Consultant tells Beech Grove board Senate Enrolled Act 1 will raise rates, cut revenue and complicate referendums

Barry Gardner, director of school services for Policy Analytics, told the Beech Grove City Schools board on June 3 that Indiana’s Senate Enrolled Act 1 will change how local property is taxed and is likely to raise local tax rates even as districts collect less revenue.

Gardner said the law replaces the district’s $48,000 standard homestead deduction with a phased-in percentage deduction and adds a post-circuit-breaker homestead credit equal to 10% (up to $300). “Tax rates are going to go up within this,” Gardner said, and he warned that the result will be a complex mix of lower net assessed value and higher statutory rate figures that can be hard to explain to taxpayers.

The consultant emphasized three pillars for district finance: tax rates, levy (the revenue the district receives) and taxpayer liability. Using a $150,000-home example, he showed how the new deductions reduce the net assessed value that schools tax and how the 10% post-circuit-breaker credit reduces revenue after existing caps apply. “Someone asked me this the other day, how do we message this new legislation impact? I said, I don't know,” Gardner said, adding Model refinement would follow as Policy Analytics and district staff fold the changes into cash-flow projections.

Gardner also flagged two business-tax changes that will lower the district’s base: the de minimis threshold for business personal property rises from $80,000 to $2,000,000 beginning in 2027, and new depreciation rules may allow equipment to be depreciated to zero when placed in service. Both actions shrink the taxable base for many districts.

On debt and capital financing, Gardner said the threshold that triggers a required referendum to issue bonds was lowered — from about $0.80 to $0.70 on the debt-service rate — which will make future bond issues likelier to require voter approval. He told the board the combination of lower net assessed value and stricter bond thresholds will push more decisions to ballots and complicate capital planning.

He presented multi-year projections showing net assessed value falling through about 2030 before trending upward again, and noted that a district operating referendum that once produced rising revenue may now generate declining revenue as assessed value falls. Gardner said districts must consider running referendums earlier and possibly at higher rates to reach desired revenue levels in later years.

Why it matters: the changes rework the relationship between assessed value, rates and revenues. For Beech Grove, administration and consultants plan to fold the new rules into updated cash-flow and referendum scenarios so the board can consider timing and rate choices for future capital and operating measures.

What’s next: Policy Analytics will continue modeling the district’s cash-flow and referendum options and assist with messaging to the community; the board discussed timing for potential referendums and next steps with administration.