Controller: SB 1 will shrink assessed value and likely reduce municipal revenues; LIT cap and bond limits create uncertainty

Summary

Bloomington’s controller told the Common Council that Indiana Senate Bill 1 will cut assessed property values by roughly $1.5 billion and rework local income tax (LIT) formulas — including a municipal cap of 1.2% — creating near-term uncertainty for the 2026 budget and reduced LIT receipts by 2028.

Controller McClellan told the Bloomington Common Council on April 30 that Indiana’s recently passed Senate Bill 1 (SB 1) will reduce the city’s taxable assessed value by roughly $1.5 billion from a base the controller described as about $5.5 billion, and will change how local income tax (LIT) revenues are calculated and distributed.

That combination, McClellan said, means property-tax-derived revenue for Bloomington will decline in the short term and municipal LIT receipts are likely to fall starting in 2028. “What we are predicting is that in 2028… we won’t be able to raise as much LIT revenue as we normally receive,” McClellan said, adding that the municipal LIT cap under SB 1 is 1.2 percent — and that officials do not yet know the precise taxable base the state will apply to calculate it.

Why it matters:…

Controller: SB 1 will shrink assessed value and likely reduce municipal revenues; LIT cap and bond limits create uncertainty

Summary

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