INDIANAPOLIS — It’s not unusual for a rookie governor’s top legislative priority to pass by a razor-thin margin. In 1973, Gov. Doc Bowen’s property tax reforms passed the Indiana Senate by one vote. In 2006, first-term Gov. Mitch Daniels’ Major Moves initiative cleared the House by a similar margin.
Gov. Mike Braun’s “historic property tax relief” passed the Senate in a 27-22 vote early Tuesday morning, though he lost 12 Republican votes. The difference is that Bowen and Daniels didn’t have the Republican supermajorities that Braun has.
Like the abortion restrictions passed in a 2022 summer special session, the new property tax law wasn’t universally embraced by what should be its most ardent supporters. Braun signed it quickly and with no fanfare, likely because of the lack of ringing support, particularly after Lt. Gov. Micah Beckwith publicly urged his boss to veto Senate Bill 1 last weekend, in a rare policy split between a governor and sidekick.
The bill could have gone to conference, but there were fears that Braun’s 27 Senate votes were about as good as he would get, and concurrence was the safest route to stave off a huge embarrassment if GOP votes continued to peel off.
Sen. Travis Holdman, chair of the Senate Tax and Fiscal Policy Committee, appeared exhausted when he made the case for SB 1 late Monday night. In response to questions, Holdman said two-thirds of homeowners would see their bills decrease.
That’s not exactly a ringing endorsement.
Holdman ended by promising to work next year on fixes to any problems that surface — again, unintentionally suggesting a flawed new law.
While SB 1 will save homeowners an estimated $1.3 billion over three years, fiscal analysis revealed that counties, cities and towns could lose $1.5 billion, including an estimated $744 million for school corporations.
The big winners appear to be businesses, which will see personal property tax exemptions on things like machinery rise to $2 million from $80,000. The big losers would be home renters living in cities that can now tax income outside the purview of counties, as well as the overwhelming majority of Republican county council members who have been handed the greased football of passing tax increases.
Democratic Lake County Council President Christine Cid criticized what she considered Braun’s faulty logic that paints some local governments as spendthrifts and touts SB 1 as providing any tax relief.
“He claims the increases in homeowners property taxes are due to counties, cities and towns bloated budgets,” Cid said of Braun in a memo. “The reality is that local government budgets throughout the state in 2025 were only increased by 4%, the property tax growth quotient allowed by the state. The main problem with homestead bills in Lake County is the fact that homes are now paying for the portion Walmart, Meijer, BP, US Steel and other businesses used to pay because the assessments are suppressed in the 3% business class, not because local governments budgets increased by 20%, per the governor’s claim.”
Lake County will lose $198 million over three years, Cid said in the memo. “Funding for police, fire and public schools is at risk. The governor and a majority of legislators want local governments to make up the loss of increasing your local income tax. In today’s economic environment that’s an unreasonable ask — one, I do not support.”
Cid added that SB 1 provides homeowners with a maximum property tax deduction of $300. “If the county were to raise the income tax to 2% and you have two incomes in your household of more than $60,000 each would pay an additional $300,” she said. “That’s a total of $600. You will pay more in taxes, not less.”
Republican Fort Wayne City Council President Russ Jehl, who had major objections to earlier versions of the bill, told WANE-TV late amendments trended in the right direction. “Our message was always just be realistic,” Jehl said. “We want to see property tax relief, but we don’t want it to be so arbitrary that the only two solutions would be massive city cuts to services or income tax increases.”
Dave Bangert reported on his Based in Lafayette Substack site that Lafayette will face revenue cuts of $1.1 million to $1.9 million; West Lafayette, $492,100 to $1 million; Tippecanoe County, $2.4 million to $4.1 million; Tippecanoe School Corp., $2.7 million to $3.1 million; Lafayette School Corp., $424,670 to $829,580; and West Lafayette Community School Corp., $563,110 to $1.7 million.
Ball State University economist Michael J. Hicks told Fort Wayne Politics that the business personal property exemption could be “a big problem” for manufacturing centers like Elkhart, Terre Haute, Fort Wayne, Indianapolis and Kokomo. “I actually think all elements are anti-growth,” he said.
So Braun won his first big legislative victory, but it exposed his divisions with Beckwith and social conservatives. Whether the governor’s win becomes pyrrhic remains to be seen, particularly when municipal budgets are cobbled late this summer and fall, coming with a plethora of public safety and school budget cuts or higher income taxes.
When local leaders are forced to raise income taxes, be assured they will be blaming Gov. Braun and General Assembly Republicans.
Brian A. Howey is a senior writer and columnist for Howey Politics Indiana/State Affairs. Follow him on X @hwypol and Blue Sky @hwypol.bsky.social.
