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Indiana Senate Bill SB0391

Indiana 2025 Regular Session

Indiana Senate Bill SB0391 Compare Versions

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22 Introduced Version
33 SENATE BILL No. 391
44 _____
55 DIGEST OF INTRODUCED BILL
66 Citations Affected: IC 6-1.1-17.
77 Synopsis: Political subdivision budgets. Provides that,
88 notwithstanding any growth in a political subdivision's assessed value
99 in the previous year, a political subdivision's ad valorem property tax
1010 levy shall not exceed the ad valorem property tax levy for its last
1111 preceding annual budget, unless the fiscal body of the political
1212 subdivision adopts an affirmative tax rate and tax levy increase by
1313 ordinance following a separate public hearing. Requires a resulting
1414 decrease in tax rates for each political subdivision in which there was
1515 an increase in the political subdivision's assessed value in the previous
1616 year, subject to any affirmative tax rate and tax levy increase adopted
1717 by the fiscal body of the political subdivision.
1818 Effective: January 1, 2026.
1919 Buck, Young M
2020 January 13, 2025, read first time and referred to Committee on Tax and Fiscal Policy.
2121 2025 IN 391—LS 7052/DI 120 Introduced
2222 First Regular Session of the 124th General Assembly (2025)
2323 PRINTING CODE. Amendments: Whenever an existing statute (or a section of the Indiana
2424 Constitution) is being amended, the text of the existing provision will appear in this style type,
2525 additions will appear in this style type, and deletions will appear in this style type.
2626 Additions: Whenever a new statutory provision is being enacted (or a new constitutional
2727 provision adopted), the text of the new provision will appear in this style type. Also, the
2828 word NEW will appear in that style type in the introductory clause of each SECTION that adds
2929 a new provision to the Indiana Code or the Indiana Constitution.
3030 Conflict reconciliation: Text in a statute in this style type or this style type reconciles conflicts
3131 between statutes enacted by the 2024 Regular Session of the General Assembly.
3232 SENATE BILL No. 391
3333 A BILL FOR AN ACT to amend the Indiana Code concerning state
3434 and local administration.
3535 Be it enacted by the General Assembly of the State of Indiana:
3636 1 SECTION 1. IC 6-1.1-17-3, AS AMENDED BY P.L.220-2021,
3737 2 SECTION 2, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
3838 3 JANUARY 1, 2026]: Sec. 3. (a) The proper officers of a political
3939 4 subdivision shall formulate its estimated budget and its proposed tax
4040 5 rate and tax levy on the form prescribed by the department of local
4141 6 government finance and approved by the state board of accounts. In
4242 7 formulating a political subdivision's estimated budget under this
4343 8 section, the proper officers of the political subdivision must consider
4444 9 the net property tax revenue that will be collected by the political
4545 10 subdivision during the ensuing year, after taking into account the
4646 11 estimate by the department of local government finance under
4747 12 IC 6-1.1-20.6-11.1 of the amount by which the political subdivision's
4848 13 distribution of property taxes will be reduced by credits under
4949 14 IC 6-1.1-20.6-9.5 in the ensuing year, after taking into account the
5050 15 estimate by the department of local government finance under section
5151 16 0.7 of this chapter of the maximum amount of net property tax revenue
5252 17 and miscellaneous revenue that the political subdivision will receive in
5353 2025 IN 391—LS 7052/DI 120 2
5454 1 the ensuing year, and after taking into account all payments for debt
5555 2 service obligations that are to be made by the political subdivision
5656 3 during the ensuing year. The political subdivision or appropriate fiscal
5757 4 body, if the political subdivision is subject to section 20 of this chapter,
5858 5 shall submit the following information to the department's computer
5959 6 gateway:
6060 7 (1) The estimated budget.
6161 8 (2) The estimated maximum permissible levy, as provided by the
6262 9 department under IC 6-1.1-18.5-24.
6363 10 (3) The current and proposed tax levies of each fund.
6464 11 (4) The percentage change between the current and proposed tax
6565 12 levies of each fund.
6666 13 (5) The amount by which the political subdivision's distribution
6767 14 of property taxes may be reduced by credits granted under
6868 15 IC 6-1.1-20.6, as estimated by the department of local government
6969 16 finance under IC 6-1.1-20.6-11.1.
7070 17 (6) The amounts of excessive levy appeals to be requested.
7171 18 (7) The time and place at which the political subdivision or
7272 19 appropriate fiscal body will hold a public hearing on the items
7373 20 described in subdivisions (1) through (6).
