Senate advances property tax relief over bipartisan opposition

Indiana senators on Monday voted to move forward with a proposal for property tax relief over the qualms of Democrats and Indianapolis Republicans.

The bipartisan coalition wasn’t enough to defeat the measure, which moved on a 37-10 vote and will get further consideration in the House.

Sen. Travis Holdman, R-Markle, spearheaded the effort, which originally mirrored the proposal promoted by Gov. Mike Braun on the campaign trail. Earlier this month, Holdman introduced a measure that mitigated some of the losses local units of government would have seen under that proposal, bringing the impact down from $1.2 billion to just shy of $300 million in the first year followed by $800 million the second year.

But Gov. Mike Braun pushed back on the measure on social media.

“I want to be clear on a key point — a real tax cut means taxpayers keep more, and government takes in less. SB1 doesn’t cut taxes for homeowners hit hardest by skyrocketing assessments since 2020 — it just slows down how fast their bills will increase next year.”

He said local governments are set to receive $477 million more in 2026 for a total property tax revenue of $11 billion. The Senate version of the bill reduces that increase to $238 million, but local government are still getting more than the year before.

“If your boss cut your raise from 5% to 2%, you’d still be making more — only politicians would call that a pay cut,” Braun posted to X. “I am open to a discussion balancing the cost pressures from inflation on local government services with tax relief for homeowners, but we can’t lose sight of the fact homeowners have been crushed by inflation in assessed values while local governments have seen a windfall in revenue well beyond inflation. This bill has a long way to go before it gets my signature, and restoring meaningful tax cuts would be a step in the right direction.”

Previous pushback highlighted the uncertain impact on public schools, which received 43% — or $3.7 billion — of all property taxes in 2021. Additionally, the plan includes no relief for renters, who have seen similar double-digit increases.

Calculating property taxes relies on a complex formula dependent on assessed value, levies, school referenda and locally set tax rates — with state lawmakers largely playing a reactionary role to rein in rampant increases.

Some lawmakers supported the underlying measure and pushed for local officials to get the blame for rising bills.

“I guarantee you, in 20 years, 30 years, if you’re still here, you’re going to deal with property tax reform up until the point we get property tax back where it belongs — at the local level of responsibility,” said Sen. Jim Buck, R-Kokomo. “(Counties) bragged about not raising the rate, but they sure skimmed off all of the (assessed value) … I hope we get to the point where we start going to zero-base budgeting for locals.

“We’ve got to make the local people responsible,” Buck continued.

Other Republican supporters said the bill amounted to a tax cut, earning their support.

“It’s probably not my first choice of how I would deal with property taxes, but it’s a cut,” said Sen. Mike Gaskill, R-Pendleton. “… property tax is really a horrible way to tax our residents. Over the last 100 years, we’ve had repeated examples where the property taxes have gotten out of hand at the local level due to the actions of the locals.”

Gaskill pointed to seniors or those who’ve owned their homes for decades and saw their property values swell but might be on a fixed income.

Sen. Greg Taylor, one of two Democrats who voted in support of the bill, likened property taxes to “financing vehicles” like mortgages. Property taxes would only decrease if home values fell, he noted.

He added that property taxes pay for local services, such as road maintenance.

Rep. Jeff Thompson, R-Lizton, controls the calendar in the House Ways and Means Committee and indicated that the property tax bill could be heard as early as March 5.