APRIL 11, 2025

The Big Issues

PROPERTY TAX REFORM

  • SB 1, which began as Governor Braun’s expansive property tax reform package, was amended in both the House Ways and Means Committee and on the floor of the House this week. The bill now creates a new homestead property tax credit for the lesser of 10% or $300, on a final property tax bill, along with new deductions for homesteads, farmland, and other residential property. The bill also includes certain limitations on general obligation debt and fire protection territory rates.
  • As a replacement revenue source, SB 1 now includes the ability for cities and towns to adopt their own LIT rate instead of relying on the county and raises the county maximum LIT expenditure rate from 2.5% to 2.9%. All of these LIT changes will go into effect in 2028.
  • When SB 1 left the Ways and Means Committee, it included a complete elimination of the business personal property tax, which would have had very detrimental fiscal consequences for budgets, economic development, and shifts to homeowners and farmers. Due to the diligent work of Aim’s membership reaching out to their elected officials, the House changed this provision on second reading to only phase out the 30% depreciation floor over time and increase the small business exemption over time to $2M.
  • SB 1, authored by Sen. Travis Holdman (R-Markle) and sponsored by Rep. Jeff Thompson (R-Lizton), passed the House with a vote of 65-29. The Senate has filed a concurrence, and the Governor has announced publicly his intention to sign this version of the bill. While this likely final version of SB 1 still represents a significant fiscal impact to our property tax revenue base, it has improved dramatically from where it began and includes LIT reform as a possible revenue replacement for the communities that need that option. The engagement of Aim’s membership from the start of this process right through these final weeks of session has made all the difference in how this bill has progressed, and we cannot express enough admiration for the commitment to your communities and all Indiana cities and towns.
  • Click here to read Aim’s full summary of SB 1. A free webinar for Aim members will be scheduled next week to walk through the final version of SB 1 and its impacts on local governments. Watch your inbox for registration information.

ROAD FUNDING

  • HB 1461 was amended in the Senate Appropriations Committee this week to further clarify the changes to the Community Crossings Matching Grant (CCMG) Program. The program will now set aside the first $100M in the fund for the traditional CCMG program while lowering the match to 20% for smaller communities. CCMG will continue to not require a local wheel tax to access the program.
  • The new portions of the program will set aside $20M per year for the next five years for the TRAX program, designed to fund rail grade separation projects. Another $50M is set aside for the city of Indianapolis if it can match it with new local funds. Estimates indicate that, in the first few years of implementation, the available formula funding will be around $180M statewide.
  • This approach attempts to balance maintaining the current CCMG structure, which has been transformational for smaller communities while giving larger communities greater incentive to participate in the program. Importantly, the entirety of the community crossings fund will continue to exclusively fund local road projects.
  • This approach attempts to balance maintaining the current CCMG structure, which has been transformational for smaller communities while giving larger communities greater incentive to participate in the program. Importantly, the entirety of the community crossings fund will continue to exclusively fund local road projects.

STATE BUDGET

  • This Thursday, the Senate unveiled its version of the state budget. The budget priorities have been school funding increases along with managing the growth of the Medicaid program and its impact on other funding priorities. Revenue growth this budget cycle has not been as strong as in years past, and final budget negotiations are expected to be focused on dealing with even weaker revenue growth after the new revenue forecast is revealed next week.
  • Included in the budget proposal is language requiring all Innovation Development Areas (IDDs), such as the LEAP district, to require the approval of all local mayors, town council presidents, and county commissioners affected by the areas. It also reforms the TrustINdiana program to lower the risk and returns of the fund.
  • HB 1001, authored by Rep. Jeff Thompson (R-Lizton) and sponsored by Sen. Ryan Mishler (R-Mishawaka), passed the Senate Appropriations Committee on Thursday with a vote of 10-3.

STORMWATER SEDIMENT AND EROSION CONTROLS

  • HB 1037 normalizes all stormwater and sediment control permits for construction sites statewide to a general permit developed by IDEM. This is meant to ensure that development rules are standard and understandable for developers who work in multiple jurisdictions.
  • The IDEM permit only controls construction sites on lots 1 acre or larger. There have been numerous discussions throughout session about how to deal with construction sites on lots under 1 acre, and this Monday the bill was amended to ensure that local units can regulate sites under 1 acre if there are violations of the IDEM standards on these smaller lots.
  • HB 1037, authored by Rep. Doug Miller (R-Elkhart) and sponsored by Sen. Blake Doriot (R-Goshen), passed the Senate Environmental Affairs Committee on Monday with a vote of 8-3.

UNSAFE BUILDING LAW

  • SB 197 changes the unsafe building law to give property owners more time to respond to violations before fines are assessed or liens are applied.
  • As the bill left the Senate, there were significant concerns about going to a 90-day response period and no longer being able to place liens on tax bills for violations.
  • This bill was amended in committee this week to lower the response period to 30 days and return the bill to alignment with current law allowing the violation fees to become liens on the tax bill if they are not paid.

MARKET STREET TO MAIN STREET LEGISLATIVE PODCAST

Listen to more about this week on the fourteenth 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 is joined by Aim CEO Matt Greller and Policy and Financial Resources Director Campbell Ricci to break down a very busy week at the Statehouse, with a focus on the latest developments surrounding Senate Bill 1.

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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