7474 21 (8) The amount of any increase in the tax rate and tax levies
7575 22 of the political subdivision in an ordinance adopted under
7676 23 section 23 of this chapter.
7777 24 (8) (9) The time and place at which the political subdivision or
7878 25 appropriate fiscal body will meet to fix the budget, tax rate, and
7979 26 levy under section 5 of this chapter.
8080 27 (9) (10) The date, time, and place of the final adoption of the
8181 28 budget, tax rate, and levy under section 5 of this chapter.
8282 29 Except as provided in section 5.6(b) of this chapter, the political
8383 30 subdivision or appropriate fiscal body shall submit this information to
8484 31 the department's computer gateway at least ten (10) days before the
8585 32 public hearing required by this subsection in the manner prescribed by
8686 33 the department. If the date, time, or place of the final adoption
8787 34 subsequently changes, the political subdivision shall update the
8888 35 information submitted to the department's computer gateway. The
8989 36 department shall make this information available to taxpayers, at least
9090 37 ten (10) days before the public hearing, through its computer gateway
9191 38 and provide a telephone number through which taxpayers may request
9292 39 mailed copies of a political subdivision's information under this
9393 40 subsection. The department's computer gateway must allow a taxpayer
9494 41 to search for the information under this subsection by the taxpayer's
9595 42 address. The department shall review only the submission to the
9696 2025 IN 391—LS 7052/DI 120 3
9797 1 department's computer gateway for compliance with this section.
9898 2 (b) The board of directors of a solid waste management district
9999 3 established under IC 13-21 or IC 13-9.5-2 (before its repeal) may
100100 4 conduct the public hearing required under subsection (a):
101101 5 (1) in any county of the solid waste management district; and
102102 6 (2) in accordance with the annual notice of meetings published
103103 7 under IC 13-21-5-2.
104104 8 (c) The trustee of each township in the county shall estimate the
105105 9 amount necessary to meet the cost of township assistance in the
106106 10 township for the ensuing calendar year. The township board shall,
107107 11 subject to section 23 of this chapter, adopt with the township budget
108108 12 a tax rate sufficient to meet the estimated cost of township assistance.
109109 13 The taxes collected as a result of the tax rate adopted under this
110110 14 subsection are credited to the township assistance fund.
111111 15 (d) A political subdivision for which any of the information under
112112 16 subsection (a) is not submitted to the department's computer gateway
113113 17 in the manner prescribed by the department shall have its most recent
114114 18 annual appropriations and annual tax levy continued for the ensuing
115115 19 budget year.
116116 20 (e) If a political subdivision or appropriate fiscal body timely
117117 21 submits the information under subsection (a) but subsequently
118118 22 discovers the information contains an error, the political subdivision or
119119 23 appropriate fiscal body may submit amended information to the
120120 24 department's computer gateway. However, submission of an
121121 25 amendment to information described in subsection (a)(1) through (a)(7)
122122 26 must occur at least ten (10) days before the public hearing held under
123123 27 subsection (a), and submission of an amendment to information
124124 28 described in subsection (a)(8) through (a)(9) must occur at least
125125 29 twenty-four (24) hours before the time in which the meeting to fix the
126126 30 budget, tax rate, and levy was originally advertised to commence.
127127 31 (f) Each year, the governing body of a school corporation that
128128 32 imposes property taxes to pay debt service on bonds or lease rentals on
129129 33 a lease for a controlled project under IC 6-1.1-20, property taxes under
130130 34 an operating referendum tax levy under IC 20-46-1, or property taxes
131131 35 under a school safety referendum tax levy under IC 20-46-9, shall
132132 36 submit the following information at least ten (10) days before the
133133 37 public hearing required by subsection (a) in the manner prescribed by
134134 38 the department:
135135 39 (1) the purposes specified in the public question submitted to the
136136 40 voters or any revenue spending plans adopted under
137137 41 IC 6-1.1-20-13, IC 20-46-1-8, or IC 20-46-9-6 for:
138138 42 (A) debt service on bonds or lease rentals on a lease for a
139139 2025 IN 391—LS 7052/DI 120 4
140140 1 controlled project under IC 6-1.1-20;
141141 2 (B) an operating referendum tax levy approved by the voters
142142 3 of the school corporation under IC 20-46-1; or
143143 4 (C) a school safety referendum tax levy approved by the voters
144144 5 of the school corporation under IC 20-46-9;
145145 6 as applicable; and
146146 7 (2) the debt service levy fund, operating referendum tax levy
147147 8 fund, or school safety referendum tax levy fund of the school
148148 9 corporation, whichever is applicable;
149149 10 to show whether the school corporation is using revenue collected from
150150 11 the referendum tax levy in the amounts and for the purposes
151151 12 established in the purposes specified in the public question submitted
152152 13 to the voters or the revenue spending plan, as applicable. The
153153 14 department shall make this information available to taxpayers at least
154154 15 ten (10) days before the public hearing.
