Library board told state tax overhaul will shrink assessed value; 2026 budget to rely on reserves

The Indianapolis City Library Board on a special meeting held a public hearing on its proposed 2026 budget and heard a long-term planning adviser say recent state property-tax legislation will reduce assessed valuation and likely lower library property-tax revenue.

Mike Rotter, introduced as a long-term planning adviser, told the board the 2025–2026 legislative session produced major changes to homestead deductions, a new homeowner credit, expansions of business personal property exemptions and a restructuring of local-option income tax distribution that together will shrink the property-tax base for local units including the library. "This feels like a train," Rotter said of the pace and scope of the session.

The changes flagged by Rotter include an increase in the homestead supplemental deduction (he said it rises from about 37.5% toward 40% next year and continues to grow in subsequent years), a new homeowner credit of up to 10% or $300, and an exemption that raises the business personal-property threshold so many smaller firms will no longer pay that tax. He also warned that the state shifted some replacement dollars toward local-option income tax (LOIT) formulas, altering how counties and libraries receive distributed funds.

Rotter and librar…