Gov. Mike Braun called on Indiana local governments to "do more with less" as he pitched his proposal for a massive residential property tax cut to Hoosier lawmakers Wednesday night in his first "State of the State" address.
The Republican chief executive said something must be done to help Hoosiers hurting from high prices over the past four years and delivering historic tax relief will save seniors and young families from getting priced out of their homes due to "runaway property taxes."
Braun cited several examples of double-digit growth in property tax bills in suburban Indianapolis — where home values are soaring — to justify his plan to revert residential property tax bills to 2021 amounts and to restrict future property tax increases.
"I understand this tax relief will have an impact on local governments, but taxpayers are struggling, and we have to put their needs first. Just like the example I set with my budget proposal, all governments need to do more with less," Braun said.
The Indiana Constitution already caps property tax bills for owner-occupied residences at 1% of the property's assessed value, with limited exceptions for state-mandated additional charges and successful school funding referendums.
That means the owner of a $200,000 home typically pays no more than $2,000 a year in property tax — a key component of Indiana's rank as the 10th most competitive tax system out of the 50 states, according to the Tax Foundation.
Braun said that's not good enough: "Hoosiers from all over the state told me these tax bills keep rising, but wages aren't keeping pace. This is not sustainable."
The nonpartisan Legislative Services Agency projects local units of government would lose about $1.15 billion in revenue in the first year after Braun's property tax plan is enacted, with $536 million (47%) taken from school corporations and charter schools, and $474 million (41%) from counties, cities and towns where police, fire and other public safety services typically comprise the largest spending category.
The revenue losses for local governments would grow to more than $1.6 billion in year 3, with Lake County units forgoing about $150 million, Porter County governing entities $45 million, and LaPorte County localities $18 million, according to LSA.
Braun did not specify how that money would be made up, if at all. Though key policymakers in the Republican-controlled General Assembly have suggested counties perhaps could hike their personal income tax rates to avoid major cuts to public services — shifting the tax burden from residential property owners to workers.
Businesses, landlords and farmers likely also would bear a greater share of the property tax burden under the governor's plan, potentially leading to higher retail prices, rents and more costly agricultural products.
At the same time, Braun is proposing to continue regularly shaving 0.05% from Indiana's 3% personal income tax rate, exempting all retirement income from state tax, and incentivizing retired farmers to pass their farms on to the next generation.
"One thing I learned building a business for 37 years — you can always run more efficiently," Braun said. "My vision is a streamlined, accountable, responsible government that keeps more money in your pocket and empowers the private sector to innovate and grow."
To that end, Braun urged state lawmakers to authorize new tax credits to employers for training their own workers, pledged to give more tax incentives to existing businesses through the Indiana Economic Development Corp., and announced plans to create an Office of Entrepreneurship and Innovation focused on supporting "Main Street" business growth.
"I believe the work of this Legislature has put us in position to achieve great things if we seize this opportunity and act decisively," Braun said. "The state of the state is strong because Hoosiers are strong."
Nevertheless, Braun identified several policy areas he believes need work, including reducing health care costs and prescription drug prices. He specifically praised state Sen. Ed Charbonneau, R-Valparaiso, for leading the way on Indiana health policy initiatives.
Braun also called for making state-funded private school vouchers available to even the wealthiest Hoosier families, bolstering teacher and police officer pay, increasing spending on school safety initiatives, and heightening criminal penalties on drug dealers and repeat violent offenders.
In addition, Braun reiterated his pledge to fully cooperate with Republican President Donald Trump's efforts to identify and remove individuals lacking legal status from the Hoosier State — citing the September 2024 stabbing of a 13-year-old girl near Lowell that allegedly was committed by a Honduran man deported from the United States in 2018 who unlawfully re-entered the country in 2022.
"Unchecked illegal immigration brings serious risks to our communities," Braun said. "Let me be clear, Indiana will not be a safe haven for illegal immigration. As the Trump administration begins to return illegal aliens with criminal records to their home countries, we will assist. A state should always put the safety of its own citizens first."
In the end, Braun called on lawmakers to act decisively so Indiana doesn't plateau, but instead uses its current foundation to build something truly exceptional.
"We were all elected by Hoosiers to get results," Braun said. "I believe Indiana should be a national model for bold, innovative leadership."
Braun's 30-minute message was broadcast statewide and heard in person by most of the 100 state representatives and 50 state senators gathered, alongside state and local elected officials, Indiana justices and judges, Braun's cabinet and state agency leaders, and special guests, in the House chamber at the Statehouse in downtown Indianapolis.
However, a number of members of the Indiana Black Legislative Caucus, led by state Rep. Earl Harris Jr., D-East Chicago, and state Rep. Carolyn Jackson, D-Hammond, boycotted the governor's address in response to Braun's recent executive order ending diversity, equity and inclusion (DEI) programs throughout state government.
"In the first few weeks of Gov. Braun's administration, we've received a message about the path he intends to follow," Harris said. "We want to bring Hoosiers together to fight for a better state for all."
"If we show a united front, there's very little we can't do to make Indiana a state that welcomes all, celebrates diversity and allows every citizen a chance to build a great life for themselves and their families."
State Rep. Maureen Bauer, D-South Bend, pointed out Republicans have controlled the General Assembly since 2011, and the governor’s office since 2005, so any problems with Indiana’s property tax system, or any other state policies, were caused by the GOP and also could have been fixed by Republicans years ago.
Others were more excited about Braun's legislative agenda and his vision to make Indiana a national model for freedom and opportunity.
"Gov. Braun is showing right out of the gate that he is going to lead with action," said House Speaker Todd Huston, R-Fishers.
"Our caucus is working closely with the governor and his team on several shared priorities to reduce health care costs, streamline government, improve public safety, empower parents and strengthen our schools. We'll continue to advance the bold, conservative leadership that's resulted in low taxes, a growing economy and increased opportunity for Hoosiers."
Hoosier lawmakers are scheduled to meet through April to craft a new, two-year state budget and to approve new or revised Indiana laws for Braun to consider enacting.