Consultant warns Senate Enrolled Act 1 will push Mount Vernon tax rates higher, trim district revenue

Mount Vernon Community School board members heard a detailed analysis Thursday on how Senate Enrolled Act 1 could affect the district’s tax base, revenues and borrowing options. Barry Gardner of Policy Analytics told the board the law will reduce districts’ net assessed value and likely raise school tax rates even if districts do not seek more revenue.

The presentation focused on three main impacts: rising tax rates, pressure on levies and a direct effect on taxpayers. Gardner said the law increases homeowner deductions and phases in other deductions that “drive down net assessed value,” and that change will push tax rates up to generate the same revenue. He added that a new 10% homestead credit (capped at $300) starts in 2026 and immediately reduces revenue the district would otherwise collect.

Why it matters: the district’s revenue math depends on assessed value times the tax rate. Gardner showed scenarios where the district’s net assessed value declines through 2031 because of phased-in deductions, and he cautioned that decline will translate into higher tax rates across school districts statewide. “This legislation is gonna drive a lot of people,” he said, noting projected school tax rate increases of about 30 to 50 cents statewide over the next six years.

Gardner also warned that business personal property reporting thresholds will change in 2027 — the current de minimis reporting amount will move from $80,000 to $2 million — which will reduce business personal property on the tax rolls and further lower net assessed value. He said that change alone worsens district revenue beginning in 2027.

The consultant described an immediate fiscal hit from changes to local income tax (LIT) distributions known as certified shares. Hancock County’s certified-share distribution to Mount Vernon is roughly $1 million; Gardner said current interpretations of the law mean that certified shares to districts will end in 2028 unless counties adopt new agreements, producing a substantial revenue loss for the district.

Gardner also flagged a new wrinkle he called the “bridal” (the 10%/$300 homeowner credit): in the current draft of the law the credit reduces revenue in both the operations and the debt service funds. That cut could create a shortfall in the debt service fund (he modeled roughly $900,000–$1,000,000), and Gardner said state action is likely to protect school debt service — which would move that shortfall into the operations fund instead as soon as 2027.

Gardner recommended continued modeling this fall after Hancock County releases 2026 assessed values and said the district should plan for “muted” revenue growth even as expenses continue to rise. He told board members the district will need to balance debt decisions and day-to-day operations carefully as the law’s effects phase in.

Board reaction and next steps: board members asked clarifying questions about how changes would affect local taxpayers in different townships and whether private schools or charters would receive new LIT distributions (Gardner said private schools do not receive certified shares). Gardner and district staff said they will rerun projections when the county’s 2026 assessed values are final and continue working with the district’s financial advisers on debt planning.

The presentation did not include a board vote; Gardner’s analysis was provided as information for future budget planning and community outreach.