Republican gubernatorial candidate Mike Braun released a property tax plan Friday that his campaign said would result in a 21% average cut in homeowners’ tax bills.

Braun said in a radio interview that his plan would return homestead tax bills to 2021 levels to wipe out increases that have largely come with jumps in property values over the past few years.

But Braun’s proposal immediately raised alarms among county, city and school leaders about the potential loss of hundreds of millions of dollars to support their functions.

The Braun campaign said it had not calculated how much his proposal would reduce property tax revenue.

Braun did not mention replacing that money for schools and local governments, which receive more than 90% of property tax revenue.

He said in an interview on WIBC-FM’s “Kendall and Casey” program that residential property taxes “got completely out of hand” in recent years.

“The No. 1 thing here is to take it back to 2021 levels,” Braun said. “No one was thinking [such a rollback] was going to happen. But that was a windfall, and if we don’t we’re just baselining Biden inflation into revenue generation.”

Impact on taxpayers, local government

Property tax bills for owner-occupied homes increased by statewide averages of 9% in 2021, 9.2% in 2022 and 16.7% in 2023, according to a Legislative Services Agency report. 

“Senator Braun hopes that this will start a conversation around delivering effective government services without allowing budget creep and overburdening homeowners,” Josh Kelley, Braun’s senior campaign adviser, said in an email to State Affairs. “He looks forward to having these conversations with the General Assembly and with local government and school stakeholders.”

Homeowner tax payments totaled about $2.9 billion in 2021 and $3.6 billion in 2023, for a potential reduction of some $700 million, according to the Legislative Services Agency report.

Such a revenue drop would be a “shock” to public schools and local governments, said Democratic Rep. Ed DeLaney, a member of the House Ways and Means Committee.

“The proposal that Mike Braun is suggesting puts every police department, fire department, city and county at risk of having a shortfall,” DeLaney told State Affairs.

DeLaney said Braun’s plan “means that he believes that the Republican supermajority has failed to protect taxpayers, at least for these last few years, and so he’s going to ask them to correct that mistake.”

Details from Braun’s proposal

Legislators have wrestled with various proposals in the past few years to stem property tax increases, but nothing has advanced that would have as far-reaching impact as Braun’s proposal.

Key parts of his plan call for:

• Increasing homestead deductions by allowing properties with assessed value below $125,000 to be eligible for the current standard deduction of $48,000, plus 60% supplemental deduction. That 60% deduction would apply to owner-occupied homes with assessed value over $125,000. The Braun campaign said that would result in a 21% reduction in the average homeowner tax bill and 39% reduction in the average tax bill for homes worth $80,000. 
• Imposing a cap on tax bill increases at 2% a year for senior citizens, low-income residents and families with children under the age of 18. All other homeowners would see a 3% annual cap. Braun proposed that any increase exceeding the caps first be approved by voters through a local ballot referendum.
• Requiring that all property tax-related referendums take place during November general elections, eliminating the current option of those votes being held during primary or special elections. A similar proposal failed in the 2024 legislative session as opponents argued it went against the concept of local control and would give most school districts the opportunity to propose a referendum only every two years.
• Requiring a referendum’s ballot language to include the total amount to be raised by the tax increase and data regarding the referendum’s impact on the median home’s property tax bill.

Braun repeatedly said during the radio interview that his proposal would reduce the tax bills for homeowners to the amount they paid in 2021. 

“This is going to take your tax bills back to that level,” Braun said.

However, the plan outline released by Braun’s campaign included no such statement.

Kelley said Braun’s aim was to “reset tax bills to 2021 levels.”

“As he studied the issue, it became clear that any attempt to roll back assessed value would face legal challenges and possibly cause market disruptions, but increasing the amount of homestead deduction was a clear and simple way to achieve the goal of resetting the average tax bill to 2021 levels,” Kelley said.

Democratic gubernatorial candidate Jennifer McCormick responded to Braun’s plan with a statement pointing out his vote as an Indiana House member in 2015 supporting a bill that would have allowed counties to impose property tax replacement fees for parcels with tax deductions or credits reducing liability below $200. That carried an estimated impact of up to $38.6 million a year in additional taxes.

“Hoosiers are sick and tired of politicians who will say anything to get elected,” McCormick said in a statement. “Mike Braun voted for higher Hoosier property taxes when he had the chance and is now only talking about a tax cut because he’s another politician Hoosiers are sick of.”

Prospects uncertain for Braun’s plan

Braun said the property tax issue would be “priority one” if he is elected governor and he had already discussed his plans with legislators, whom he did not identify.

House and Senate Republican leaders did not answer questions Friday from State Affairs about Braun’s proposal nor did any issue statements about the plan.

The Legislature’s State and Local Tax Review Task Force has topics assigned to it this year that include possibly capping the amount of operating referendum tax that school districts could levy, studying school districts’ use of debt and making more local government projects subject to petition remonstrances.

Task force Chairman Jeff Thompson, R-Lizton, told State Affairs in May that local government officials are in control of property taxes.

“Yes, we’re talking about some reforms and what things we can do to put guardrails [around property taxes],” said Thompson, chairman of the House Ways and Means Committee. “But the ultimate responsibility lies with local government.”

Tom Davies is a Statehouse reporter for State Affairs Pro Indiana. Reach him at [email protected] or on X at @TomDaviesIND.