With Indiana Senate Bill 1 as it now stands, Johnson County taxing units could lose $41 million in revenue over 3 years

Elissa Maudlin, Reporter, Noah Crenshaw, News Editor, and Jayden Kennett, Reporter, Daily Journal of Johnson County

 As a state property tax relief bill moves through the Indiana Statehouse, local government officials are watching apprehensively.

Senate Bill 1 would provide property tax relief to Hoosiers by cutting tax revenues for local government units — counties, cities, towns, townships, fire protection districts and schools. The bill is subject to change, but as it stands now, Hoosier taxpayers are estimated to save $1.4 billion over the next three years.

The bill would freeze local property tax operating fund levies for property taxes paid in 2026, impose a 1% growth cap in 2027 and a 2% growth cap in 2028. Starting in 2029, the bill implements a new levy growth formula intended to limit big year-to-year swings in levy growth.

Other provisions limit local governments’ ability to go above the annual maximum operating levy growth cap. To raise additional money, local officials will have to pursue a referendum, so voters can decide whether to approve extra levy growth. It also ends automatic levy growth by forcing local governments to have a separate public meeting and have a stand-alone vote on annual levy increases.

Taxing units in Johnson County would collectively receive approximately $41.1 million fewer tax dollars for 2026 and the following two years, according to the bill’s fiscal note.

SB 1 initially included caps on property tax increases and deductions for homeowners, as requested by Gov. Mike Braun, but these were removed from the bill. The Senate approved the amended bill Feb. 17 in a 37-10 vote. Braun has threatened to veto the bill, if some of his requested reforms are not added back before it reaches his desk.

The bill is now before the House, where it’s set to be heard by the Ways and Means Committee. Two local Reps. Robb Greene, R-Shelbyville, and Peggy Mayfield, R-Martinsville, are committee members.

At session half-time, the Daily Journal reached out to local government officials to hear their thoughts on the bill.

Officials watching closely

All government units in Johnson County stand to lose tax dollars. Towns would lose thousands, while Franklin, Greenwood and Johnson County would lose millions.

Under the original SB 1, the Legislative Services Agency estimated Greenwood could lose at least $13.9 million from 2026 to 2028. However, under the city’s estimates for the amended bill, Greenwood would lose nearly $4 million, said Greg Wright, city controller.

The nearly $4 million lost in those years has a “compounding effect” because of how the property tax system works, Wright said.

“Not only do we not collect them in those years, but they also decrease every subsequent year’s growth,” he said. “The targeted assessed value relief in the amended version will essentially shift the property tax levy from one segment of taxpayer to others — potentially leading to additional tax cap losses.”

Franklin could lose over $2.5 million as of now, but Mayor Steve Barnett said this depends on how the final bill looks. He’s preparing to deal with a loss of at least $1 million.

However, Barnett said legislators have told him to “hold on” and not get too nervous yet. He keeps hearing that larger cities may get hit harder. He’s hopeful the changes will not hurt Franklin as badly because it is run frugally and doesn’t carry a lot of debt, he said.

Whiteland initially faced a 47% cut in property taxes under the initial bill, but state estimates show that the town could now lose over $209,550. Carmen Young, the town’s director of administration, said the cuts could have “a huge impact” on the budget.

Neighboring New Whiteland officials aren’t as concerned about the cuts. Town Council President John Perrin said New Whiteland’s budget is already minimal. State estimates currently indicate the town could lose $239,090 over the three years.

Speaking for himself and not the council, Perrin said he was a proponent of Braun’s initial plan.

“Even if it got the full cuts that Gov. Braun wanted, I think [the impact] would be minimal, simply because, like I said, we don’t have a lot of extra,” he said. “When you do an under 2.5% [budget] increase one year and the year prior to that, you go down almost 12%. Well, that tells me right there we’re doing what we’re supposed to be doing with the taxpayers’ money.”

Edinburgh was initially expected to lose about $1.6 million, but now the town is slated to potentially lose anywhere from $235,000 to $240,000. The loss would hurt the town with its already “very tight budget,” said John Myers, town manager.

“I like that they’re trying to do something, but the burden that it’s going to put on the town is going to be hard on the town,” Myers said.

Other municipalities wanted to wait before speaking about property taxes since the bill is still in process.

Johnson County Commissioner Brian Baird declined to comment on SB 1 because commenting now “would only be unverified speculation.” He did, however, say in a public meeting Feb. 24 that he is “all for lowering property taxes” with thought and process put into it but he expressed dissatisfaction at the state for acting as though counties are “wasteful” in spending while adding new cost burdens.

Bargersville Town Manager Dax Norton said it’s too soon to know how the bill will take shape, but officials were watching the legislature. Prince’s Lakes officials said they were waiting for guidance on the bill from Accelerate Indiana Municipalities on the bill.

What to cut

With the cuts, officials would have to figure out how to keep expenses similar to levels they are now. However, there are expenses — like gasoline, insurance or electricity — they can’t control.

In Greenwood, officials would have to look to hold down the cost for supplies, services and employee salaries to stay on budget going forward.

