Introduced Version
SENATE BILL No. 391
_____
DIGEST OF INTRODUCED BILL
Citations Affected: IC 6-1.1-17.
Synopsis: Political subdivision budgets. Provides that,
notwithstanding any growth in a political subdivision's assessed value
in the previous year, a political subdivision's ad valorem property tax
levy shall not exceed the ad valorem property tax levy for its last
preceding annual budget, unless the fiscal body of the political
subdivision adopts an affirmative tax rate and tax levy increase by
ordinance following a separate public hearing. Requires a resulting
decrease in tax rates for each political subdivision in which there was
an increase in the political subdivision's assessed value in the previous
year, subject to any affirmative tax rate and tax levy increase adopted
by the fiscal body of the political subdivision.
Effective: January 1, 2026.
Buck, Young M
January 13, 2025, read first time and referred to Committee on Tax and Fiscal Policy.
2025 IN 391—LS 7052/DI 120 Introduced
First Regular Session of the 124th General Assembly (2025)
PRINTING CODE. Amendments: Whenever an existing statute (or a section of the Indiana
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between statutes enacted by the 2024 Regular Session of the General Assembly.
SENATE BILL No. 391
A BILL FOR AN ACT to amend the Indiana Code concerning state
and local administration.
Be it enacted by the General Assembly of the State of Indiana:
1 SECTION 1. IC 6-1.1-17-3, AS AMENDED BY P.L.220-2021,
2 SECTION 2, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
3 JANUARY 1, 2026]: Sec. 3. (a) The proper officers of a political
4 subdivision shall formulate its estimated budget and its proposed tax
5 rate and tax levy on the form prescribed by the department of local
6 government finance and approved by the state board of accounts. In
7 formulating a political subdivision's estimated budget under this
8 section, the proper officers of the political subdivision must consider
9 the net property tax revenue that will be collected by the political
10 subdivision during the ensuing year, after taking into account the
11 estimate by the department of local government finance under
12 IC 6-1.1-20.6-11.1 of the amount by which the political subdivision's
13 distribution of property taxes will be reduced by credits under
14 IC 6-1.1-20.6-9.5 in the ensuing year, after taking into account the
15 estimate by the department of local government finance under section
16 0.7 of this chapter of the maximum amount of net property tax revenue
17 and miscellaneous revenue that the political subdivision will receive in
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1 the ensuing year, and after taking into account all payments for debt
2 service obligations that are to be made by the political subdivision
3 during the ensuing year. The political subdivision or appropriate fiscal
4 body, if the political subdivision is subject to section 20 of this chapter,
5 shall submit the following information to the department's computer
6 gateway:
7 (1) The estimated budget.
8 (2) The estimated maximum permissible levy, as provided by the
9 department under IC 6-1.1-18.5-24.
10 (3) The current and proposed tax levies of each fund.
11 (4) The percentage change between the current and proposed tax
12 levies of each fund.
13 (5) The amount by which the political subdivision's distribution
14 of property taxes may be reduced by credits granted under
15 IC 6-1.1-20.6, as estimated by the department of local government
16 finance under IC 6-1.1-20.6-11.1.
17 (6) The amounts of excessive levy appeals to be requested.
18 (7) The time and place at which the political subdivision or
19 appropriate fiscal body will hold a public hearing on the items
20 described in subdivisions (1) through (6).
21 (8) The amount of any increase in the tax rate and tax levies
22 of the political subdivision in an ordinance adopted under
23 section 23 of this chapter.
24 (8) (9) The time and place at which the political subdivision or
25 appropriate fiscal body will meet to fix the budget, tax rate, and
26 levy under section 5 of this chapter.
27 (9) (10) The date, time, and place of the final adoption of the
28 budget, tax rate, and levy under section 5 of this chapter.
29 Except as provided in section 5.6(b) of this chapter, the political
30 subdivision or appropriate fiscal body shall submit this information to
31 the department's computer gateway at least ten (10) days before the
32 public hearing required by this subsection in the manner prescribed by
33 the department. If the date, time, or place of the final adoption
34 subsequently changes, the political subdivision shall update the
35 information submitted to the department's computer gateway. The
36 department shall make this information available to taxpayers, at least
37 ten (10) days before the public hearing, through its computer gateway
38 and provide a telephone number through which taxpayers may request
39 mailed copies of a political subdivision's information under this
40 subsection. The department's computer gateway must allow a taxpayer
41 to search for the information under this subsection by the taxpayer's
42 address. The department shall review only the submission to the
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1 department's computer gateway for compliance with this section.
2 (b) The board of directors of a solid waste management district
3 established under IC 13-21 or IC 13-9.5-2 (before its repeal) may
4 conduct the public hearing required under subsection (a):
5 (1) in any county of the solid waste management district; and
6 (2) in accordance with the annual notice of meetings published
7 under IC 13-21-5-2.
