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3/15 Hendricks County Chambers Weekly Statehouse Update

  • General Statehouse Update
  • Hendricks County Chambers Update
  • Action Items
  • Important Dates
  • Closing

General Statehouse Update

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The big topic of the year

Indiana lawmakers continue the debate over property tax relief designed to mitigate increased homeowner tax bills. Governor Mike Braun has prioritized this issue, urging effective measures for homeowners but lawmakers have their own ideas. House Republicans introduced a new proposal to the discussion this week, with HB 1402 entering the chat during a four-hour hearing in House Ways and Means Committee earlier this week as a potential alternative to SB 1. It is unclear what the committee will do with either bill, and unclear to what extent Senate Republicans will agree to incorporate elements of Chairman Thompson’s proposal. Only time will tell.

 

The other big topic(s) of the week

The Senate Appropriations Committee began hearings on HB 1001, the state's biennial budget plan. This week’s presentations restarted the process on the Senate side, with leaders of higher education institutions and state agencies defending their appropriations requests and discussing funding needs. The Family and Social Services Administration presentation continued for more than three hours, well into the evening Thursday, with Secretary Mitch Roob’s hat inspiring further chatter about the state’s Medicaid program.

This week also brought the first House hearing of legislation addressing significant energy-related issues, notably the proposal to support the Governor’s priority of introducing small modular nuclear reactions to help address the state's growing role as a hub for large data centers. Major technology companies such as Amazon, Microsoft, and Google have announced plans to invest approximately $15 billion in building data centers within Indiana. These facilities are expected to substantially increase the state's energy needs.

In response, legislators have been shepherding SB 424 and HB 1007, which require these tech companies to cover 80% of the costs associated with constructing new small modular reactors and enhancing transmission infrastructure needed to support the data centers (SB 422). The House Utilities Committee this week passed SB 424, but the Senate has not yet heard HB 1007. While consumer advocacy groups have expressed concerns that the bill will lead to higher costs and lack adequate regulatory oversight, efforts continue to allay demand needs.

 

The process

The Indiana General Assembly has only four more weeks of committee hearings to entertain bills that are still moving. While the committee report deadline is not til mid April, the countdown is on as time will be eaten up by larger issues. As we told you last week, there’s more information yet to come on revenue projections that will help fiscal leaders finalize budget proposals. We will keep you updated as the conversation continues.

Hendricks County Chambers Update

The second week of the second half of session has started to see committee hearings pick up speed. We are not sure how many priority bills will end up (property taxes, road funding, health care cost reform, just to name a few) but efforts are underway to make changes in the second house and get closer to the finish line. Next week should bring hearings on more Senate and House priority bills and TPA will be in the room making sure your best interests are at the forefront of the Indiana General Assembly.

 

Bill Updates:

Property Tax

SB 1 - The House Ways and Means Committee met again this week to discuss property tax reform, after a marathon 9 hour hearing the week before on the same topic. This time, Chairman Thompson presented HB 1402 to the committee for discussion - which was a bill the Chairman introduced in January to tackle property tax reform, but he never moved the bill. It was a much smaller crowd for testimony - only 11 people signed up to testify to share their thoughts on bill language. No votes were taken in committee, and Chairman Thompson said that in the next few weeks more ideas will be shared for input prior to creating a SB1 Chairmans amendment to present to the committee. He also asked committee members to consider their own amendments to the bill as well.

The main focus of this language is for a long-term, sustainable fix. Chairman Thompson described why the taxpayers do not see relief if their tax rate is lowered. He shared that we are currently living in Indiana with a rate-based constitution and a levy-based system that locals use. He explained that when you mix these types of systems the taxpayer will never pay more or less but the local units of government will just try to pull from other units to gain more tax money for their individual units.

This bill changes the tax deductions for the home owners over 65 and veterans that are listed in the SB1 language and moves them to tax credits. If they are deductions, most Hoosiers that qualify will never actually see a deduction in what they pay due to the mixed system but if they are credits, they definitely will all see a tax credit.

Here are the details of HB 1402 as discussed:

  • Exemption for New Business Personal Property: This bill phases in a total exemption for business personal property that is placed in service after January 1, 2025. It specifies that the exemption does not apply to business personal property that is placed in service on or before January 1, 2025.
  • Personal Property DeMinimis Exemption: This bill increases the acquisition cost threshold for the business personal property tax exemption from $80,000 to $200,000 over six years.
  • Personal Property Floor Adjustment: This bill provides that the 30% minimum valuation limitation does not apply to business personal property placed in service after January 1, 2025. It also phases down the minimum valuation percentage from 30% to zero for business personal property placed in service on or before January 1, 2025.
  • Homestead Deduction Changes: This bill phases down the homestead standard deduction over five years to zero beginning for taxes due and payable in 2031. It also phases in an increase in the supplemental homestead deduction over five years to 2/3 of the assessed value (AV) of the homestead.
  • Deduction for 2% CB Cap Properties: This bill provides an AV deduction for all property that is subject to the 2% circuit breaker credit for excessive property taxes for assessment dates beginning in 2025. It provides that the amount of the AV deduction is increased over a five-year period from a 7% AV deduction for taxes due and payable in 2026 to a 1/3 AV deduction for taxes due and payable in 2031, and each taxable year thereafter.
  • Certain Property Tax Deductions Expiration: This bill expires certain property tax deductions allowed in current law and instead allows a credit against local property taxes in certain instances.
  • New LIT Structure: This bill increases, beginning in 2027, the maximum local income tax (LIT) expenditure rate for all counties to 2.9%. It authorizes a city or town to impose municipal LIT rate beginning in 2027 not to exceed 1.2%. It provides four rate categories within the county's total expenditure rate that a county may adopt:

(1) up to a 1.2% rate for county general purpose revenue;

(2) up to a 0.4% rate for fire protection and emergency medical services;

(3) up to a 0.2% rate for nonmunicipal civil taxing unit general purpose revenue; and

(4) up to 1.2% for certain cities and towns that are not eligible to adopt a municipal LIT rate.

