Local elected officials from across the region gathered Monday in Richmond to discuss the impacts of Senate Enrolled Act 1 on their communities and urge the Indiana General Assembly to make critical fixes to the legislation during the 2026 session.
Connersville’s Chad Frank joined with other mayors from Richmond, Greensburg, Batesville, Columbia City and North Manchester, in a session led by Mishawaka Mayor Dave Wood.
Organized by Accelerate Indiana Municipalities (AIM), the roundtable brought together municipal officials to share how the 2025 law, introduced as a vehicle for property tax relief, is creating budget uncertainty, impacts to essential services and long-term concerns about the viability of cities and towns.
The goal, said Wood, AIM’s president, is not to do away with the reform but to reduce its impact on cities and towns. He and several mayors, including Frank, spoke of the effects that SEA 1 will have on their municipalities.
“Looking ahead, Mishawaka’s fiscal impact from SEA 1 could amount to $15 million or 20 percent of our general fund,” said Wood. “Of course our top priority in determining how to cut the budget will be protecting public safety. But the reality is, we could eliminate all other city departments and still have to cut into public safety to find this level of savings.”
Local leaders report that the law’s unintended consequences have impacted cuts to public safety, and EMS services, road maintenance, and other basic municipal services.
Mayor Frank spoke of the city’s budget, noting that it includes no pay raises in 2026 except for police covered by a multiyear labor contract. Frank said the city has tightened its belt to make it through 2026 but even larger effects on the budget will become more painful by 2028, as SEA 1’s reforms continue.
Richmond Mayor Ron Oler told of having to cut 21 positions to balance the city’s 2026 budget.
As written, the legislation also creates particular challenges for smaller municipalities under 3,500 residents, which must now petition their counties annually for revenue distributions, introducing increasing instability into local budgeting.
Tom Saunders, a former 26-year state representative who now sits on the Lewisville Town Council, said his town will be affected but is used to getting by on a shoestring. The town has about 350 residents and so has very little tax revenue to start with.
SEA 1, in addition to cutting property taxes, gives localities – both cities and counties – the option to raise local income taxes. They must adopt the new income taxes by the end of 2027 or will lose them in 2028, and the law requires them to readopt the income taxes every year.
Under SEA 1, local income taxes in a county cannot exceed 2.9 percent of income, with 1.7 percent going to counties and 1.2 percent to cities. AIM is calling for an even split in the income taxes between cities and counties. AIM also suggests allowing cities to adopt a tax for city residents that could exceed the 2.9 percent cap.
AIM also wants the law revised so that once adopted, an income tax would stay in force without annual renewal. Annual renewal creates budgeting uncertainties, the group said.
The organization reform also requires towns of 3,500 or fewer residents to petition their county council for distribution of the local income tax.
Additional concerns included:
• Lack of reliable revenue projections from the state for 2026, 2027, and 2028 budgets
• Challenges for municipalities under 3,500 residents
• Technical issues with debt coverage and TIF neutralization
• Government modernization and efficiency measures
Columbia City Mayor and AIM 2026 president-elect Ryan Daniel emphasized that local officials are not opposed to tax reform, it’s a more balanced approach that is necessary.
“Hoosier communities are stretched thin without adequate funding to provide the services our taxpayers deserve and the funding required to attract new residents and businesses. As long as we are all working together, with an understanding that the tax reforms must complement the need for our municipalities to be fiscally healthy, I think we will see a productive legislative session.”
AIM staff revealed a list of technical amendments to SEA 1 that would preserve the policy goals behind the new law while offering more flexibility for local units to continue providing the services and programs their communities need. And tackling calls from the legislature for all units to look at local service delivery models to find savings and innovations, AIM revealed several measures, such as amending the government modernization statute to make restructuring less complicated and more flexible.
“The Governor and legislature build the policy framework for our state. Local leaders understand this and want to partner with lawmakers and state leaders to ensure all cities and towns have the greatest chance of success under the new fiscal system created by SEA 1,” said AIM CEO Matt Greller.
The Richmond roundtable was one of 10 being held across Indiana in November. They are part of a coordinated effort to educate legislators about local impacts and build support for legislative fixes before session begins in January 2026.
Copyright © 2025 The Connersville News-Examiner