House committee hears broad debate on Senate Bill 1 property-tax reforms, local leaders warn of service cuts

The Indiana House Ways and Means Committee heard hours of testimony and data analysis on Senate Bill 1 on Jan. 28, 2025, as the measure proposing restraints on property-tax growth, referendum changes and new homeowner credits drew praise from tax-relief advocates and blunt warnings from local governments and school districts.

The bill would cap the maximum-levy growth quotient (MLGQ) at 0% for pay 2026, 1% for pay 2027 and 2% for pay 2028, change the timing and wording of some school referenda, create a first-time homebuyer credit and allow several optional local programs such as a small annual property-tax deferral. Proponents said the changes are intended to bring predictability and relief for homeowners after several years of fast assessment-driven increases.

Senator Holman, who presented the Senate package to the committee, said the measures respond to large local borrowing and assessment growth. "As of January the first of 20 25, there's $54,000,000,000 of debt, that is owed by local units of government," Holman said, and outlined provisions to tighten excess-levy appeals and to require some referenda be moved to general elections.

Why it matters: the policy choices set out in Senate Bill 1—levy controls, referendum timing, caps and new credits—would reallocate how much property-tax revenue is available to counties, cities, school districts, libraries and special districts. Supporters say the package trims what would otherwise be steep rises for homeowners; local officials say the package shifts unresolved funding gaps onto local governments and would force cuts to police, fire, public health, roads and schools unless the state or localities identify replacement revenue.

What the committee heard

Data presentation: The Department of Local Government Finance summarized six years of statewide data, noting a large rise in assessed values and levies. Deputy Commissioner Jamie Bolser told the committee the statewide real property assessed value had reached roughly $671,000,000,000 and that the total statewide levy for pay 2024 was about $10,400,000,000.

Local-government concerns: County commissioners and township trustees testified they are already “maxed out” on locally available tools (local income tax, wheel tax, emergency levies) and that the proposed cap on the MLGQ would reduce future local revenues as districts strive to maintain services. Knox County Commissioner Kelly Streeter and Park County Commissioner Jim Meese said cuts would likely force layoffs or cuts to programs and jeopardize public-safety staffing and jail operations.

School funding: superintendents and school boards from fast-growing districts warned the proposed 0–1–2 percent caps would force operating cuts even as enrollment and classroom needs rise. Danville Community Schools superintendent Dr. Tracy Schafer told the panel her district’s modeling shows 6%, 12% and 16% reductions to its operations levy across three years, and that the district is simultaneously adding teachers and buses because of enrollment growth.

Public-safety risk: township trustees and fire officials from fast-growth suburbs said the bill’s removal of growth-appeal mechanisms would reduce revenue used to staff paid firefighters and EMS; Wabash Township Trustee Angel Valentin said his department would be unable to add the firefighters the service area needs.

Relief proposals within the bill: Holman and others described homeowner-targeted provisions—temporary MLGQ caps, an expanded circuit-breaker/deduction structure (higher AV thresholds and larger deductions for seniors and veterans), an optional local property-tax deferral program offering $100–$500 a year with a $10,000 lifetime cap and up to 4% interest, and a first-time homebuyer credit limited by household income and assessed-value thresholds.

How proponents framed the bill

Representatives of the governor’s office, including Deputy Chief of Staff Jason Johnson, told the committee the bill aims to deliver three outcomes: near-term tax relief for homeowners, predictable future bills and system reforms. Johnson said homeowners have borne disproportionate assessed-value growth in recent years and that the governor wanted tools to curb increases while protecting services where possible.

Concerns the committee will need to resolve

Timing and implementation: Several witnesses noted the bill would begin affecting some local budgets only in 2028, giving a delayed phase-in for some provisions; others said that delay does not eliminate the near-term planning problem for local governments.

Shifting revenue burdens: Local officials repeatedly warned the bill would force them to consider raising local income taxes, cutting services, furloughing staff or deferring capital maintenance. "We have no place left to go," several commissioners said in testimony. County and city attorneys and finance directors told the committee that debt-service payments and voter-approved referenda still create revenue pressure beyond the MLGQ and that cutting one lever can simply shift costs to another.

Public response and next steps

The committee received several dozen public comments—some asking for deeper homeowner relief, many urging protection of local services, and a substantial volume from school leaders warning about cuts. Committee members signaled they will continue work on amendments and integration with other bills; Chair Thompson said he plans to post chairman’s amendment language in advance of further hearings to allow public review.

Ending

The session on SB 1 made clear the bill touches a broad array of local services and requires careful drafting to balance homeowner relief against the funding needs of schools, police, fire and other local programs. The committee has scheduled follow-ups and told stakeholders it will accept technical suggestions while working toward a compromise that preserves essential services and addresses citizens’ concerns about recent surges in assessed values.

Speakers quoted: Senator Holman; Deputy Commissioner Jamie Bolser (Department of Local Government and Finance); Jason Johnson (Deputy Chief of Staff, Governor’s Office); Kelly Streeter (Knox County Commissioner); Dr. Tracy Schafer (Superintendent, Danville Community Schools); Angel Valentin (Wabash Township Trustee, Tippecanoe County)

sections":{"lede":"The Indiana House Ways and Means Committee heard extensive testimony on Senate Bill 1 on Jan. 28, 2025, focusing on a package of property-tax changes supporters say will curb homeowner bill growth and critics say will force cuts to local services.","nut_graf":"Committee members and witnesses debated caps on the maximum-levy growth quotient, referendum timing changes, veteran and first-time homebuyer credits, and a local optional tax-deferral program. Supporters argued the bill brings predictability and relief; county officials, school leaders and first responders warned it shifts costs to already-constrained local budgets.","ending":"The committee will continue work on amendments; Chair Thompson said a proposed chairman’s amendment will be posted publicly ahead of further hearings so stakeholders can review and comment."},