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Michigan City officials urge fixes to SB1 and ask state to reallocate local income tax caps

Michigan City Chamber / La Porte Economic Advancement Partnership (Third House Session) · January 19, 2026

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Summary

Mayors and county officials at a Michigan City forum asked the Legislature to reallocate local income tax caps and lower municipal-adoption thresholds to prevent a projected $4 million municipal revenue loss tied to Senate Bill 1.

Local leaders pressed state legislators to address the unintended local-budget impacts of last year’s Senate Bill 1 and related proposals under consideration this session.

Mayor Angie told the panel that Michigan City could lose an estimated $4 million in annual revenue under the current structure and asked for a reallocation of the local income tax caps — reducing the county share and increasing the municipal share — and for a lower population threshold to adopt the municipal rate from 3,500 to 2,000. "In 2028, Michigan City is going to lose $4,000,000," the mayor said, urging changes so municipalities can remain fiscally stable.

Panelists also discussed Senate Bill 8, which would move some library budget authority to county councils. Local officials said SB8 is still in committee but argued it’s intended to address fiscal and reporting problems in some counties; LaPorte County commissioners said their local libraries already maintain strong fiscal controls.

County Commission President Steve Holofield and others described the uncertainty SB1 created for capital projects and urged the Legislature to provide fixes this year. Rep. Jim Pressell and others acknowledged SB1 would require a dynamic, iterative process to address emerging problems.

Next steps: legislators said they expect to continue addressing SB1 consequences in committee this short session and invited local officials to provide specifics and fiscal analyses to lawmakers.