“Obviously, pay increases for employees would be impossible,” Wright said. “This is particularly unfortunate for those employees when the costs for groceries and other household needs continue to grow, but barring additional cuts elsewhere, it’s not feasible to give salary increases.”

It will also become “even more difficult” for the city to recruit and train qualified employees who could go into the private sectors and be better compensated, he said.

Thought people don’t like to pay property taxes, Wright said they can’t have all the services they enjoy without them. Police and fire protection, snowplowing, playgrounds with safe equipment and pothole repairs, all come with a cost, he said.

Greenwood could save by delaying purchases of things like fire trucks and dump trucks, but they can’t put that off forever, he said.

“These cuts will not prevent us from doing our jobs for the citizens of Greenwood, but they will make it much more difficult to do it at the current level of service,” Wright said.

Franklin, Whiteland and New Whiteland officials all emphasized they would make sure there are no cuts to public safety.

However, Barnett said “whenever people start paying less, they get less.”

“We just spent 10 years going through and fixing every alley in the city of Franklin that needed fixing … Now we’re wanting to start on sidewalks. Do we cut sidewalks out?” he said. “Because what do you cut? Do we cut out paving streets? Where do you draw that line?”

He hopes Franklin will not have to cut quality of life projects, as spending money on those ultimately generates revenue by attracting new residents, businesses and visitors.

For Whiteland, Young said she “couldn’t plan in a vacuum” without knowing what’s going to happen, but the town already runs on a “very conservative” budget. She said municipalities should receive funding to train someone in Lean Six Sigma, which would help the town look at its processes, find inefficiencies and generate solutions.

“We as government units have continued to do things the same way just because that’s the way we’ve always done them,” Young said. “I feel like we need to start running our government units as a business.”

Perrin would more likely impact large-scale projects instead of public safety.

“This is not even a done deal, it’s not even close and everybody’s got the taxpayers all up in arms. [They say], ‘We’re going to lose our police, we’re going to lose our fire.’ No, they’re not, nobody’s going to lose anything,” Perrin said. “What they’re going to lose are these big projects that they’ve bought or paid for that are not even necessary.”

The most likely impact for New Whiteland would be pushing back the planned reconstruction of Tracy Road, Perrin said.

Property tax cuts could cause Edinburgh officials to delay projects and purchasing equipment, Myers said. The council recently authorized replacing a fire truck that was 30 years old, but there are even more aging vehicles in the town’s inventory.

No replacement revenue

As of now, communities have few local options for generating additional revenue to help make up predicted shortfalls.

For example, Greenwood could increase user fees for recreational programs or admissions to parks facilities, but this creates barriers for those with lower or fixed incomes to use these services. Other fees include permits, certain business licenses, municipal wheel taxes and impact fees. These increases tend to “stifle economic growth and development, which would further hurt our fiscal prospects for the future,” Wright said.

But overall, Wright says there’s not an option currently to make up the full amount lost.

“The amounts are too much to generate through user fees and none of the legislation currently contemplates providing other avenues,” he said. “Just like in the private sector, when there’s insufficient revenue available and no option for more revenue, the only option left available is cutting costs.”

Barnett said he doesn’t want to impose a tax on Franklin residents, especially with out-of-state rental owners getting a tax break. He views the push to lower property taxes as “a shell game” in the Statehouse.

“Right now as a property owner, they’re taking that money that you pretty much budget for,” he said, “and then all of a sudden … you’re going to have to pay the income tax or [the] sales tax [will] go up.”

Young believes the state should provide a way for municipalities to make up lost funds since they’re taking something away. She said it feels like legislators are “pull[ing] the rug out from under us” making municipalities panic.

She and Barnett both questioned why legislators want to make this change so badly. The state doesn’t get revenue from property taxes, they pointed out.

“If we need to be more efficient, then I kind of point the finger back at them. What are they doing to become more efficient?” Young said. “And right now, it’s very abrasive, abrupt kind of changes like we’re seeing at the federal and even at the state level.”

Myers, a former Johnson County Council member, said this reminds him of when the state reclassified the criminal code to hold low-level felons at county jails without providing more funding. Indiana counties had to add more space at their jails to accommodate, and the state eventually allowed counties to adopt a Jail Local Income Tax.

“There needs to be some kind of mechanism in place. I always think prior to, not after the fact,” Myers said.

The future

Local leaders will be apprehensively watching as the second half of the session begins next week.

Young said it is concerning that Braun might veto the plan if it doesn’t return to the form he proposed, which would be even more harmful to municipal bottom-lines. Meanwhile, Perrin said there’s nothing to be concerned about until June because “it’s still so fresh.”

Wright was more pointed on the impacts of the cuts.

“Greenwood officials have invested tax dollars strategically to create the type of community that attracts people of all ages to live, work and play,” he said. “It would be an absolute mistake for the General Assembly to destroy the progress being made in Greenwood and around the state.”

Barnett expects it will take a little while to figure out how to make the changes work. He related the experience to a poker game where a player shuffles the deck and deals cards, while the other players figure out how to win the game.

“You play with the cards you’re dealt, and I’ve always felt that we’re winners in Franklin,” Barnett said. “We’re going to win the game when they deal us the cards.”