8 (c) The trustee of each township in the county shall estimate the
9 amount necessary to meet the cost of township assistance in the
10 township for the ensuing calendar year. The township board shall,
11 subject to section 23 of this chapter, adopt with the township budget
12 a tax rate sufficient to meet the estimated cost of township assistance.
13 The taxes collected as a result of the tax rate adopted under this
14 subsection are credited to the township assistance fund.
15 (d) A political subdivision for which any of the information under
16 subsection (a) is not submitted to the department's computer gateway
17 in the manner prescribed by the department shall have its most recent
18 annual appropriations and annual tax levy continued for the ensuing
19 budget year.
20 (e) If a political subdivision or appropriate fiscal body timely
21 submits the information under subsection (a) but subsequently
22 discovers the information contains an error, the political subdivision or
23 appropriate fiscal body may submit amended information to the
24 department's computer gateway. However, submission of an
25 amendment to information described in subsection (a)(1) through (a)(7)
26 must occur at least ten (10) days before the public hearing held under
27 subsection (a), and submission of an amendment to information
28 described in subsection (a)(8) through (a)(9) must occur at least
29 twenty-four (24) hours before the time in which the meeting to fix the
30 budget, tax rate, and levy was originally advertised to commence.
31 (f) Each year, the governing body of a school corporation that
32 imposes property taxes to pay debt service on bonds or lease rentals on
33 a lease for a controlled project under IC 6-1.1-20, property taxes under
34 an operating referendum tax levy under IC 20-46-1, or property taxes
35 under a school safety referendum tax levy under IC 20-46-9, shall
36 submit the following information at least ten (10) days before the
37 public hearing required by subsection (a) in the manner prescribed by
38 the department:
39 (1) the purposes specified in the public question submitted to the
40 voters or any revenue spending plans adopted under
41 IC 6-1.1-20-13, IC 20-46-1-8, or IC 20-46-9-6 for:
42 (A) debt service on bonds or lease rentals on a lease for a
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1 controlled project under IC 6-1.1-20;
2 (B) an operating referendum tax levy approved by the voters
3 of the school corporation under IC 20-46-1; or
4 (C) a school safety referendum tax levy approved by the voters
5 of the school corporation under IC 20-46-9;
6 as applicable; and
7 (2) the debt service levy fund, operating referendum tax levy
8 fund, or school safety referendum tax levy fund of the school
9 corporation, whichever is applicable;
10 to show whether the school corporation is using revenue collected from
11 the referendum tax levy in the amounts and for the purposes
12 established in the purposes specified in the public question submitted
13 to the voters or the revenue spending plan, as applicable. The
14 department shall make this information available to taxpayers at least
15 ten (10) days before the public hearing.
16 SECTION 2. IC 6-1.1-17-16, AS AMENDED BY P.L.9-2024,
17 SECTION 169, IS AMENDED TO READ AS FOLLOWS
18 [EFFECTIVE JANUARY 1, 2026]: Sec. 16. (a) The department of
19 local government finance shall certify the tax rates and tax levies for all
20 funds of political subdivisions subject to the department of local
21 government finance's review.
22 (b) For a fund of a political subdivision subject to levy limits under
23 IC 6-1.1-18.5-3, the department of local government finance shall
24 calculate and certify the allowable budget of the fund if the political
25 subdivision adopts a tax levy that exceeds the estimated maximum levy
26 limits as provided by the department of local government finance under
27 IC 6-1.1-18.5-24.
28 (c) For a fund of a political subdivision subject to levy limits under
29 IC 6-1.1-18.5-3 and for which the political subdivision adopts a tax
30 levy that is not more than the levy limits under IC 6-1.1-18.5-3, the
31 department of local government finance shall review the fund to ensure
32 the adopted budget is fundable based on the unit's adopted tax levy and
33 estimates of available revenues. If the adopted budget is fundable, the
34 department of local government finance shall use the adopted budget
35 as the approved appropriation for the fund for the budget year. As
36 needed, the political subdivision may complete the additional
37 appropriation process through IC 6-1.1-18-5 for these funds during the
38 budget year.
39 (d) For a fund of the political subdivision subject to levy limits
40 under IC 6-1.1-18.5-3 and for which the political subdivision adopts a
41 tax levy that is not more than the levy limits under IC 6-1.1-18.5-3, if
42 the department of local government finance has determined the adopted
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1 budget is not fundable based on the unit's adopted tax levy and
2 estimates of available revenues, the department of local government
3 finance shall calculate and certify the allowable budget that is fundable
4 based on the adopted tax levy and the department's estimates of
5 available revenues.
