STATE BUDGET

ROAD FUNDING

• HB 1461 reforms the Community Crossings Matching Grant program (CCMG). 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. Previously discussed changes to the CCMG program requiring a wheel tax to access CCMG funding did not come to fruition.
• 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.
• The bill also increases some tolling authority for the Governor and clarifies the differences in bridge maintenance responsibilities between the cities and the counties.
• HB 1461, authored by Rep. Jim Pressel (R-Rolling Prairie) and sponsored by Sen. Mike Crider (R-Greenfield), passed the House in its final vote last week with a vote of 69-16 and will now be sent to the Governor’s desk for his signature.

PROPERTY TAX REFORM

• SB 1 included many property tax reductions and reforms that will have a significant negative fiscal impact on local governments. This includes a new 10% or $300 property tax credit on all homesteads, a new 2/3 deduction on homesteads and a 1/3 deduction on all other residential and agricultural land. The de minimis exemption for business personal property taxes was increased to $2M and the 30% floor was eliminated for new property, a change that was delayed to 2026 in a last minute conference committee report during the final hours of the legislative session.
• There is also language that caps fire territory rates at 0.4%, places all debt financed projects that push a debt service tax rate over 0.25% into the controlled projects statute, and requires short-term bonds to roll off of the tax bill before being readopted.
• SB 1 also reforms local income taxes starting in 2028 with a new structure that divides rates between the different types of government, 1.2% for counties, 1.2% for municipalities, 0.4% for fire/EMS, and 0.2% for all other taxing units. This structure will allow municipalities with a population over 3,500 to control their own LIT rate adoption only on their own citizens. The process for establishing these new rates will need to be improved in the coming years before it is implemented.
• SB 1, authored by Sen. Travis Holdman (R-Markle) and sponsored by Rep. Jeff Thompson (R-Lizton), was signed by the Governor in mid-April.

ANNEXATION

• There were several bills this session that proposed to change the annexation statute, including legislation that would have eliminated municipally-initiated annexation, allowed for certain non-contiguous annexation, and an expedited process for pocket annexation.
• Aim worked with all the stakeholders to try to improve the annexation statute while responding to concerns about the current process. There were many good discussions and committee hearings throughout session on this topic.
• In the end, none of the bills on annexation passed except for a specific exception for a single annexation in Plainfield. Aim will continue to work to ensure the annexation process is effective for growth and development in our communities.

CABLE FRANCHISE FEES

• HB 1427 reduces all cable franchise fees by up to 1 point (if the current fee is 5%, it goes down to 4%, if currently at 4%, down to 3%, etc.). This constitutes a cut in cable franchise fees of between 20-50% depending on the current local rate. These fees are used for right-of-way maintenance and repair from cable work and installation.
• Given all of the revenue cuts from SB 1 and other changes this year, it is very difficult to also reduce this usage fee by up to 50%. This session has seen significant revenue cuts in many major revenue categories, an argument that unfortunately did not sway legislators in the final hours of session.
• HB 1427, authored by Rep. Craig Snow (R-Warsaw) and sponsored by Sen. Eric Bassler (R-Washington), passed the House with a vote of 69-23 and passed the Senate with a vote of 37-13.

Listen to more about this week on the sixteenth 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 heads to the Statehouse to sit down with Amy, Campbell, and Isabel on the final day of the 2025 Legislative Session to discuss what’s still in play and how they expect the session to wrap up.

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.