Governor Mike Braun won’t sign a property tax bill after the Senate passed an amended bill, his director of legislative affairs Jason Johnson told the House Ways and Means Committee Wednesday.

“We must keep the impact to taxpayers front of mind,” Johnson said. While doing that, Johnson said the state has to ensure police, fire and schools —which are funded through property taxes – are adequately funded, though he didn’t offer a proposal for that.

After a five-hour hearing on Senate Bill 1, House Ways and Means Committee chairman Rep. Jeffrey Thompson, R-Lizton, said next Wednesday he will offer a new version of Senate Bill 1, which will strip its content and include language from House Bill 1402, which Thompson authored and didn’t advance in the first half of session.

Senate Bill 1 changes the percentage cap used to determine the maximum levy growth quotient to 0% in 2026, 1% in 2027 and 2% in 2028; and allows a county fiscal body to establish a property tax payment deferral program, where up to $10,000 can be deferred and the deferment becomes a lien on the property.

Senate Bill 1 also offers relief to those 65 years old and older and those who are disabled. It also establishes a first-time home buyer tax credit. It allows for local governments to utilize a levy referendum during even-year general elections.

The Senate amended the bill to remove Braun’s property tax relief plan he campaigned on. The bill initially stated a homestead standard deduction amount of 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 fiscal impact of the amended bill would cut $1.4 billion across the state between 2026 and 2025, including $370.9 million from schools, $67 million from libraries, $304.3 million from cities and towns, and $346.6 million from counties.

The previous fiscal note said the plan would cut $4.1 billion across the state between 2026 and 2028, including $1.9 billion from schools, $254 million from libraries, $890 million from cities and towns, and $765 million from counties.

Bill author Sen. Travis Holdman, R-Markle, presented the bill to the House Ways and Means Committee and shared a concern that as of Jan. 1 local governments have a collective debt of $54 billion.

State Rep. Mike Andrade, D-Munster, asked Holdman if he had any concerns that reducing property tax bills would reduce funding for local police and fire departments. Holdman said he was concerned, but that the loss in revenue could be backfilled through local income taxes.

With the announcement about local governments being in debt, Andrade said it was interesting state officials would support “shifting the burden” to local governments to supplement the loss in revenue.

“I’m not telling you this is a perfect bill,” Holdman said. “Hopefully we get to a place we can land that’s agreeable for everyone.”

State Rep. J.D. Prescott, R-Union City, said the bill has evolved since it was first proposed, but he was glad Braun has focused on property tax reform.

“We have some work to do before we hit a landing place. I think we can all agree on that,” Prescott said.

Jamie Bolser, the deputy commissioner and chief of staff for the Department of Local Government Finance, presented a property tax overview, which showed that assessed values for homesteads have increased by 55.35% from 2019 to 2024 while assessed values for businesses have increased by 21.77% in the same time period.

The data proves that businesses and homes are assessed differently, said DLGF general counsel Emily Crisler.

Johnson said that homeowners have taken on the “brunt” of the property tax increase costs and should receive relief. State government will work with local governments to address budget shortfalls, he said, but didn’t offer specifics.

As the legislature works on the biennial budget this session, the state government has been “tightening its belt,” Johnson said, so local governments could do the same.

“We’re inviting them to take this journey with us,” Johnson said.

After the discussion, 42 people signed up to testify on the bill, the majority of whom were local government officials opposing the bill. The various mayors, commissioners and trustees who testified shared that they are good stewards of tax payer dollars and are already running lean.

Julie Wendorf, the director of the Crown Point Community Library and president of the Indiana Library Federation, testified that she opposed Senate Bill 1 because decreasing funding for public libraries “threatens their ability to continue the extraordinary work they do in placemaking, economic development, and offering Indiana citizens the services that help them thrive.”

“Libraries have long become experts on doing more with less,” Wendorf said. “Libraries face increased costs needed to operate including larger utility bills, higher cost of maintaining current level of staffing, and purchasing the goods and services needed to maintain public facilities and services for all ages and stages of our community members.”