6 (e) For all other funds of a political subdivision not described in
7 subsections (b), (c), and (d), the department of local government
8 finance shall certify a budget for the fund.
9 (f) Except as provided in section 16.1 of this chapter, the department
10 of local government finance is not required to hold a public hearing
11 before the department of local government finance reviews, revises,
12 reduces, or increases a political subdivision's budget by fund, tax rate,
13 or tax levy under this section.
14 (g) Except as provided in subsection (l), IC 20-46, or IC 6-1.1-18.5,
15 the department of local government finance may not increase a political
16 subdivision's budget by fund, tax rate, or tax levy to an amount which
17 exceeds the amount originally fixed by the political subdivision.
18 However, if the department of local government finance determines
19 that IC 5-3-1-2.3(b) applies to the tax rate, tax levy, or budget of the
20 political subdivision, the maximum amount by which the department
21 may increase the tax rate, tax levy, or budget is the amount originally
22 fixed by the political subdivision, and not the amount that was
23 incorrectly published or omitted in the notice described in
24 IC 5-3-1-2.3(b). The department of local government finance shall give
25 the political subdivision notification electronically in the manner
26 prescribed by the department of local government finance specifying
27 any revision, reduction, or increase the department proposes in a
28 political subdivision's tax levy or tax rate. The political subdivision has
29 ten (10) calendar days from the date the political subdivision receives
30 the notice to provide a response electronically in the manner prescribed
31 by the department of local government finance. The response may
32 include budget reductions, reallocation of levies, a revision in the
33 amount of miscellaneous revenues, and further review of any other
34 item about which, in the view of the political subdivision, the
35 department is in error. The department of local government finance
36 shall consider the adjustments as specified in the political subdivision's
37 response if the response is provided as required by this subsection and
38 shall deliver a final decision to the political subdivision. The
39 department of local government finance may not consider any
40 adjustments that are suggested by the political subdivision after the
41 expiration of the ten (10) day period allowed for the political
42 subdivision's response.
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1 (h) The department of local government finance may not approve a
2 levy for lease payments by a city, town, county, library, or school
3 corporation if the lease payments are payable to a building corporation
4 for use by the building corporation for debt service on bonds and if:
5 (1) no bonds of the building corporation are outstanding; or
6 (2) the building corporation has enough legally available funds on
7 hand to redeem all outstanding bonds payable from the particular
8 lease rental levy requested.
9 (i) The department of local government finance shall certify its
10 action to:
11 (1) the county auditor;
12 (2) if the budget and levy of the political subdivision are being
13 continued:
14 (A) the state board of accounts;
15 (B) the state comptroller; and
16 (C) the department of state revenue;
17 (3) the political subdivision if the department acts pursuant to an
18 appeal initiated by the political subdivision; and
19 (4) a taxpayer that owns property that represents at least ten
20 percent (10%) of the taxable assessed valuation in the political
21 subdivision.
22 (j) The following may petition for judicial review of the final
23 determination of the department of local government finance under
24 subsection (i):
25 (1) If the department acts under an appeal initiated by a political
26 subdivision, the political subdivision.
27 (2) A taxpayer that owns property that represents at least ten
28 percent (10%) of the taxable assessed valuation in the political
29 subdivision.
30 The petition must be filed in the tax court not more than forty-five (45)
31 days after the department certifies its action under subsection (i).
32 (k) The department of local government finance is expressly
33 directed to complete the duties assigned to it under this section as
34 follows:
35 (1) Not later than December 31 of the year preceding that budget
36 year, unless subdivision (2) applies.
37 (2) Not later than January 15 of the budget year if any of the
38 following are true:
39 (A) A taxing unit in a county intends to issue debt after
40 December 1 in the year preceding the budget year and has
41 indicated its intent to issue debt after December 1 in the year
42 preceding the budget year as specified in section 5 of this
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1 chapter.
2 (B) A taxing unit intends to file a shortfall appeal under
3 IC 6-1.1-18.5-16 and has indicated its intent to file a shortfall
4 appeal as specified in section 5 of this chapter.
5 (C) The deadline for a city in the county to fix the budget, tax
6 rate, and tax levy has been extended, in accordance with
7 section 5.2 of this chapter, due to the executive's veto of the
8 ordinance fixing the budget, tax rate, and tax levy.
9 (l) Subject to the provisions of all applicable statutes, and
10 notwithstanding IC 6-1.1-18-1, the department of local government
11 finance shall, unless the department finds extenuating circumstances,
12 increase a political subdivision's tax levy to an amount that exceeds the
13 amount originally advertised or adopted by the political subdivision if:
14 (1) the increase is requested in writing by the officers of the
15 political subdivision;
16 (2) the request includes:
17 (A) the corrected budget, tax rate, or levy, as applicable; and
18 (B) the time and place of the meeting described in subdivision
19 (4);
20 (3) the political subdivision publishes the requested increase on
21 the department's advertising website;
22 (4) the political subdivision adopts the needed changes to its
23 budget, tax levy, or rate in a public meeting of the governing
24 body; and
25 (5) notice is given to the county fiscal body of the department's
26 correction.
