Angel Valentín, the Wabash Township Trustee in Tippecanoe County, testifies on March 5, 2024 before a House community that his community will have to freeze its efforts to hire firefighters if Senate Bill 1 moves forward. (Whitney Downard/Indiana Capital Chronicle)
The Indiana House tackled property tax legislation for the first time this session, listening to hours of public testimony on two bills with a wide-ranging impact on local government services and school budgets.
The meeting was still going at 10 p.m. — more than eight hours after it began.
The author of one measure emphasized the evolving nature of the bill, underlining the need to find an appropriate mix of taxes to avoid disproportionately burdening one class of taxpayers over another.
“I’m not telling you this is a perfect bill. And we’re looking for some collaboration with this body … to make it even better than what it is,” said Sen. Travis Holdman, R-Markle. “If that means more relief for homestead property owners, I think you would find that we’re open to have that discussion.”
Wednesday’s meeting included a presentation from the Department of Local Government Finance and testimony, with amendments and a vote pushed to another week. Following testimony, Rep. Jeff Thompson said that Senate Bill 1 would be stripped to insert his proposal — House Bill 1402 — with additional public testimony.
Thompson’s effort offsets relief to homeowners, which is greater than the current version of Senate Bill 1, by implementing increases on other classes of property owners, as detailed in the fiscal note.
School officials and advocates, in particular, denounced the dual legislation considered Wednesday for the double-whammy hit to budgets. The combined impact of both bills could result in 10-12% cuts, depending on the district, according to Christopher Lagoni, the executive director of Indiana Small and Rural Schools Association.
“We asking that careful consideration be taken to find ways to provide relief,” said Lagoni. “But also (to) use a scalpel instead of a cleaver as we try to figure this out.”
How we got here
During the economic tumult of the COVID-19 pandemic, as housing prices soared, the state’s homeowners also saw their assessed values grow by double digits. Property taxes climbed as a result.
Property tax relief was a priority for Gov. Mike Braun on the campaign trail, which was introduced as Senate Bill 1. Critics panned the plan for its heavy hit to local coffers, which largely rely on property taxes to fund public safety, infrastructure and education.
New analysis shows some counties’ homeowners burdened with disproportionate share of property tax
In response, Senate Republicans softened the proposal. Instead of saving taxpayers over a billion dollars annually, the amended version of the bill would total $1.4 billion over the next three years. The legislation no longer includes the 3% cap on the growth of property tax bills — or 2% for certain classes of property owners — nor does it expand homeowner deductions. Senators did introduce restrictions for school funding referendums and added a first-time homebuyer tax credit alongside an option for a county-based deferral program for taxpayers who can’t afford their bills.
Another part of the proposal would also freeze the maximum levy growth quotient for 2026 and cap it for the following two years.
Following the changes, Braun threatened to veto the legislation last month — though he acknowledged that lawmakers could override his veto with a simple majority vote.
The other bill, Senate Bill 518, would require public school districts share their property tax collars with charter school districts if more than 100 students attend the latter option.
Wednesday testimony
Rep. Ed DeLaney, D-Indianapolis, questioned whether the bill’s behemoth hit for cities and counties was worth it for the average homeowner to save $48, according to his calculations.
“I think that’s the most important thing we can do today: decide whether we can do more for the homeowners or not,” DeLaney said. “And I just wanted to make it clear that, so far, we’re doing very little for the homeowners.”
Holdman and other Republicans didn’t refute or confirm that figure. Holdman maintained that the bill was as much about controlling future growth as it was for providing immediate property tax savings. He noted that no legislative action would change 2024 tax bills.
The option to “backfill” budget losses with local income taxes — as allowed under Senate Bill 1 — wasn’t an option for every county, said Parke County Commissioner Jim Meece. His 16,000-resident community had already tried to control costs by consolidating schools and applying for “every” grant or cost-sharing opportunity, he said.
“It’s been mentioned that we could shift some of this cost, this loss, from property tax to income earners … in Parke County, we are number six in the state on income tax rate,” said Meece.
Meece said allowable taxes in the following categories had been maxed out: excise, EMS services and wheel taxes.
“The alternative, I think … would be to lose personnel and services because we have no fluff. No place else for that money to come from,” Meece said, adding that the county would have to abandon attempts to remedy failing local septic systems and expand broadband access.
“If you make these changes, we just ask that you give us some other tools that we can use to try to pay our way as we go along,” Meece concluded.
According to the bill’s fiscal note, Parke County would lose $621,000 in the 2026 calendar year, followed by $1.2 million in 2027 and $1.7 million in 2028.
“(Senate Bill 1) greatly reduces much-needed revenue for school corporations, operations and debt service funds,” said Terry Spradlin, the executive director of the Indiana School Boards Association. “I urge you to not rush to diminish the quality of life that Senate Bill 1 imposes by eliminating or reducing essential local government services and the impact on k-12 education.”
More than a dozen school officials detailed the ways state funding hadn’t kept pace with inflation for more than a decade. Spradlin said schools turned to referendums because limited operation funding from the state left “very little money” for building maintenance, repairs, renovations or construction.
One of the few supporters of the bill was Marion County homeowner Gregory Catter, who disputed arguments from local taxing officials.
“I’ve heard a lot of talk from local agencies and school boards about losing money. The money they’re talking about is my money,” said Catter. “They don’t have a penny that they don’t first extort from me under the threat of taking my home.”
Ongoing negotiations
Earlier this week, Braun signaled “general” agreement between the governor’s office and House Republicans in a joint one-minute press conference with House Speaker Todd Huston.
“I feel real good that we’ll get to a place that keeps local governments and our school districts in a healthy place and we’re going to have definable tax relief for the taxpayers,” Braun told reporters on Monday.
Huston, R-Fishers, said his caucus would continue to collaborate with Braun and Senate Republicans.
“We want to create a property tax system that is fair and provides relief (to) homeowners but allows communities to make the type of investments that they want to make,” Huston said.
Braun highlighted both bills as “driving the process” for property tax relief but emphasized the need for amendments to “get where we need to be.”
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