155155 16 SECTION 2. IC 6-1.1-17-16, AS AMENDED BY P.L.9-2024,
156156 17 SECTION 169, IS AMENDED TO READ AS FOLLOWS
157157 18 [EFFECTIVE JANUARY 1, 2026]: Sec. 16. (a) The department of
158158 19 local government finance shall certify the tax rates and tax levies for all
159159 20 funds of political subdivisions subject to the department of local
160160 21 government finance's review.
161161 22 (b) For a fund of a political subdivision subject to levy limits under
162162 23 IC 6-1.1-18.5-3, the department of local government finance shall
163163 24 calculate and certify the allowable budget of the fund if the political
164164 25 subdivision adopts a tax levy that exceeds the estimated maximum levy
165165 26 limits as provided by the department of local government finance under
166166 27 IC 6-1.1-18.5-24.
167167 28 (c) For a fund of a political subdivision subject to levy limits under
168168 29 IC 6-1.1-18.5-3 and for which the political subdivision adopts a tax
169169 30 levy that is not more than the levy limits under IC 6-1.1-18.5-3, the
170170 31 department of local government finance shall review the fund to ensure
171171 32 the adopted budget is fundable based on the unit's adopted tax levy and
172172 33 estimates of available revenues. If the adopted budget is fundable, the
173173 34 department of local government finance shall use the adopted budget
174174 35 as the approved appropriation for the fund for the budget year. As
175175 36 needed, the political subdivision may complete the additional
176176 37 appropriation process through IC 6-1.1-18-5 for these funds during the
177177 38 budget year.
178178 39 (d) For a fund of the political subdivision subject to levy limits
179179 40 under IC 6-1.1-18.5-3 and for which the political subdivision adopts a
180180 41 tax levy that is not more than the levy limits under IC 6-1.1-18.5-3, if
181181 42 the department of local government finance has determined the adopted
182182 2025 IN 391—LS 7052/DI 120 5
183183 1 budget is not fundable based on the unit's adopted tax levy and
184184 2 estimates of available revenues, the department of local government
185185 3 finance shall calculate and certify the allowable budget that is fundable
186186 4 based on the adopted tax levy and the department's estimates of
187187 5 available revenues.
188188 6 (e) For all other funds of a political subdivision not described in
189189 7 subsections (b), (c), and (d), the department of local government
190190 8 finance shall certify a budget for the fund.
191191 9 (f) Except as provided in section 16.1 of this chapter, the department
192192 10 of local government finance is not required to hold a public hearing
193193 11 before the department of local government finance reviews, revises,
194194 12 reduces, or increases a political subdivision's budget by fund, tax rate,
195195 13 or tax levy under this section.
196196 14 (g) Except as provided in subsection (l), IC 20-46, or IC 6-1.1-18.5,
197197 15 the department of local government finance may not increase a political
198198 16 subdivision's budget by fund, tax rate, or tax levy to an amount which
199199 17 exceeds the amount originally fixed by the political subdivision.
200200 18 However, if the department of local government finance determines
201201 19 that IC 5-3-1-2.3(b) applies to the tax rate, tax levy, or budget of the
202202 20 political subdivision, the maximum amount by which the department
203203 21 may increase the tax rate, tax levy, or budget is the amount originally
204204 22 fixed by the political subdivision, and not the amount that was
205205 23 incorrectly published or omitted in the notice described in
206206 24 IC 5-3-1-2.3(b). The department of local government finance shall give
207207 25 the political subdivision notification electronically in the manner
208208 26 prescribed by the department of local government finance specifying
209209 27 any revision, reduction, or increase the department proposes in a
210210 28 political subdivision's tax levy or tax rate. The political subdivision has
211211 29 ten (10) calendar days from the date the political subdivision receives
212212 30 the notice to provide a response electronically in the manner prescribed
213213 31 by the department of local government finance. The response may
214214 32 include budget reductions, reallocation of levies, a revision in the
215215 33 amount of miscellaneous revenues, and further review of any other
216216 34 item about which, in the view of the political subdivision, the
217217 35 department is in error. The department of local government finance
218218 36 shall consider the adjustments as specified in the political subdivision's
219219 37 response if the response is provided as required by this subsection and
220220 38 shall deliver a final decision to the political subdivision. The
221221 39 department of local government finance may not consider any
222222 40 adjustments that are suggested by the political subdivision after the
223223 41 expiration of the ten (10) day period allowed for the political
224224 42 subdivision's response.
