Indianapolis Mayor Joe Hogsett’s administration introduced a $1.7 billion budget for 2026 Monday evening that required some cuts to offset reduced revenue caused by newly approved state property tax relief and to pay increased wages under newer union contracts.
The Hogsett administration said the mayor has no plans to seek a tax increase in 2026. That’s despite the fact that the city’s 2026 tax revenue is now expected to be $43 million short of earlier expectations, according to Indianapolis Controller Abby Hanson.
She told IBJ on Aug. 6 that leaders of the administration knew that increased salaries and benefits in new union contracts would create a tough budget situation. But she said this budget was “prohibitively tight” in part due to the effects of Senate Bill 1, which Gov. Mike Braun signed into law earlier this year. That bill is expected to lead to steep drops in property tax revenue for Indiana local governments and is projected to mean $10.5 million less in tax revenue for Indianapolis than would have otherwise been expected.
City leaders also cited new costs, including a required match to receive new state road funding in 2027 and a lost grant within the Indianapolis Fire Department, for the revenue gap.
As a result, the Hogsett administration asked all non-public safety agencies to propose budgets that included a 4% reserve. Public safety-related agencies were asked to limit the growth in their spending to 2%.
Dan Parker, the city’s chief deputy mayor, said the agencies were told, “Don’t cut bone or muscle.” Most cuts came from funds that were historically underspent or roles that have gone unfilled.
One agency, the Department of Business and Neighborhood Services, will begin bringing in new revenue in 2026. The permitting and enforcement arm of the city will introduce a new fee for customers that could bring in $5 million annually, city officials said.
The changes, along with some shifts in how income tax funds are allocated, was enough to make up the gap, administration officials said.
The mayor presented the budget to the Indianapolis City-County Council on Monday, and the council will hold public hearings and deliberate on the budget beginning Tuesday evening. The final budget hearing, when the full 25-member City-County Council will hold a vote, is set for Oct. 6.
Public safety, infrastructure investments remain high
The Indianapolis Metropolitan Police Department’s budget—at nearly $359 million—makes up 29% of the city’s spending. It is closely followed by the Indianapolis Fire Department, at $283 million, and the Department of Public Works, at $257 million. Each account for 22% of the budget.
IMPD’s budget includes a $19 million increase over 2025 to cover the cost of the Fraternal Order of Police’s new labor contracts. It also continues to fund public safety technology, including mobile trailer cameras, license plate readers and analysts at a real-time crime center to monitor these devices.
City officials also plan to allocate $10 million to homelessness initiatives, including a Streets to Home program that got underway this year.
The Indianapolis Fire Department’s budget is proposed to increase $24.5 million over 2025, in part to pay salaries for 65 new recruits. The fire budget also includes $8 million to replace Station 33 on the northwest side
The Metropolitan Emergency Services Agency’s proposed budget includes $8 million to replace outdated tornado sirens and invest in the outdated county-wide emergency response system.
Planning for road-funding match
Road-funding legislation passed this year would give Marion County an additional allotment—up to $50 million in 2027 but requires a city match.
City leaders are starting to budget for that this year by spending $10 million in new income tax revenue on strip-patching, which will count toward the match.
The income tax allocation is in lieu of increasing the wheel or excise taxes in Marion County, which was authorized by the bill. Hogsett has opposed increasing the wheel or excise tax rates under the current funding structure, which the city says underfunds Indianapolis roads compared to its rural counterparts.
Maintaining priorities, new investments
Despite seeing a 2% decrease in spending, the Office of Public Health and Safety will continue to fund and expand some existing programs. They include:
- The Indy Peace Fellowship—which employs people to disrupt potential incidents of violence—at $4.5 million.
- The city’s Elevation Grant Program, which doles out funding to community organizations focused on anti-violence.
- Legal assistance in all nine township courts and Marion County Superior Court to assist residents with evictions through the Tenant Advocacy Project. A proposed increase for that program would bring the budget from $250,000 to $750,000 and pay a full-time employee.
- The Clinician-Led Response Team and an expansion of the team. The program provides a non-police response to mental health and addiction-related crises in three IMPD districts and will expand to a fourth in 2026.
- Funding for the Assessment and Intervention Center.
Parks and Recreation will spend $57.7 million on park improvements in the coming year, some of which comes from an $80 million Lilly Endowment grant to the city in late 2022.
The Department of Metropolitan Development will expand its existing master-leasing program, which allows the city to lease residential units and sublease them to people experiencing homelessness. The program will increase from 20 units to 50 units.
The department will also maintain spending on a homeowner repair program previously funded through federal grants.
The Indy Arts Council will maintain the funding level it received last year—$1.3 million from the city’s budget, along with $500,000 each from the Indianapolis Bond Bank and the Capital Improvement Board.