Senate Bill 238 is essential to protect Tipton’s fiscal future

By KEGAN SCHMICKER
Mayor of Tipton

Tipton is a community that takes pride in delivering reliable, high-quality services while living within our means. As we have strategized city operations over the last two years, our focus has been on fiscal responsibility both in the short- and long-term.

Like many communities across the state, we have both short-term problems and long-term opportunities – both which require financial resources. We have worked diligently to address these short-term problems and I’m proud of our team that has worked so hard to realize these changes. We are near a point where we can focus more of our attention and resources on long-term opportunities, but all of that is at serious risk.

Last year’s Senate Enrolled Act 1 (SEA 1) made sweeping changes to Indiana’s tax structure. While most of the public conversation focused on property taxes, SEA 1 fundamentally reworked the Local Income Tax (LIT) system – a change that has significant and unintended consequences for communities like ours. In Tipton’s case, the new formula is projected to reduce our LIT revenue by nearly 45 percent once the system fully phases in. For a city our size, this is a financial shock from which we cannot simply “budget our way out.”

Our present forecasts estimate that Tipton will receive approximately $7.1 million in property and local income tax revenue in 2026. In 2027, the revenues in those buckets are estimated to drop to approximately $5.8 million, which is an 18 percent combined loss. This type of revenue reduction will have significant adverse impacts on city services and our ability to be strategic with future planning.

Cities don’t plan month to month. We plan years ahead, crafting strategies to address utility infrastructure, industrial park expansion, quality-of-life investments, public safety, fleet management, downtown revitalization, housing, and more. Long-term capital planning, infrastructure replacement cycles, police and fire readiness, bond obligations, and quality-of-life investments all rely on stable and predictable revenues. When that stability disappears, so does the ability to serve our residents effectively and responsibly.

Tipton has worked hard to build momentum. Our community-driven “Tipton Thrives” initiative is helping to shape a downtown renaissance. We’re reinvesting in neighborhoods, improving streets and sidewalks, expanding housing opportunities, and caring for our parks, trails, and amenities that make Tipton an attractive place for families and businesses. All of this depends on a revenue system that supports – not undermines – local progress.

If LIT revenues drop nearly in half, we will face difficult and painful choices, such as:

• Delaying or canceling infrastructure projects,
• Postponing equipment replacement for police, fire, street, parks, cemetery, and golf course,
• Holding vacancies unfilled, even when they represent essential positions across the city, and
• Scaling back or eliminating quality‑of‑life programs that our community depends on.

These choices might not be immediately visible, but they compound quickly – and they cost taxpayers more in the long run.

That is why I am urging Tipton residents, and our partners across the region, to support Senate Bill 238 as introduced. SB 238 provides the targeted, responsible fixes needed to prevent the fiscal cliff SEA 1 inadvertently created.

SB 238 includes three essential corrections:

1. Adjusting the Local Income Tax formula to prevent a municipal funding crisis.
2. Allowing municipalities with populations above 2,000 to participate in the countywide municipal services LIT rate.
3. Eliminating the requirement to re-adopt LIT rates every year.

These are not dramatic policy shifts. They are practical, well-considered adjustments developed in collaboration with municipal leaders, financial experts, and Aim’s Balanced Solutions Initiative. They preserve the intent of SEA 1 while ensuring that local communities aren’t financially destabilized by it.

Tipton wants to be a strong, reliable partner to the State of Indiana. We want to continue our work of strengthening our downtown, supporting economic development, maintaining public safety, and building a high-quality community where people want to live and invest.

But without the fixes in Senate Bill 238, our ability to deliver on those commitments is in real jeopardy. This bill is essential to protecting the progress we’ve made – and to ensuring that Tipton continues to thrive in the years ahead.

Learn more about SB 238 at iga.in.gov/legislative/2026/bills/senate/238/details.