Nearly two dozen people testified on a proposed property tax bill Tuesday with municipal and county officials testifying against the bill as written and residents and most organizations in favor of the bill.

Senate Bill 1 would accomplish a number of the property tax reforms that Gov. Mike Braun campaigned on. The bill would change the homestead standard deduction amount to 60% of the homestead’s assessed value if the value is more than $125,000 or $48,000 plus 60% of the remaining assessed value if the homestead has an assessed value of $125,000 or less.

The bill states a controlled project or a school tax levy referendum can be held only at a general election in an even-numbered year. It also requires the Department of Local Government to Finance to develop and maintain a property tax transparency portal.

The bill was authored by Sen. Travis Holdman, R-Markle, who is the chairman of the Senate Tax and Fiscal Policy Committee.

Jason Johnson, Braun’s deputy chief of staff for legislative affairs, testified before the committee Tuesday that rising property taxes have caused “frustration, anger and despair” among Indiana residents.

Throughout his campaign for governor and his 6 years in the U.S. Senate, Braun traveled to all 92 counties in Indiana annually, Johnson said. Within the last 3 years, many residents shared with Braun their frustration with the increase in property taxes, Johnson said.

“The matter cuts across party lines. It directly impacts low and middle income, working class Hoosiers,” Johnson said.

Total net property tax levies for pay year 2022 were just over $9 billion, Johnson said. The number increased by 10% for pay year 2023 and by 7% for pay year 2024, he said. The total for property tax levies by the end of 2025 will be over $11 billion, he said.

Homeowners will receive a property tax bill in April that will be, on average, another 7% higher compared to last year, Johnson said.

Senate Bill 1 caps growth year over year at 2% for the elderly and families and 3% for all other payers, Johnson said.

“Government shouldn’t grow faster than the taxpayers’ ability to pay for it,” Johnson said.

As the legislature drafts a two-year budget this session, Johnson said the legislature will “tighten its belt, make hard decisions and find efficiencies and streamline opportunities” while investing in children, infrastructure, economic development and absorb rising Medicaid costs.

“We’re simply asking our local units to follow the lead of the governor and this general assembly and looking for those efficiencies,” Johnson said.

Further discussions will be had about how to support police, fire and other municipal services, Johnson said, but taxpayers deserve property tax relief.

“The governor understands that his property tax relief will have an impact on local governments, but we must keep the impact to taxpayers over the last 4 years top of mind,” Johnson said.

Sen. Fady Qaddoura, D-Indianapolis, pointed to the Senate Bill 1 fiscal note, which shows that school corporations are projected to lose around $536 million in revenue in 2026, between $626 million to $641 million in 2027, and between $708 million and $737 million in 2028.

Braun has proposed a 2% increase for education in the next two-year budget, but that increase will go toward voucher schools, Qaddoura said. With those items in mind, Qaddoura asked about the impact Senate Bill 1 will have on public schools.

School corporations receive the biggest portion of property tax revenue, Johnson said, so “when we want to provide relief to everyday Hoosiers and keep taxpayers first, schools will be impacted in the same ratio that they receive property tax dollars.”

Qaddoura said he supports property tax relief, but he wants to “be fiscally responsible” and ensure that public schools, police, fire and other local services are still receiving the funding they need.

Sen. Lonnie Randolph, D-East Chicago, said Senate Bill 1 seems to take away from counties, cities, towns, school corporations and libraries to financially support themselves. Randolph asked if the governor’s administration has had discussions about how to help local entities make up for lost revenue.

Braun’s focus has been the taxpayer, Johnson said.

“We have to provide relief to taxpayers first, have the conversations with our partners in local government about what they may need to make sure vital services are maintained and he can evaluate on a case-by-case basis from there. But the plan is a taxpayer-first proposal,” Johnson said.

Maggie McShane, the senior vice president of government affairs with the Indiana Association of Realtors, said the organization supports Senate Bill 1 because homeowners have been negatively impacted by the recent increase in property taxes.

“Affordable housing and affordable homeownership has been a brand for us in Indiana. It’s given us a great advantage to our neighbors in the Midwest when it comes to selling our states as good place to live, and work and raise your families,” McShane said.

Janet Gernand, of Daleville, testified that she and her husband bought their farmhouse nearly 30 years ago. Her husband was a business owner and auto mechanic for almost 30 years until he passed away in October from cancer, she said.

Gernand said she’s concerned about how to pay her property taxes because money was tight and the family was unable to save a lot of money or set up a life insurance policy. In 2025, her property taxes will increase to $2,000 annually, she said.

Since her husband’s passing, Gernand said she receives $2,100 monthly through Social Security. With the rise in inflation, Gernand said it will be nearly impossible to pay $2,000 in property taxes.

“I find it unconscionable that I now have to worry about losing my home to a tax sale, which again was paid off after paying on it for 25 long years. The way things are now, homeowners never truly own their home,” Gernand said.

Terre Haute Mayor Brandon Sakbun and Carmel Mayor Sue Finkam testified along with Accelerate Indiana Municipalities Policy Director Campbell Ricci about the impacts the bill would have on their cities.

In Carmel, Finkam said the city has been looking to expand services while paying off debt. Senate Bill 1 would eliminate $2.7 billion in assessed value, erase $26.1 million from the city’s general fund and revert property tax revenue to 2019 within the first year, she said.

“While we could dramatically cut services and/or drastically raise tax rates for the non-homestead taxpayers, either of these actions would undermine decades of careful community building which would hurt Carmel, Indiana,” Finkam said.

In recent years, Sakbun said Terre Haute’s services have been decreasing as the circuit breaker credit went into effect on certain property tax bills. The city went from six engineers to two engineers, the street department downsized from 65 employees to 36 employees and from 24 snowplows to 13 snowplows, and the city hall departments have downsized as well, he said.

Terre Haute’s general fund is funded 56% from property taxes, and 82% of the general fund pays for police and fire salaries, Sakbun said.

“We fight like heck to be efficient, to modernize, to reduce costs, to keep services top notch,” Sakbun said. “We do want to support that overall vision (of property tax relief), while also maintaining public safety.”

The legislature should consider other revenue sources for cities and municipalities as property tax relief is discussed, Sakbun said.

Ricci said the fiscal impact of the bill “is understated” because its tax caps will compound over time.

Targeted relief, like for the elderly or veterans, would be one way to help those with rising property taxes while still maintaining municipal services, Ricci said.

“We want to have a robust conversation about how to do reforms and have a conversation about all the available revenue options out there. I want to make sure all the tools we have for economic development and public safety in our local units still actually function after we do some property tax reforms,” Ricci said.

Knox County Commissioner and past president of the Indiana County Commissioners Kellie Streeter said county commissioners are good stewards of the taxpayer dollar to provide services.

“We simply cannot do more with less,” Streeter said. “We encourage you all to think of local government as your partners serving the needs of constituents back home just as you all do here in Indy.”

The details came up in a discussion at Monday’s Munster Town Council meeting, with local officials critical of legislators’ approach of cutting taxes without valuing the necessary services municipalities and school districts provide.

Munster Town Councilman Chuck Gardiner, R-3, sounded the alarm with the rest of the council at its Monday night meeting, where the idea of having to implement other taxes to replace the money the town stands to lose if SB1 passes came up.

“I’m all in favor of government efficiency, but to do so without any sort of replacement (is dangerous),” Gardiner said Tuesday. “Certainly all parts of a town’s government are valuable — Police, parks, water, Public Works — but if you’re not going to be able to do them all, what do you have to offer?”

Holdman said Senate Bill 1 would be held to next week for a vote.

akukulka@chicagotribune .com