LEGISLATIVE SERVICES AGENCY
OFFICE OF FISCAL AND MANAGEMENT ANALYSIS
FISCAL IMPACT STATEMENT
LS 7443 NOTE PREPARED: Jan 9, 2025
BILL NUMBER: SB 540 BILL AMENDED:
SUBJECT: Local Fiscal Matters.
FIRST AUTHOR: Sen. Buchanan BILL STATUS: As Introduced
FIRST SPONSOR:
FUNDS AFFECTED:XGENERAL IMPACT: State & Local
DEDICATED
FEDERAL
Summary of Legislation: Appointed County Assessors: This bill provides, beginning in 2027, that the office
of the county assessor is an appointive office rather than an elective office. It specifies that the county
executive shall appoint an individual to the office of the county assessor. It also includes provisions to
manage the conversion of the office of the county assessor to an appointive office upon the abolition of the
office as an elective office.
Excess Levy Appeal Limitations: This bill limits the ability to seek an excess levy appeal to those units that
have experienced a year over year population increase of 5% or more.
Homestead Property Tax Bill Cap: This bill caps the allowable increase in the amount of property taxes first
due and payable on a homestead in 2026, 2027, and 2028.
Personal Property DeMinimis Exemption: This bill raises the acquisition cost threshold for purposes of the
personal property tax exemption from $80,000 to $250,000.
Effective Date: Upon passage; July 1, 2025.
Explanation of State Expenditures: Appointed County Assessors: This bill’s provisions may result in a
minor increase in the administrative workload for the Election Division since they may need to update some
publications and forms to remove references to electing county assessors.
Explanation of State Revenues:
Explanation of Local Expenditures: Appointed County Assessors: This bill’s provision may result in a
slight savings to ballot preparation costs if county assessors were no longer listed on the ballot in future
elections.
Homestead Property Tax Bill Cap: County auditors will have additional programming costs to implement
the changes to the tax computations.
SB 540 1 Personal Property DeMinimis Exemption: Local assessors will realize some administrative savings as a result
of this provision. Taxpayers who claim the exemption must file one initial return within the county. The
return includes only identifying information and the exemption claim. The rest of the return may be left
blank. Local assessors will not have to process the numeric portion of these returns. Also, in a case where
an affected taxpayer is currently filing multiple returns in the county, the total number of filings will be
reduced to one. This bill will result in additional taxpayers filing the return in this manner.
Explanation of Local Revenues: Excess Levy Appeal Limitations: The population growth requirement under
this provision will limit the number of taxing units that will be permitted to seek an excess levy appeal for
tax years beginning with CY 2026. A review of 2022 and 2023 population estimates shows that eight
municipalities had at least 5% population growth in 2023. No counties had growth of 5% or more. Fewer
appeals will mean that fewer taxing units will have controlled levy increases that exceed the growth resulting
from the statewide maximum levy growth quotient. [The DLGF has received a total of 99 petitions in 2024
for excess levies in 2025.]
Homestead Property Tax Bill Cap: Homeowners' net property taxes will be lower under this bill than under
current law by an estimated $17.6 M in CY 2026, $42.0 M in CY 2027, and $65.5 M in CY 2028. Non-
referendum homestead tax increases will be limited to 5% in CY 2026, CY 2027, and CY 2028. Revenues
for local civil taxing units and schools would decline by these same amounts. Estimated revenue losses are
summarized in the following table.
Estimated Net Revenue Change ($ Millions)
Unit Type CY 2026CY 2027CY 2028
Counties -2.6 -6.2 -9.5
Townships -0.8 -1.9 -3.0
Cities and Towns -5.2 -13.0 -21.1
School Corporations -7.9 -18.4 -28.0
Libraries -0.6 -1.3 -2.0
Special Units -0.5 -1.0 -1.5
TIF -0.1 -0.2 -0.4
Total -17.6 -42.0 -65.5
Total Without TIF -17.6 -41.8 -65.1
Note: Totals may not sum due to rounding.
Personal Property DeMinimis Exemption: This bill will result in additional personal property tax
exemptions, which will increase tax rates and shift some taxes to other taxpayers. In addition, the higher tax
rates will result in a local revenue reduction due to higher tax cap losses. Cumulative fund and school
operating and safety referendum funds will see less revenue. Also, TIF revenues will increase because of the
higher tax rates.
This bill will result in the exemption of approximately 44,700 additional business property tax returns
beginning with taxes payable in CY 2027. The newly exempted personal property taxpayers will save about
$37 M in property taxes beginning in CY 2027, and the tax bills for other property will be increased by about
$21 M. Overall, annual local revenues will decrease by $16.5 M statewide.
The estimated change in CY 2027 and CY 2028 net tax by property type is shown in the following table.
SB 540 2 Estimated Net Tax Change ($ Millions)
Property Type CY 2027CY 2028
Homesteads 7.4 7.7
Farmland 1.8 1.8
Other Residential 1.7 1.7
Apartments 0.6 0.6
Ag Business 0.7 0.7
Other Real 5.3 5.3
Personal Property -34.0 -34.6
Total -16.5 -16.8
Note: Totals may not sum due to rounding.
The following table summarizes the estimated CY 2027 and CY 2028 revenue change by taxing unit type.
Estimated Net Revenue Change ($ Millions)
Unit Type CY 2027CY 2028
Counties -3.5 -3.6
Townships -0.6 -0.6
Cities and Towns -6.7 -6.8
School Corporations -6.2 -6.3
Libraries -0.7 -0.7
Special Units -1.4 -1.4
TIF 2.6 2.6
Total -16.5 -16.8
Total Without TIF -19.1 -19.4
Note: Totals may not sum due to rounding.
Additional Information - Personal Property DeMinimis Exemption: Under current law, beginning with taxes
payable in CY 2023, taxpayers who have less than $80,000 of depreciable asset acquisition cost in the county
are exempt from personal property tax. For taxes payable in CY 2017 through CY 2020, taxpayers who had
less than $20,000 of depreciable asset acquisition cost in the county were exempt from personal property tax.
From CY 2021 through CY 2022, taxpayers with less than $40,000 of depreciable asset acquisition cost in
the county were exempt from personal property tax.
State Agencies Affected: Secretary of State - Election Division.
Local Agencies Affected: Local assessors; Local civil taxing units and school corporations; Circuit court
clerks; County election boards.
Information Sources: LSA Property Tax Database.
Fiscal Analyst: James Johnson, 317-232-9869; Bob Sigalow, 317-232-9859; Chris Baker, 317-232-9851.
SB 540 3