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Senate Enrolled Act 1 will lower assessed value and push local school tax rates higher, consultant says
Summary
A Policy Analytics presentation to the Beech Grove City Schools board explained how Senate Enrolled Act 1 changes to homestead and business deductions will reduce net assessed value, raise tax rates and shrink some school revenues, potentially forcing districts to consider more referendums or other measures.
Barry Gardner, director of school services with Policy Analytics, told the Beech Grove City Schools board on June 3 that Senate Enrolled Act 1 will reduce the district's taxable base and likely raise local tax rates even where district revenue does not increase.
Gardner said the legislation changes homestead deductions and other valuation rules and “spoiler alert, tax rates are going to go up,” and explained the mechanics: “rate times levy gives us our money or our revenue.”
The presentation laid out three main effects: (1) new homestead deductions and a post-circuit‑breaker local credit will lower net assessed value (the amount taxpayers are taxed on); (2) expanded deductions for some 2% property classes (for example, apartments and long‑term care) and large increases to the business personal property exemption will remove taxable value; and (3) those changes, taken together, reduce revenue available to schools and force higher tax rates to generate the same dollars.
Why it matters: a district can see its net assessed value decline while tax rates rise, which can produce confusing messaging for taxpayers (higher rates but not more local revenue) and reduce predictable growth in operations and referendum revenues that many districts rely on. Gardner said the change to the business personal property de minimis threshold — from $80,000 to $2,000,000 beginning in 2027 — is among the largest single drivers of lost assessed value.
Gardner walked board members through Policy Analytics’ modeling for Beech Grove, showing a projected dip in net assessed value in the late 2020s and a corresponding rise in projected tax rates under the new law. He said the legislation also lowered the threshold that forces bond issues to a public referendum (previously 80¢ per $100 assessed value, now 70¢), which will mean many future capital projects requiring voter approval.
On operations and referendums, Gardner said a current operations fund gain the district saw in 2025 could erode; under Policy Analytics’ scenario, operations revenue falls toward zero relative to pre‑Act 1 projections before slowly recovering, and a typical operating referendum that now raises a set rate will generate fewer dollars over time because the base it multiplies is smaller.
Board members asked whether the 70¢ threshold might be changed in future sessions; Gardner said he could not predict future legislative action and that the 70¢ figure was in place under current law. He recommended continued modeling and communications work to help the district and its voters understand how rates, assessed value and revenue interact under the new law.
Gardner and administration staff said they will incorporate these projections into the district cash‑flow and referendum planning work this summer and advised the board that many Indiana districts are moving referendum planning earlier (including in 2026) because the law compresses timelines and changes revenue expectations.
Ending: The presentation concluded with an offer from Policy Analytics to continue modeling scenarios and to prepare voter‑facing taxpayer impact analyses to inform any referendum or budget decisions.
