Education officials immediately shunned a property tax plan that Republican gubernatorial nominee Mike Braun proposed Friday.
Aiming to provide property tax relief, Braun called for Hoosiers whose homes are valued at more than $125,000 to receive a 60% homestead deduction. He also wants Indiana homeowners whose homes are valued below that amount to get a 60% supplemental deduction and a $48,000 standard deduction.
In addition, Braun would cap the increase in property tax bills for seniors, “low-income” Hoosiers and families with children under the age of 18 at 2%; all other Hoosiers’ property tax bill increases would be capped at 3%. Any proposed property taxes above the caps would go to referendum.
Schools, which receive the lion’s share of property tax revenues, could be the biggest losers under the plan, education officials said.
“We don’t see a way forward with the plan that Braun has put out where it doesn’t have a negative impact on school corporations,” Indiana Association of School Business Officials Executive Director Scott Bowling said.
It was not immediately clear what the bottom-line impact of Braun’s plan would be on schools. Josh Kelley, Braun’s senior campaign adviser, told State Affairs the campaign instead focused on the impact to Hoosier homeowners. According to a news release, the plan would result in “an immediate 21% reduction in the average homeowner tax bill.”
“We have not calculated the impact on local government revenue,” Kelley said in an email.
The Indiana State Teachers Association also criticized Braun’s plan. Keith Gambill, the association’s president, said in a statement that the state needs “a proper balance between resident- and business-friendly property taxes and adequate school funding.”
“While Mike Braun’s proposal to cap property tax increases may seem beneficial, it risks undermining the financial stability of public schools,” Gambill said in the statement. (The Indiana State Teachers Association, through its political arm, has endorsed Jennifer McCormick, the Democratic gubernatorial nominee.)
In June, Bowling told the State and Local Tax Review Task Force that school corporations are already being financially squeezed.
According to an independent analysis of school property tax funding by Policy Analytics LLC, Indiana school corporations’ operations property tax revenues since 2010 haven’t kept up with inflation, creating a decrease in purchasing power for transportation, utilities, capital projects and maintenance. Debt service revenues have also lagged inflation, Bowling told the task force while presenting the analysis’s findings.
“The fundamental problem is this: Local government is under pressure on the property tax side because they have limited revenue sources,” Rep. Ed DeLaney, D-Indianapolis, told State Affairs. “They have an incentive, obviously, to raise property taxes.”
School corporations’ primary way for raising property taxes — through referendums — could also be changed under Braun’s plan.
The plan calls for all property tax-related referendums to take place only during “high-turnout” elections — likely during general elections. A bill proposing a similar idea died during the second half of the 2024 legislative session.
School officials, whose school corporations might rely on referendum dollars, are against the proposed restriction. Many school corporations have dedicated referendum revenues to increasing teacher salaries. And if a school corporation would have to wait more than a year to renew a referendum, “that makes it very difficult to keep those promises that you made with those dollars,” Bowling said.
“Under the current system, schools are able to plan for that and hold referendums so that that funding stream doesn’t have a major interruption,” Bowling said.
However, one aspect of Braun’s plan received support from Bowling’s association.
In 2021, lawmakers required new ballot language for referendums. Many have criticized the new language, arguing that it’s confusing for voters because it expresses average property tax increases for homesteads and business property as percentages.
Braun’s plan would require the ballot language to include the total levy as a dollar amount and would include “data regarding the referendum’s impact on median home property tax bills.”
Bowling said the Indiana Association of School Business Officials supports a ballot question “that better reflects what is actually happening” when Hoosiers vote on a referendum.
Contact Jarred Meeks on X @jarredsmeeks or email him at [email protected].