JANUARY 31, 2025

This week has been active in the Senate Tax and Fiscal Policy Committee, and next week is shaping up to be equally if not more impactful. The Committee, chaired by Senator Holdman, is scheduled to hear Senate Bill 1, Governor Braun’s property tax proposal. While we know it is still early in the process, the magnitude of this bill and its companion bills is too great to observe now and act later. We have some requests of you and hope you will engage on these immediately.  

Thank you in advance for your investment of time on this critical issue.

The Big Issues

PROPERTY TAX REFORM

  • Several property tax bills were heard in the Senate Tax and Fiscal Policy Committee last Tuesday. This was the starting point for robust property tax reform discussion that is expected to continue through April.
  • SB 9, authored by Sen. Scott Baldwin (R-Noblesville), would rewrite the MLGQ formula, the rate at which general fund property tax levies can grow from year to year, to be differentiated by county and based on a combination of four economic metrics instead of just nonfarm personal income growth. The net effect of this bill is a lower overall MLGQ relative to the historical formula and a lower MLGQ for all but 10 counties relative to the current 4% cap.
  • SB 443, authored by Sen. Aaron Freeman (R-Indianapolis), proposes eliminating the depreciation floor for the business personal property tax and increasing the exemption from $80,000 to $160,000. The net effect of these changes would be a loss of over $380M to local units once fully phased in.
  • SB 8 was amended in committee to remove the excess levy appeals statute and replace it with a municipal and county operating referendum that can be used to capture excess growth or combat tax cap losses.
  • All of these bills were held for future discussion except for SB 443, elimination of BPPT depreciation floor, which passed the Senate Tax and Fiscal Policy committee with a vote of 8-2.

ANNEXATION

  • SB 126 would repeal the law that allows municipalities to initiate annexations. Only voluntary and super voluntary annexations would be allowed starting after March 1, 2025.
  • Aim opposes this bill because it would limit municipalities’ ability to grow and develop through their own planning process. It would also limit municipalities’ ability to annex non-contiguous areas, even those that want to become part of the municipality, because the statutes that allow non-contiguous annexation are tied to municipal initiation of the annexation.
  • Several annexation bills are also scheduled to be heard in the House Local Government committee next week, including HB 1394 which is substantially similar to SB 126. The other two bills, HB 1472 and HB 1473, would allow for easier annexations in certain circumstances. Aim expects a wide-ranging conversation about annexation policy this session and will advocate for the effective use of this tool for growth and development.
  • SB 126, authored by Sen. Jim Buck (R-Kokomo), passed the Senate Local Government Committee on Thursday with a vote of 9-0.

MUNICIPAL ELECTIONS

  • SB 355 would move all municipal elections to the presidential election cycle. It would allow municipalities to opt out of this change if the council approves the opt-out and it succeeds at referendum. HB 1633 would accomplish the same goal without the option to opt-out.
  • Aim opposes these bills as the current municipal election cycle ensures that local issues stay front-and-center when mayors, clerks, and council members are up for election. Moving the elections to the national cycles would drown out local issues in the minds of voters and force municipal officials to spend most of their time talking about national partisan issues instead of the issues that they would have jurisdiction over and matter most to their communities.
  • SB 355, authored by Sen. Mike Gaskill (R-Pendleton), passed the Senate Elections Committee last Monday with a vote of 7-2. HB 1633, authored by Rep. Ben Smaltz (R-Auburn), passed the House Elections and Apportionment Committee last Wednesday with a vote of 8-5.

EMINENT DOMAIN

  • SB 128 creates a new compensation category for takings through eminent domain that reimburses ongoing business losses, called “going concern,” if a condemnation results in long-term losses to a business. This applies to the use of eminent domain by government, including the state government through INDOT, as well as by utilities both investor-owned and municipal.
  • Aim opposes SB 128 because it would increase the cost of eminent domain when it is necessary, and this will increase the total taxpayer burden of large economic development, road, or utility projects to taxpayers or ratepayers. Eminent domain is a tool of last resort and already has robust procedural and compensatory frameworks to protect property owners.
  • SB 128, authored by Sen. Jim Buck (R-Kokomo), passed the Senate Local Government Committee last Thursday with a vote of 6-3 and will be sent to the Senate Appropriations Committee for additional consideration.

HOUSING DEVELOPMENT

  • HB 1005 would add $25M to the Residential Infrastructure Fund (RIF) and prioritize communities with zoning and design standards conducive to development in prioritizing the funds. It would also add language requiring local units to accept inspections and plan reviews from third-party service providers.
  • Aim has been working with the bill authors to ensure that the third-party review provisions do not compromise local control or standards and do not require duplicative work on the part of local building code authorities. Aim supports the expansion of the RIF and continues to work to encourage housing development.
  • HB 1005, authored by Rep. Doug Miller (R-Elkhart), passed the House Government and Regulatory Reform Committee last Monday with a vote of 11-1.

MARKET STREET TO MAIN STREET LEGISLATIVE PODCAST

Listen to more about this week on the fourth episode of the 2025 Market Street to Main Street Podcast Series, Aim’s legislative episodes of the Hometown Innovations Podcast and a supplement to this e-newsletter. In this episode, Jennifer chats with Amy Krieg, Isabel Elliott, and Campbell Ricci about the first quarter of the 2025 Legislative Session.

To listen to Market Street to Main Street, please visit The Terminal post and click the “play button” on the audio player. Or you can subscribe to Aim Hometown Innovations Podcast on Podbean, Apple Podcasts, and Spotify.

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