House committee advances amendment to Senate Bill 1 after hours of debate over property-tax overhaul

The House Ways and Means Committee on Tuesday approved Amendment 45 to Senate Bill 1, a broad package of property-tax and local-income-tax changes, after more than three hours of questions and debate. The committee approved the amendment and moved the amended bill out of committee by a 15-8 vote.

Amendment 45 would shift many existing property-tax deductions to credits, establish a capped homestead credit (7.5 percent of the final tax bill, capped per the amendment), raise the de minimis personal property exemption, change farm-ground capitalization rates for a two-year period, place new caps on bonding rates that trigger referenda, and reorganize portions of the local income tax (LIT) distribution so county councils would control a larger “bucket” of LIT proceeds. The amendment also includes provisions affecting tax treatment of virtual-school enrollments, TIF neutralization language and a change to the maximum rate for newly formed fire territories.

Why it matters: Committee members said the changes aim to give homeowners immediate, targeted relief while restructuring how local governments receive and control revenue. Opponents said the proposal shifts costs to local units, creates uncertainty for counties and school corporations, and lacks a complete fiscal analysis by district and taxing unit.

Committee discussion and key provisions

Chairman Thompson opened consideration of Amendment 45 and summarized the measure’s major components, including moving referenda to the November election calendar; restricting general-obligation bonding; neutralizing TIF windfalls tied to recent deduction changes; and converting many deductions for seniors, veterans and disabled taxpayers into credits. Thompson also outlined a homestead-credit cap and changes to business and farm property treatment.

Several members said they had received the amendment and a fiscal analysis very late. "We did not get this amendment till 05:32," Representative Delaney said during committee remarks; he and others asked when an updated fiscal would be available. Thompson said updated fiscal notes are typically released after an amendment is adopted and predicted members would see analyses later in the day but acknowledged technology and processing delays.

Lake County members repeatedly pressed for more local detail. "There’s quite a bit of language specifically crafted for Lake County," Representative Andretti said, adding that parts of the amendment would affect rail projects on the Westlake Corridor and other county-specific arrangements. Representative Harris said the delayed availability of precise fiscal details made local planning harder because some provisions have implementation dates in 2027–2028.

Local income tax and LIT distribution

The amendment would change the structure and caps of the local income tax. Committee debate focused on a new bucket of LIT revenue controlled by the county adopting body (county council), which some members said would centralize decision-making for distribution of certain LIT shares. Thompson described the change as returning local control to counties; critics said it removes guaranteed shares for entities that traditionally received set percentages and could require negotiation at the county level.

Shifts in business and farm property treatment

Amendment 45 phases up the de minimis business personal property exemption (from the current $80,000 to $115,000, then to $150,000), and temporarily raises the farm-ground capitalization rate to 9 percent. Committee members warned those changes would shift tax burdens among classes of property and could increase bills for some businesses in the short term. Representative Smoltz and others noted the long-term intent of removing or reducing business personal property taxation, but argued the transition risks causing local revenue shortfalls and bond-repayment challenges for jurisdictions that relied on those revenues.

School funding, virtual schools and Union School Corporation

The amendment includes a provision that begins a dissolution process for a specified union school corporation (discussed as Union Township School/Union School Corporation in the committee). Members questioned how virtual-enrollment funding and the transition timeline (effective dates in 2027) would affect families and districts. Representative Porter asked whether the state would continue funding virtual students during the transition; the chair said funding would continue but litigation and prior funding irregularities remain unresolved.

Votes, process and outstanding fiscal work

After extended debate and multiple amendments proposed on the floor of the committee, the panel approved Amendment 45 by a 15-8 roll call. A subsequent motion to pass the amended bill also carried 15-8. Several members who voted "no" explained their votes on the record, citing the lack of a comprehensive fiscal note, the shifting of decision authority to county councils and the risk to local services such as police, fire and schools.

The committee considered, and defeated, multiple additional amendments that would have required state general-fund contributions to local tax relief, expanded renter deductions, raised senior caps or provided state funding for a share of school transportation or public safety costs. Roll-call tallies for those failed amendments were recorded in committee minutes.

What’s next

Chairman Thompson said the committee will schedule follow-up meetings (a date was to be announced) to consider bills that were held. He also said staff and fiscal offices would continue modeling the amendment’s district-level effects and that members would have two years in some provisions before implementation dates to work on county-level issues. Several Lake County members asked to meet with the chair and bill authors to seek clarifications and possible drafting fixes before second reading.

Ending

The committee’s action sends an amended Senate Bill 1 to the next stage of the legislative process with significant changes in how property taxes, business personal property and local income tax distributions are structured. Supporters said the package provides immediate homeowner relief and long-term reform; opponents warned it reallocates burdens to local units and raises unanswered fiscal and implementation questions.