Policy analytics: Senate Bill 1 shrinks assessed value, could cut district referendum revenue by hundreds of thousands annually

Jane Herndon of Policy Analytics told the West Lafayette school board on Aug. 4 that recent statewide tax changes in Senate Bill 1 will reduce net assessed values statewide and materially cut property‑tax revenue available to local governments, including schools. Herndon summarized the statutory changes and their effects: “Senate Bill 1 changes that, in that across the state we are seeing net assessed value decrease,” she said, citing larger homestead deductions phased in over five years, a new $300 or 10% supplemental homestead credit, and higher business‑personal property exemptions (rising from $80,000 to $2 million). She warned these changes shrink the tax base and shift tax burden among property classes. Key findings presented: Policy Analytics’ parcel‑level model projects West Lafayette’s net assessed value will drop through 2031 as deductions fully phase in; the district’s debt tax rate would rise if it tries to raise the same levy amount, and the operations and referendum levies are likely to generate materially less revenue than under previous law. Herndon said the referendum fund — which carries a community‑approved rate — could fall sharply and that some districts will face the choice to renew referenda at higher rates earlier than planned. Board reaction and consequences: Trustees and administrators treated the presentation as alarming and immediate. Greiner and finance staff recommended pausing discretionary capital work proposed for Happy Hollow and treating the referendum and broader budget planning as urgent topics for follow‑up. Trustee David said the news “makes the people in the room very frustrated” because future programming and staffing are at stake. What the study did and did not assume: Herndon presented two scenarios — one holding debt levy amounts flat and another holding rates constant to show different revenue paths — and noted that 2026 assessed values might be stronger than the conservative model used because state cost tables and market values are still being updated. She recommended the board discuss strategies including possible earlier referendum renewal, levy adjustments, and coordination with county income tax policy. Limits and next steps: The report does not include non‑property revenue or detailed district debt schedules; Herndon said Policy Analytics will rerun models when Tippecanoe County publishes 2026 assessed values and when the district provides a debt‑service plan. The administration told the board it would bring budget scenarios and follow‑up meetings to translate the analysis into policy options for the community.