As the Indiana General Assembly prepares to advance a property tax reform bill through the House starting this week, Lake County Finance Director Scott Schmal said legislators need to take a closer look at the root cause of increased property taxes for homeowners: the discrepancy in assessed value calculations of homes versus businesses.
The assessment process for the three classes of property — residential homestead, agricultural/other residential property, and businesses — has been disproportionally calculated, Schmal said, resulting in a significant increase to property taxes on homesteads while businesses have experienced minimal to no shift between 2019 and 2024.
“The problem with the property taxes is not because of bloated budgets, it’s because the assessed value is the issue,” Schmal said. “While the value of a commercial property like a big box store or steel mill has remained relatively the same over the past five years, the value on individual homes has skyrocketed.”
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, Schmal said.
Schmal analyzed other counties throughout the state and found they had similar assessed value disparities.
In Marion County, residential homesteads’ assessed value increased from approximately $31.6 billion in 2019 to approximately $49.5 billion in 2024, which represents a 56.9% increase. For agricultural/other residential property the assessed value increased from approximately $12.4 billion in 2019 to approximately $19.9 billion in 2024, a 60.3% increase.
Meanwhile, the assessed value for Marion County businesses increased from approximately $25.9 billion in 2019 to $29.8 billion in 2024, which represents a 15.2% increase.
In Allen County, Schmal found that residential homesteads’ assessed value increased from approximately $15.2 billion in 2019 to approximately $25.8 billion in 2024, which represents a 69.5% increase. The agricultural/other residential property assessed value increased from approximately $3.4 billion in 2019 to $4.8 billion in 2024, which represents a 41.1% increase.
Meanwhile, the assessed value for Allen County businesses increased from approximately $8.5 billion in 2019 to $10.9 billion in 2024, which represents a 28.4% increase.
In Hamilton County, the assessed value for residential homesteads increased from approximately $25.9 billion in 2019 to approximately $43.7 billion in 2024, which represents a 68.3% increase. For agricultural/other residential property, the assessed value increased from approximately $4.4 billion in 2019 to approximately $7 billion in 2024, a 59.9% increase.
Meanwhile, the assessed value for Hamilton County businesses increased from approximately $8.7 billion in 2019 to $10.6 billion in 2024, which represents a 21.8% increase.
To fix the system, Schmal said the state legislature should begin trending the business assessed value closer to that of the other two property groups to shift the burden off of property taxpayers in those groups.
“Any reform would have to be done carefully. This is such a complex beast across the state, the dynamics are so different. You have 92 counties that have different layouts,” Schmal said.
For Lake County, the state legislature could pass a bill to remove businesses from receiving property tax replacement credit, Schmal said. Lake County’s income tax is 1.5%, and 1% of that goes to the county and the 0.5% is dedicated to public safety, he said.
The 1% of the county’s income tax is applied to every tax bill as a credit, Schmal said. In Lake County, the legislature could decide to remove businesses from that tax credit because they don’t pay into it but receive the benefits, he said.
“That would be an immediate shift and you’re not disrupting the whole system. That’s something they could do this session,” Schmal said.
Senate Bill 1, authored by Sen. Travis Holdman, R-Markle, is a massive property tax relief plan that is the Republican supermajority’s main priority for this legislative session. The bill, though amended, still takes $1 billion away from local governments.
SB1 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 bill was amended to remove parts of Gov. Mike Braun’s property tax relief plan that 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.
Indiana has one of the lowest property tax rates in the country, Schmal said. As state officials talk about decreasing costs for Hoosiers, Schmal said the state budget won’t be impacted by decreasing property taxes.
“The state lives on sales tax and income tax. The state has no aggressive plan to reduce sales tax or income tax,” Schmal said. “They’re not cutting their own revenue. Put your money where your mouth is. Take the sales tax down and cut that in half, take the state income tax down and cut that in half, and lead by example.”
Schmal said when he read the initial version of SB1, he thought it was an aggressive approach to cutting down property taxes.
“Indiana governments are not as bloated as federal and other nearby state governments. Moreso, I was concerned about the schools when I looked at it,” Schmal said.
Looking over Lake Central School Corporations’s 2025 budget order, Schmal said of the district’s approximately $51.9 million levy, or property tax collection, the state can only cut from approximately $18.8 million, which is in the operations line item. The remaining $33.1 million covers debt and referendum, which voters approved, and have to be paid, Schmal said.
The initial Senate Bill 1 proposed cutting $7 million from Lake Central, Schmal said, which would mean a 39% reduction in the operations line item.
Lake Central receives approximately $80 million in its education line item that comes from the state, Schmal said. It’s unclear, he said, if state officials believe the $80 million from the state should be enough to cover district costs.
But, cutting the operations piece by 39% will force the district to make changes to stay within budget, Schmal said.
“End of the day, if you take a section of your funding and cut it by 40%, that’s a problem,” Schmal said. “Even if you go through here with a machete and start cutting things, I don’t think (the state government) is going to bear the fruit that is being advertised at the federal level. That’s why every school should have complete anxiety and heartburn about what was proposed.”
Lake Central School Corporation Superintendent Larry Veracco said the district is monitoring Senate Bill 1 because it will impact the district heavily if approved. Lake Central School Corporation would be the most impacted Lake County school district by SBB1, he said.
The proposed change in the percentage cap used to determine the maximum levy growth quotient to 0% in 2026, 1% in 2027 and 2% in 2028 would mean that school districts wouldn’t be able to keep up with inflation, Veracco said.
The district was recently informed of a 17% increase to its NIPSCO bill, spread over a two-year period, and school buses have increased in price by 20% over the last three years, Veracco said. The cost of supplies, from toilet paper to cleaning supplies, has increased as well, he said.
“That’s pretty hard to swallow given that inflation is at least 3%,” Veracco said. “When you start sockin’ us in the pocketbook, that’s going to impact the services that we provide to students. It’s easy to say, ‘do more with less,’ but the truth is if you run lean, if you run relatively at the margin, when you get less you’re going to do less.”
Local districts that have failed to pass property tax referendums have cut extracurricular activities, bus service and even in-person school days.
The state funds public schools and charter schools, Veracco said, but charter schools pick and choose the students they accept while public schools take all students. It’s important that the state properly fund public schools, which serve a higher percentage of students that require additional resources for their education, he said.
If Senate Bill 1 went into effect as proposed, Veracco said the district would have to look at reducing the number of school resource officers, literacy coaches, math support staff, instructional aides, and others.
Veracco said he’s glad that Indiana is a fiscally conservative state and the state already has one of the lowest property taxes in the Midwest, but the property tax reform proposed in Senate Bill 1 will lead to a “self-inflicted budget crisis,” Veracco said.