Consultant: Senate Enrolled Act 1 likely to push School Town Speedway tax rates higher, reduce some revenues

Barry Gardner, a consultant with Policy Analytics, told the School Town Speedway Board of Trustees on June 10 that revisions in state law known as Senate Enrolled Act 1 will reduce the district’s net assessed value and, in many cases, force local tax rates higher even if districts do not collect more revenue.

Gardner said the Act increases homeowner deductions, adds a 10% credit on tax liability (capped at $300) for homeowners, and changes how business personal property is reported and taxed. “Spoiler alert, this is going to drive up tax rates,” Gardner said. He added: “It’s the net assessed value times the tax rate gives me my revenue.”

The consultant said those changes will phase in over six years and will reduce the taxable base that school districts and other local governments draw on to produce revenue. Among the specifics Gardner described: state policy is moving away from a $48,000 standard homeowner deduction toward a deduction equal to two-thirds of a home’s assessed value; the homeowner credit equals 10% of tax liability up to $300; the de minimis reporting threshold for business personal property was raised from about $80,000 to $2,000,000; and businesses will be allowed to depreciate some equipment for tax purposes to a zero floor in coming years.

Gardner showed district-level projections that, under those rules, School Town Speedway’s net assessed value would decline through 2031 and that the district’s combined tax rate could rise by roughly 20¢ to 30¢ over current levels if no other changes are made. He said statewide averages he and his firm model show many districts could see rate increases of 30¢ to 50¢ over the same period.

Gardner cautioned that the business-personal-property changes create behavioral risk: owners of large equipment may restructure or time purchases to reduce taxable value. He noted that Speedway’s business personal property currently totaled about $390 million and that only $30 million of that would be below the new $2 million de minimis threshold; the remainder would remain on the rolls unless businesses moved property or otherwise changed reporting.

He also described how the law alters debt-service rules. Gardner said the state lowered a secondary threshold from 80¢ to 70¢: if a district’s debt-service rate is above the higher threshold, a future bond would automatically require a referendum vote. He said Speedway has more flexibility than many districts because its current debt-service position is relatively conservative, but that future projects could trigger the additional procedural requirements if the district’s rates rise.

Trustees asked questions about tax-increment financing (TIF) districts and local income-tax changes. A board member noted Speedway’s TIF district and asked whether assessed value outside a TIF would change when TIFs “run out.” Gardner said TIF neutralization rules and local-income-tax changes remain complex and partially unresolved. He warned that some provisions affecting locally collected income-tax revenue will change in 2028 and that one provision in state law’s implementation may reduce the district’s revenue by roughly $100,000 when it sunsets.

Gardner emphasized that while the new rules reduce taxable base and create higher rates, the effect on Speedway may be more manageable than for some other districts. He urged boards and staff to plan for a constrained revenue environment, to reconsider messaging about rate changes and referendums, and to monitor how businesses respond to the new business-personal-property rules.

The presentation concluded with Gardner offering to take questions; trustees thanked him and said they would continue planning into the budget cycle and upcoming years.