This bill defines "nonmunicipal civil taxing units".

  • Current LIT Structure Expiration: This bill eliminates the following provisions under the current LIT structure:
    • Eliminates the imposition of the LIT on individuals who maintain a principal place of business or employment in a county with a LIT but do not reside in the county.
    • Eliminates provisions that provide for a distribution of LIT expenditure rate revenue to schools and civil taxing units in counties that imposed a rate under the prior county adjusted gross income tax (CAGIT).
    • Expires the authority to impose a property tax relief rate under the LIT and repeals the levy freeze rate.
    • Provides that an ordinance adopted to impose a LIT property tax relief rate shall expire December 31, 2026.
    • Provides that, in order to continue to impose an expenditure tax rate after 2026, each county must adopt a new ordinance in 2026 (on or before October 1, 2026) to impose the rate. This bill provides that, for counties that fail to adopt an ordinance to renew an existing expenditure tax rate in 2026, the expenditure tax rate for the county in 2027 shall be the minimum tax rate necessary for existing debt service. It specifies that this does not prevent the county from renewing, imposing, or modifying an expenditure tax rate in subsequent years.
    • Eliminates local income tax councils beginning July 1, 2026, and instead provides that the county fiscal body is the adopting body in all counties for purposes of the county LIT, and the city or town fiscal body is the adopting body in the case of a municipal LIT.
    • Repeals a provision that requires the State Budget Agency to adjust the certified distribution of a county for the succeeding year following a tax rate change.
  • LIT Trust Account Special Distributions: This bill requires the State Budget Agency to determine the difference between the balance in a county's local income tax trust account as of December 31, 2025, minus the county's certified distribution amount for 2027, and beginning in 2027, make five consecutive special distributions to counties over a five-year period equal to 20% of that amount each year.
  • LIT Holding Accounts: This bill establishes the local income tax holding account within the state General Fund for purposes of local income tax distributions. It provides that the State Budget Agency shall administer the account and requires the State Budget Agency to maintain an accounting for each county imposing a local income tax based on annual returns filed by or for county taxpayers (same as current law). It also requires undistributed amounts so accounted to be held for purposes of the local income tax holding account beginning after December 31, 2026. (Under current law, undistributed amounts are required to be held in reserve separate from the state General Fund.)

This bill requires the State Budget Agency to present each December to the State Budget Committee a report of the following:

(1) An estimate of the monthly certified distribution amounts for the immediately succeeding calendar year.

(2) A description of the method used to determine the monthly estimates.

(3) The balance in the local income tax holding account, including an accounting of the undistributed amounts held for purposes of the account.

Beginning in 2027, the State Budget Agency will be required to make monthly transfers to the local income tax holding account of the amount determined for the month in its report to the State Budget Committee.

Childcare

SB 463 - This bill aims to improve childcare quality and access in Indiana by setting new provider standards and expanding affordable options, especially in underserved areas.

  • As a reminder, the Senate Appropriations Committee removed the tax credit and local matching grant provisions, but Sen. Charbonneau intends to restore them in the budget, with coalitions pushing for their reinsertion in the House. A second-reading amendment clarified that licensed childcare centers and homes can voluntarily adopt stricter staff-to-child ratios.
  • Backed by Chambers of Commerce, the bill passed the Senate 44-5 and now moves to the House, sponsored by Rep. Devon.
  • The bill has been scheduled for a hearing on Wednesday, March 19th at 8:30AM in the House Family, Children and Human Affairs committee.

HB 1253 - Rep. Heine’s legislation, which includes the multi-site licensure language, moved out of the House with a unanimous 91-0 vote and Senators Brown and Charbonneau are the Senate sponsors. This week, during the hearing, multiple stakeholders voiced their support for the bill, emphasizing its potential to address childcare availability, reduce administrative burdens, and improve workforce participation. Testimony from representatives of organizations such as the FSSA, United Way of Central Indiana, YMCA of Indiana, and many Chambers of Commerce reinforced the bill's importance in alleviating childcare shortages and supporting economic development.

  • The committee voted on the bill, unanimously (8-0). It has now been recommitted to Senate Appropriations.

 

Upcoming Committee Hearings to Highlight:

  • Tuesday, March 18th
    • Senate Homeland Security and Transportation Committee will meet at 9:00AM to hear HB 1461 Road Funding (Pressel, J).
  • Wednesday, March 19th
    • House Family, Children and Human Affairs Committee will meet at 8:30AM to hear SB 463 Child Care Matters (Charbonneau, E).

 

Here is a link to your live bill tracker.

Action Items

  • Please review your bill track list and let us know if there are any bills you would like us to engage more on in the second half.

Important Dates:

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Thursday, April 10th - House and Senate Committee Report Deadline

Monday, April 14th - House and Senate Second Reading Deadline

Tuesday, April 15th - House and Senate Third Reading Deadline

April 16th - April 24th - Conference Committees

Thursday, April 24th - Anticipated Sine Die

Tuesday, April 29th - Sine Die