225225 2025 IN 391—LS 7052/DI 120 6
226226 1 (h) The department of local government finance may not approve a
227227 2 levy for lease payments by a city, town, county, library, or school
228228 3 corporation if the lease payments are payable to a building corporation
229229 4 for use by the building corporation for debt service on bonds and if:
230230 5 (1) no bonds of the building corporation are outstanding; or
231231 6 (2) the building corporation has enough legally available funds on
232232 7 hand to redeem all outstanding bonds payable from the particular
233233 8 lease rental levy requested.
234234 9 (i) The department of local government finance shall certify its
235235 10 action to:
236236 11 (1) the county auditor;
237237 12 (2) if the budget and levy of the political subdivision are being
238238 13 continued:
239239 14 (A) the state board of accounts;
240240 15 (B) the state comptroller; and
241241 16 (C) the department of state revenue;
242242 17 (3) the political subdivision if the department acts pursuant to an
243243 18 appeal initiated by the political subdivision; and
244244 19 (4) a taxpayer that owns property that represents at least ten
245245 20 percent (10%) of the taxable assessed valuation in the political
246246 21 subdivision.
247247 22 (j) The following may petition for judicial review of the final
248248 23 determination of the department of local government finance under
249249 24 subsection (i):
250250 25 (1) If the department acts under an appeal initiated by a political
251251 26 subdivision, the political subdivision.
252252 27 (2) A taxpayer that owns property that represents at least ten
253253 28 percent (10%) of the taxable assessed valuation in the political
254254 29 subdivision.
255255 30 The petition must be filed in the tax court not more than forty-five (45)
256256 31 days after the department certifies its action under subsection (i).
257257 32 (k) The department of local government finance is expressly
258258 33 directed to complete the duties assigned to it under this section as
259259 34 follows:
260260 35 (1) Not later than December 31 of the year preceding that budget
261261 36 year, unless subdivision (2) applies.
262262 37 (2) Not later than January 15 of the budget year if any of the
263263 38 following are true:
264264 39 (A) A taxing unit in a county intends to issue debt after
265265 40 December 1 in the year preceding the budget year and has
266266 41 indicated its intent to issue debt after December 1 in the year
267267 42 preceding the budget year as specified in section 5 of this
268268 2025 IN 391—LS 7052/DI 120 7
269269 1 chapter.
270270 2 (B) A taxing unit intends to file a shortfall appeal under
271271 3 IC 6-1.1-18.5-16 and has indicated its intent to file a shortfall
272272 4 appeal as specified in section 5 of this chapter.
273273 5 (C) The deadline for a city in the county to fix the budget, tax
274274 6 rate, and tax levy has been extended, in accordance with
275275 7 section 5.2 of this chapter, due to the executive's veto of the
276276 8 ordinance fixing the budget, tax rate, and tax levy.
277277 9 (l) Subject to the provisions of all applicable statutes, and
278278 10 notwithstanding IC 6-1.1-18-1, the department of local government
279279 11 finance shall, unless the department finds extenuating circumstances,
280280 12 increase a political subdivision's tax levy to an amount that exceeds the
281281 13 amount originally advertised or adopted by the political subdivision if:
282282 14 (1) the increase is requested in writing by the officers of the
283283 15 political subdivision;
284284 16 (2) the request includes:
285285 17 (A) the corrected budget, tax rate, or levy, as applicable; and
286286 18 (B) the time and place of the meeting described in subdivision
287287 19 (4);
288288 20 (3) the political subdivision publishes the requested increase on
289289 21 the department's advertising website;
290290 22 (4) the political subdivision adopts the needed changes to its
291291 23 budget, tax levy, or rate in a public meeting of the governing
292292 24 body; and
293293 25 (5) notice is given to the county fiscal body of the department's
294294 26 correction.
295295 27 The political subdivision shall publish notice of the meeting described
296296 28 in subdivision (4) on the Indiana transparency website in the manner
297297 29 prescribed by the department not later than forty-eight (48) hours
298298 30 (excluding weekends and holidays) before the meeting. If the
299299 31 department increases a levy beyond what was advertised or adopted
300300 32 under this subsection, it shall, unless the department finds extenuating
301301 33 circumstances, reduce the certified levy affected below the maximum
302302 34 allowable levy by the lesser of five percent (5%) of the difference
303303 35 between the advertised or adopted levy and the increased levy, or one
304304 36 hundred thousand dollars ($100,000).