27 The political subdivision shall publish notice of the meeting described
28 in subdivision (4) on the Indiana transparency website in the manner
29 prescribed by the department not later than forty-eight (48) hours
30 (excluding weekends and holidays) before the meeting. If the
31 department increases a levy beyond what was advertised or adopted
32 under this subsection, it shall, unless the department finds extenuating
33 circumstances, reduce the certified levy affected below the maximum
34 allowable levy by the lesser of five percent (5%) of the difference
35 between the advertised or adopted levy and the increased levy, or one
36 hundred thousand dollars ($100,000).
37 (m) If the department of local government finance has
38 determined that the proposed tax levy for a political subdivision's
39 budget exceeds the permissible tax levy for the political subdivision
40 under section 23 of this chapter, the department of local
41 government finance shall calculate and certify the allowable tax
42 levy and tax rate for the political subdivision based on the
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1 provisions in section 23 of this chapter.
2 SECTION 3. IC 6-1.1-17-17, AS AMENDED BY P.L.146-2008,
3 SECTION 161, IS AMENDED TO READ AS FOLLOWS
4 [EFFECTIVE JANUARY 1, 2026]: Sec. 17. Subject to the limitations
5 contained in IC 6-1.1-18.5 and IC 20-46, and notwithstanding section
6 23 of this chapter, the department of local government finance may at
7 any time increase the tax rate and tax levy of a political subdivision for
8 the following reasons:
9 (1) To pay the principal or interest upon a funding, refunding, or
10 judgment funding obligation of a political subdivision.
11 (2) To pay the interest or principal upon an outstanding obligation
12 of the political subdivision.
13 (3) To pay a judgment rendered against the political subdivision.
14 (4) To pay lease rentals that have become an obligation of the
15 political subdivision under IC 20-47-2 or IC 20-47-3.
16 SECTION 4. IC 6-1.1-17-23 IS ADDED TO THE INDIANA CODE
17 AS A NEW SECTION TO READ AS FOLLOWS [EFFECTIVE
18 JANUARY 1, 2026]: Sec. 23. (a) This section applies beginning after
19 December 31, 2025, to the formulation and adoption of a budget,
20 tax rate, and tax levy under this chapter.
21 (b) Notwithstanding any growth in a political subdivision's
22 assessed value in the previous year, the ad valorem property tax
23 levy for the budget of a political subdivision shall not exceed the ad
24 valorem property tax levy for its last preceding annual budget,
25 except as provided in subsections (c) and (d).
26 (c) The fiscal body of a political subdivision may by ordinance
27 authorize the proper officers of the political subdivision to
28 formulate and submit a budget, tax rate, and tax levy under section
29 3 of this chapter that exceed the ad valorem property tax levy
30 restriction in subsection (b), subject to all other limits under this
31 article, if the following conditions are met:
32 (1) The fiscal body of the political subdivision must hold a
33 public hearing at which the only item on the agenda is the
34 proposal to adopt an ordinance under this subsection. The
35 hearing shall be conducted in accordance with IC 5-14-1.5,
36 and notice of the hearing shall be published in accordance
37 with IC 5-3-1.
38 (2) After conducting a public hearing under subdivision (1)
39 and subject to subdivision (3), the fiscal body of the political
40 subdivision may adopt an ordinance under this subsection,
41 which must contain:
42 (A) a general statement of the reasons for the tax levy and
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1 tax rate increase;
2 (B) the dollar amount of the tax levy increase; and
3 (C) the percentage increase in the tax rate from the
4 previous year.
5 (3) An ordinance may not be adopted under this section after
6 the date that is fifteen (15) days before the public hearing
7 under section 3 of this chapter.
8 (d) If an ordinance is adopted by the fiscal body of a political
9 subdivision under subsection (c), the limitation in subsection (b)
10 shall not apply and instead the ad valorem property tax levy for
11 the budget of the political subdivision shall not exceed the sum of:
12 (1) the ad valorem property tax levy for the political
13 subdivision's last preceding annual budget; plus
14 (2) the additional ad valorem property tax levy authorized in
15 the ordinance adopted by the fiscal body under subsection (c);
16 subject to all other limits under this article.
17 (e) The provisions of this section shall be applied to decrease the
18 tax rate of each political subdivision in which there was an increase
19 in the political subdivision's assessed value in the previous year,
20 subject to subsections (c) and (d).
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