 1% of my assessed value due to all these referendums that keep being voted in.
I can’t believe Carmel’s Mayor is complaining. Carmel is loaded with local income tax.
I hope this leads to schools fighting cities fighting library boards fighting townships and TIF takes all the flak.
Camel is also loaded with long-term debt and heavy interest payments. They’re okay for now, but cuts to property taxes would be devastating for municipalities like Carmel, Fishers, Zionsville, etc. that are dependent on high -value, large-lot properties for their tax revenue (and these large lot properties come with HUGE infrastructure liabilities). A property tax cut could really screw the suburbs very quickly.
Braun is the businessman boss that tells his employees to work harder while cutting their paychecks.
Sen. Holdman hales from Markle, population 1,070 living in an area barely larger that the Mile Square in Indianapolis, and where the median price of a home is in the low $200s. There are no public elementary schools in Markle, but there are two public elementary schools within 5 miles of its city borders. Those schools are rated 28.14 (with 100 being the best).
All this to say he lacks any experience with the bigger picture: the cost of roads and maintenance, public schools, and large police/fire/ambulance departments and equipment. In essence, he lives is a small, rural community that has been losing residents since 1990 when it was 1,2431 people. I seriously would doubt that property taxes have been rising (either at all or even significantly) during those 35 years.
This, right here. Indianapolis is being micromanaged by people who step inside I-465 once or twice per year, sometimes only during the General Assembly. The complaints that Representatives get are from large land owners, like data centers and corporate megafarms.
1) The State should focus on itself, not micromanaging municipalities.
2) This proposal is inflationary. With the kind of upward market pressure that we are experiencing, we should not be lowering property taxes.
3) Indiana municipalities need MORE flexibility in their revenue streams, not less. If the State really wants to cut back, then they should drop a penny from the State Sales Tax and allow localities to pick it up for discretionary funding.
My property tax bill nearly doubled in 4 years. I do think we need property tax reform but is largely because they reassess to market value each year. It would make much more sense to use the 3 or 5 years average value to do the assessment that way it smooths it out.
What has the value of your home done the last four years, and have you appealed your assessment? If the value of your house doubled, sorry, not sure you have a valid complaint.
The services funded by property taxes have faced the same inflationary pressures. All Republicans are doing is slashing government and making it someone else’s problem.
And they’ll brag about it on their campaign flyers that taxpayers pay for. They take us for suckers.
The question for you, was your assessment wrong four years ago or wrong now? If the assessment is not correct now, then you have a opportunity to appeal. If it was wrong 4 years ago then count yourself lucky that you get a deal for all of those prior years.
If the value of your house really has doubled in 4 years then count yourself lucky with the accumulated wealth you have accrued.
Republican philosophy: Reduce property taxes which leads to fewer/poorer services & maintenance which leads to increased complaints about poor services & maintenance which leads to increased complaints about excessive and ineffective use of tax dollars which leads to increased demands to reduce taxes which leads to fewer/poorer services & maintenance, etc., etc., etc. My dog exhibits more intelligence chasing his tail.
YEP! You get what you pay for.
I live in Marion county, and the only reason we’ve seen any real infrastructure improvements is because of Federal dollars. All of that money has instantly dried up with the chaos monkeys in charge in Washington now.
I suspect that projects that already have dollars allocated are screeching to a halt right now and to add insult to injury, the state wants to cut back on the insufficient, but reliable property tax stream.
How about people over 60 years old in Indiana don’t pay school taxes? They get no benefit from fancy schools. Fancy buildings don’t equate to better educated children…
I have to assume the first statement is sarcasm?
And yes there is some truth to that fancy buildings don’t equal better education, but if you mean “fancy”, by buildings with AC (now that school runs from August to Mis-May), I don’t see your point.
More money for teachers and education in general, at all levels would gradually improve the states economy. Ohio has proved this by outspending Idiana by upwards of $10billion in recent years.
Welcom to Indiana, on a race to the bottom.
Clark, when you were going through 13 years of public education (or less), you benefitted from “school taxes” that other people without kids paid. Your parents didn’t pay enough to cover your own education, much less any siblings.
You still benefit from having good schools where you live, because it reinforces the value of your real estate.
It’s called “the social contract”.
Top 5 dumbest comment ever on the IBJ.
Sounds like Clark never benefitted from school.
As long as we can get rid of social security tax since we aren’t using it while we’re working – I’d gladly let the elderly not pay property taxes
You can bash Mayors all you want but they are correct. The technical reasons for the crunch on cities is far more complex. There is a complete disconnect between the state and the cities. You really think that a drop in taxes on a $500k house from $4250 to $2000 will result in NO loss of police or fire services?
Look at the schools before you look at local government. They suck up 60+% of the tax revenue and 50% kids cannot read at grade level. I live in Lawrence twp. Not sure we needed a $200 million bond issue for nicer entrances to the schools when academic performance has not increases.
Did you not see the recent stories about Indiana’s statewide performance on reading tests going up dramatically?
State and town/city reliance on the built in property tax ‘cash cow’ mentality needs to change!
Seeing the mayors of Carmel, Fishers and new casino Terre Haute complain is laughable. While Terre Haute does have legitimate long term shortfall issues, the other 2 are the classic abusers of the ‘built-in’ revenue source to the detriment of every property owner. Remarkably, Indiana’s ‘tax pie’ is 50% ‘education’. Today’s schools are more like Royal Palaces. Considering many households have seen their kids grow up and leave or that many don’t have children makes this almost a ‘bogus’ source of income in the first place. As many have already pointed out, if a city decides it ‘needs’ $300,000 sculptures for their roundabouts, arenas and other ‘improvements’ they should be funded by other than already overburdened property owners. Entertainment; Wheel; Local Sales and other taxes……oh but wait, if they promoted those ideas they wouldn’t get elected. The answer. Trim your budgets like most families. Live reasonably within your means.
Brad, you didn’t cover the whole cost of your kids’ education when they were at home. Look at the “per student” expenditure in Indiana vs. your property taxes…unless you live in a house with a $1 million net assessment, you probably don’t even cover one child’s worth of education.
Kudos to my Mayor. I’ve been critical of Sue but she is right on the money on this one.
Strange that its supposed to be Democrats who defund the police, but it may well be Republicans who enact policies that defund police departments across the state.