Tax reform proposals to cost municipalities, schools hundreds of millions in revenue
GOSHEN — Local elected leaders expressed fears of potentially losing hundreds of millions of dollars in revenue under tax reforms introduced by the state legislature this year.
The organization that advocates for local governments in the state, Accelerate Indiana Municipalities, raised the alarm about the potential impact of Senate Bill 1 and other bills that would starve them of revenue without replacing it. Local governments, schools and libraries in Elkhart County stood to lose hundreds of millions of dollars in revenue under the bill as introduced – a countywide total of over $140 million between 2026 and 2028.
“If it passes as proposed, the projected loss of revenue to Goshen City alone is in the range of over $9.5 million over the next three fiscal years, which would be devastating for city operations,” Goshen Councilwoman Linda Gerber said Monday. “I know Mayor (Gina) Leichty has been participating in meetings in Indianapolis to advocate on behalf of the city, and I think we as counsellors have a responsibility to do so as well.”
An amended version of Senate Bill 1 that moved out of committee Tuesday morning scales back tax cuts for homeowners to $1.1 billion over three years. It’s expected to cost local units of government just under $300 million in the first year, according to Sen. Travis Holdman, who authored the bill and introduced the amended version.
As introduced, the annual impact on property tax collection would have grown from an initial $1.2 billion to $1.6 billion. The Indiana Office of Fiscal and Management Analysis had not released a revised fiscal impact statement that reflects the amended bill as of Tuesday morning.
Gerber suggested passing a resolution expressing the city’s opposition to tax cuts without a plan for revenue replacement. She drafted a resolution along with council members Brett Weddell and Megan Peel, which they said they would introduce at the Feb. 24 meeting after gathering input from others on Goshen Common Council.
“It seems kind of irresponsible of the governor to propose such a tax reduction across the entire state without offering up possible options to replace it,” Peel said.
Similar resolutions were passed by Accelerate Indiana Municipalities, the Indiana Library Federation and the cities of Bluffton, Boonville and Cumberland.
As originally proposed, the property tax reforms in SB1 would have caused revenue losses to township governments ranging from roughly $50,000 in Locke to $2.1 million in Cleveland, according to the state’s projections. The impact on school corporation budgets included a total loss of around $16 million for Elkhart, $14 million for Goshen and $11 million for Middlebury.
“It would mean the only possibility is to cut personnel,” Councilman Phil Lederach said. “There’s no other way to replace that,”
Losses for Fairfield, Baugo, Concord and Wa-Nee school districts ranged from $1.1 million to $2.7 million per year between 2026 and 2028. Libraries stood to lose hundreds of thousands of dollars in revenue as well, with Elkhart Public Library alone projected to see a total shortfall of close to $3 million.
Elkhart County government would have lost a total of $27.2 million in revenue over three years. Commissioner Suzie Weirick said the revenue cuts as introduced posed a catastrophic risk to public safety as well as roads and infrastructure, which are facing a 40 percent increase in costs.
“Elkhart County is very concerned about the implications of the tax cuts proposed by the governor and the state legislature,” she said. “While I hate paying taxes and do not want to pay more, I understand I want to use certain things like public services and infrastructure. ... If it is a matter of simply cutting services to cut cost, the state needs to give all local municipalities, cities and counties, the ability to cut services by reducing mandates. There is an increasing effort by the state legislature to demand the locals provide services without increases in revenue.”
The office of Gov. Mike Braun issued a statement Tuesday afternoon saying the governor “remains committed to delivering meaningful property tax reform that puts taxpayers first by providing immediate relief, capping future growth, and simplifying the process through reform and transparency.”
The Senate Committee on Tax and Fiscal Policy has taken steps in the right direction, he said, “by proposing strong caps on future bill growth, reforms to the referendum process, and targeted relief for veterans, retirees and first-time homebuyers, but Hoosier homeowners need a solution that includes broad and immediate reductions in their tax bills.”
“The Governor will carefully review the changes to his plan and looks forward to working with the House and Senate to strengthen the amended bill to include broad based and immediate property tax cuts for Hoosier homeowners who have been hit the hardest by skyrocketing home value inflation,” the statement said.
Read this article on the Elkhart Truth website here.