County receives detailed briefing on Senate Bill 1 and potential revenue risks

Vermillion County Council members on July 14 heard a detailed briefing from Baker Tilly consultant Jason Simler about Senate Bill 1 and how it could affect local property-tax revenue and local income tax options.

Simler told the council the legislation phases in larger homestead deductions, new credits and reduced assessments for multiple property classes, and he said those changes are likely to reduce the county's taxable base over several years. "Decrease in assessment means we have to increase our tax rates to generate the same amount of revenue," Simler said during the presentation.

The consultant highlighted several provisions of the law: larger homestead deductions that increase through 2031, new deductions for property in the 2% classification (agricultural, certain rentals and multifamily), and a change to personal-property treatment that preserves a 30% floor only for existing equipment but lets new equipment depreciate much more quickly. He warned that those combined changes could push more taxpayers onto tax caps and produce larger circuit-breaker losses for counties and local taxing units.

Simler also explained a substantial restructuring of local income tax (LIT) law. Under the new framework counties will have more discretion but must adopt LIT decisions annually beginning with the 2027 cycle and make allocation choices for fire/EMS, municipalities and nonmunicipal units (townships, libraries and similar bodies). "Beginning in 2027, when we adopt this new rate, you have to adopt the local income tax rate every year," Simler said, adding that the October 1 deadline for adoption will be critical for planning.

Simler recommended Vermillion County run parcel-level and sensitivity analyses now to estimate likely circuit-breaker increases and to test LIT scenarios. "What we're recommending our clients prepare... is do that calculation and see what we think the impacts might be," he said. He told the council Baker Tilly hoped to produce county-level estimates by August and to run sensitivity scenarios (for example, varying assessment growth by 3% or 5% per year) to show a revenue range.

Council members asked how municipal decisions interact with county choices, whether small towns must opt in, and how TIP/TIF areas will be neutralized under the law to avoid windfalls. Simler said the state will publish forms and guidance for TIP neutralization but that auditors and county offices will need to work through the details next year.

Why it matters: Simler said Vermillion County could face multi-year reductions in its tax base and should consider the timing and size of any LIT adjustments, bond requirements and budget commitments accordingly. He urged council members to treat the 2026 and 2027 budget cycles as planning periods and to keep reserve balances large enough to withstand potential LIT volatility.

The presentation did not create any formal council actions; Simler said Baker Tilly will provide more detailed estimates to the county in coming weeks.