Submitted by City of Carmel
On Thursday, Aug. 28, Carmel leaders gave a virtual presentation to address the projected financial impact of a new state law, Senate Enrolled Act (SEA) 1, which will significantly change local government funding starting in 2026.
Mayor Sue Finkam, Carmel Clay Schools Superintendent Dr. Thomas Oestreich, and Carmel Clay Public Library Director Bob Swanay detailed how the new legislation will affect their respective budgets. Portions of their remarks were in response to questions submitted by residents in advance of the session.
Mayor Finkam explained the financial challenge facing the city: rising costs and potential revenue losses from SEA 1. She noted that while the law provides new options for cities to implement a Local Income Tax (LIT) starting in 2028, it simultaneously eliminates the ability for fast-growing communities like Carmel to appeal for additional property tax levies. This change is projected to have a significant impact on the city’s property tax revenue, a primary source of funding for essential services.
According to Dr. Oestreich, the legislation will most directly affect the school district’s Operations Fund and Debt Services Fund. He stressed that while the new law provides tax relief to homeowners by lowering the tax rate, it also significantly decreases the school district’s Net Assessed Value (NAV), the total value of all taxable property. This reduction in NAV is expected to lead to a significant drop in state funding, which could require an increase in the local tax rate to maintain current programs and services.
Library Director Bob Swanay noted that the library is particularly vulnerable to the new law’s effects, as property taxes make up 43 percent of its revenue. The new tax credits and deductions introduced by SEA 1 are projected to reduce this funding, with an estimated loss of at least $330,000 in 2026 alone.
A recording of the presentation is available on the city’s YouTube Channel.
The public can also submit additional questions at this link through Friday, Sept. 5.