In 2023, over 21 million people visited Indiana public libraries and checked out over 54 million items, Wendorf said. Libraries also provide barrier-free access to early literacy programming, lifelong learning opportunities, and combat the epidemic of senior loneliness through free senior-friendly programming, she said.

“Public libraries are major contributors in building community placemaking by creating public spaces that are engaging, welcoming, and improve the quality of life for their communities. The collective return on investment that this provides to taxpayers is astounding,” Wendorf said.

Under Senate Bill 1, Indiana libraries will lose out on $32.4 million by 2028, Wendorf said. Historically, libraries have the second lowest tax rate of government entities, but the primary source of funding is property tax distribution, she said.

“This loss in revenue for many libraries would result in cutting library hours, staffing, and services that our patrons rely on. For small rural libraries, who operate as a beacon of hope as the sole provider for many public services, it may cause them to close their doors in part or entirely.” Wendorf said.

Lake County Finance Director Scott Schmal testified about his analysis that the root cause of increased property taxes for homeowners has been the discrepancy in assessed value calculation of homes versus businesses.

His analysis found that the process for the three classes of property — residential homestead, agricultural/other residential property and businesses — has been improperly calculated. The practice has resulted in a significant increase to property taxes on homesteads and minimal to no shift for businesses between 2019 and 2024.

In Lake County, the assessed value for residential homesteads has increased from approximately $21.7 billion in 2019 to approximately $32.5 billion in 2024, which represents a 49.9% increase. For agricultural/other residential property the assessed value increased from approximately $4.4 billion in 2019 to approximately $6.2 billion in 2024, which represents a 42.5% increase.

Meanwhile, the assessed value for Lake County businesses increased from approximately $13.6 billion in 2019 to approximately $15.2 billion in 2024, which represents an 11.5% increase, according to the analysis.

U.S. Steel in Gary has a land value of $5.3 million in 2024, which had remained the same since 2008, Schmal said.

“I’m an advocate for efficiency, but if you don’t change the allocation process you’re not going to get the desired result that you’re looking for,” Schmal said.

Jim Meece, a Parke County Commissioner, said county officials “have always tried to take care of ourselves.”

Parke County has its own ambulance service, uses innkeepers tax to cover infrastructure and public safety, and the county has a 2.65% income tax rate, Meece said. The county has “maxed out” its wheel tax, excise tax and local income tax, he said.

“We have used all of those tools,” Meece said. “We don’t ask for much, we just ask for the tools.”

If property taxes were to decrease in Parke County, Meece said that would result in a decrease in personnel — which would impact county services. It would also impact the county’s ability to apply for state grants, because many grants require the county to match funds, he said.

“We really are maxed out,” Meece said. “Whatever you choose to do, we’re going to need some ideas as to how we can generate that income from some place else if we lose that property tax money coming in.”

Indiana School Boards Association Executive Director Terry Spradlin said the organization opposed the bill because when considered with Senate Bill 518, which would require public schools to share referendum funds with local charter schools, it will negatively impact public schools.

Indiana has one of the lowest property tax rates in the country, Spradlin said, so the state legislature doesn’t have to rush property tax reform. Since 2009, through tax caps and circuit breaker losses, public schools have lost $3.5 billion, he said.

“We are living within our means. For 15 years we’ve been tightening our belt,” Spradlin said. “This is only going to compound the challenges that we have.”

Maggie McShane, senior vice president of government affairs for the Indiana Association of Realtors, said the organization supports Senate Bill 1 because, similar to local government officials who expressed concern about being able to afford operations, homeowners are also concerned about paying their bills and property taxes.

McShane said the organization supports reviewing the assessed value process, which would further support homeowners.

Thompson said the committee will hear Senate Bill 1 next Wednesday, but it will be stripped of its content and include language from House Bill 1402.

House Bill 1402, which Thompson authored, is a 228-page bill addressing property tax relief. The bill wasn’t heard by committee in the first half of the session, which means it can’t move forward on its own.

The bill will be up for discussion only, Thompson said.

akukulka@post-trib.com