Subscriber Benefit
As a subscriber you can listen to articles at work, in the car, or while you work out. Subscribe Now
Several local government leaders warned state lawmakers 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.
Please enable JavaScript to view this content.
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.
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!
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?
I can’t believe Carmel’s Mayor is complaining. Carmel is loaded with local income tax.
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.