Mayors warn of major cuts as property tax hearings begin

By GARRETT BERGQUIST
WISH-TV | wishtv.com

Two Indiana mayors from opposing parties told lawmakers a more targeted approach to property tax reform could head off significant cuts, especially to public safety.

Six days after Gov. Mike Braun pushed for property tax reform in his State of the State address, lawmakers held their first hearing on his plan on Tuesday.

In its current form, the measure would allow homeowners to either file for a 60 percent homestead deduction or have their tax bill reset to 2021 levels. It also would require property tax referendum votes to occur during general elections in even-numbered years, when voter turnout is higher for presidential and midterm elections.

Property tax rates skyrocketed following the pandemic. Braun’s team shared data with the Senate Tax and Fiscal Policy Committee which showed that property taxes spiked by 5.6 percent for taxes paid in 2021, then another 49 percent for 2022 and 10.2 percent in 2023. Taxes paid for the years 2024 and 2025 will net homeowners back-to-back increases of 7.1 percent each year.

Those numbers carry real-world consequences. While lawmakers took testimony on the plan upstairs, Braun hosted two homeowners for a fireside chat in his office. Indianapolis resident Jennie Reith said her property taxes went up by $1,200 over the past four years, while Franklin resident Mark Gross said he pays at least $1,000 a year more now than in 2021.

“Literally one day a month, my paycheck goes straight to paying taxes,” Gross said.

Braun’s plan carries a stiff price tag. The state’s budget writers estimate local governments could lose a combined total of more than $1 billion next year and in each year following. State budget writers released estimates for every single township, city and county in the state, along with school corporations and special taxing districts. IMPD could lose $4.2 million next year if the bill passes in its current form. Greenfield-Central Schools would lose $2.9 million. The Monroe County Public Library would lose about $900,000. All of those figures go up in the years that follow.

Carmel Mayor Sue Finkam, a Republican, and Terre Haute Mayor Brandon Sakbun, a Democrat, told lawmakers their cities would have to cut essential services if the plan passes in its current form. Sakbun said his city would have to reduce its total workforce by 10 to 15 percent. He said 82 percent of his city’s property tax revenue goes to public safety.

“In the city of Terre Haute, we are already reducing our total amount of personnel,” he said. “What’s abundantly important here is, when you have the conversation around taxation, it’s important to also say, well, folks, you get what you pay for.”

Finkam said Carmel already has one of the lowest tax rates in the state. She said her city would lose $26 million next year, more than one-fourth of Carmel’s general fund revenue. As an example of the city’s uses for property tax revenue, she said Carmel already has two fewer fire stations than it needs to provide adequate fire protection and the city council just voted Monday night to add another ambulance on the city’s west side.

“It’s how do we do that and still maintain the services that people deserve and expect and frankly have been invested in for years,” she said.

During his testimony, Sakbun noted 40 percent of the people who live in Terre Haute are renters rather than homeowners and said the property tax conversation should include them as well. Braun said while he’s open to that, homeowners have borne the brunt of the increase in property taxes over the past four years and so are in the greatest need of relief.

Braun said he’s open to conversations with local government leaders like Finkam and Sakbun on how to implement his plan in a way that minimizes impact to services. He said local governments are nearly always run more efficiently than state government, but that doesn’t mean there’s no room for cities and counties to find additional savings.

“This is an issue about listening to the taxpayers – some of them now feel that they may not be able to keep their home – and listening to the folks that we all want to be healthy and survive,” Braun said, adding he wants to make sure local governments weren’t simply taking advantage of a tax revenue windfall.

There was no committee vote Tuesday. Bill author Sen. Travis Holdman, R-Markle, said he plans to file an amendment based on feedback from Tuesday’s hearing, with a possible committee vote coming next week.

This story was originally published by WISH-TV at wishtv.com/news/politics/mayors-warn-property-tax-reform.