305305 37 (m) If the department of local government finance has
306306 38 determined that the proposed tax levy for a political subdivision's
307307 39 budget exceeds the permissible tax levy for the political subdivision
308308 40 under section 23 of this chapter, the department of local
309309 41 government finance shall calculate and certify the allowable tax
310310 42 levy and tax rate for the political subdivision based on the
311311 2025 IN 391—LS 7052/DI 120 8
312312 1 provisions in section 23 of this chapter.
313313 2 SECTION 3. IC 6-1.1-17-17, AS AMENDED BY P.L.146-2008,
314314 3 SECTION 161, IS AMENDED TO READ AS FOLLOWS
315315 4 [EFFECTIVE JANUARY 1, 2026]: Sec. 17. Subject to the limitations
316316 5 contained in IC 6-1.1-18.5 and IC 20-46, and notwithstanding section
317317 6 23 of this chapter, the department of local government finance may at
318318 7 any time increase the tax rate and tax levy of a political subdivision for
319319 8 the following reasons:
320320 9 (1) To pay the principal or interest upon a funding, refunding, or
321321 10 judgment funding obligation of a political subdivision.
322322 11 (2) To pay the interest or principal upon an outstanding obligation
323323 12 of the political subdivision.
324324 13 (3) To pay a judgment rendered against the political subdivision.
325325 14 (4) To pay lease rentals that have become an obligation of the
326326 15 political subdivision under IC 20-47-2 or IC 20-47-3.
327327 16 SECTION 4. IC 6-1.1-17-23 IS ADDED TO THE INDIANA CODE
328328 17 AS A NEW SECTION TO READ AS FOLLOWS [EFFECTIVE
329329 18 JANUARY 1, 2026]: Sec. 23. (a) This section applies beginning after
330330 19 December 31, 2025, to the formulation and adoption of a budget,
331331 20 tax rate, and tax levy under this chapter.
332332 21 (b) Notwithstanding any growth in a political subdivision's
333333 22 assessed value in the previous year, the ad valorem property tax
334334 23 levy for the budget of a political subdivision shall not exceed the ad
335335 24 valorem property tax levy for its last preceding annual budget,
336336 25 except as provided in subsections (c) and (d).
337337 26 (c) The fiscal body of a political subdivision may by ordinance
338338 27 authorize the proper officers of the political subdivision to
339339 28 formulate and submit a budget, tax rate, and tax levy under section
340340 29 3 of this chapter that exceed the ad valorem property tax levy
341341 30 restriction in subsection (b), subject to all other limits under this
342342 31 article, if the following conditions are met:
343343 32 (1) The fiscal body of the political subdivision must hold a
344344 33 public hearing at which the only item on the agenda is the
345345 34 proposal to adopt an ordinance under this subsection. The
346346 35 hearing shall be conducted in accordance with IC 5-14-1.5,
347347 36 and notice of the hearing shall be published in accordance
348348 37 with IC 5-3-1.
349349 38 (2) After conducting a public hearing under subdivision (1)
350350 39 and subject to subdivision (3), the fiscal body of the political
351351 40 subdivision may adopt an ordinance under this subsection,
352352 41 which must contain:
353353 42 (A) a general statement of the reasons for the tax levy and
354354 2025 IN 391—LS 7052/DI 120 9
355355 1 tax rate increase;
356356 2 (B) the dollar amount of the tax levy increase; and
357357 3 (C) the percentage increase in the tax rate from the
358358 4 previous year.
359359 5 (3) An ordinance may not be adopted under this section after
360360 6 the date that is fifteen (15) days before the public hearing
361361 7 under section 3 of this chapter.
362362 8 (d) If an ordinance is adopted by the fiscal body of a political
363363 9 subdivision under subsection (c), the limitation in subsection (b)
364364 10 shall not apply and instead the ad valorem property tax levy for
365365 11 the budget of the political subdivision shall not exceed the sum of:
366366 12 (1) the ad valorem property tax levy for the political
367367 13 subdivision's last preceding annual budget; plus
368368 14 (2) the additional ad valorem property tax levy authorized in
369369 15 the ordinance adopted by the fiscal body under subsection (c);
370370 16 subject to all other limits under this article.
371371 17 (e) The provisions of this section shall be applied to decrease the
372372 18 tax rate of each political subdivision in which there was an increase
373373 19 in the political subdivision's assessed value in the previous year,
374374 20 subject to subsections (c) and (d).
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