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Members of the Kosciusko County Council and Kosciusko County Commissioners were presented with a year-end financial plan and legislative update during a special meeting on Tuesday.
The plan was presented by Tyler Lewis, a consultant with Reedy Financial Group.
Lewis reviewed Senate Enrolled Act 1 with those present. Through its passage, SEA 1 made changes to Indiana’s property tax and local government finance systems. The legislation "significantly alters how deductions and credits are applied, reshapes Local Income Tax (LIT) distributions and places new limitations on the use of debt service levies," according to Accelerate Indiana Municipalities.
With a new local income tax structure approved in 2025 through SEA 1, it was initially approved to begin in 2028. However, its implementation has been pushed out to 2029.
"What we found at Reedy ... is that most cities and towns lost money on this deal," said Lewis. "Now the doughnut cities like Carmel, Fishers, they benefit from this 1.2%, but 90% of the state, they did not. The max rate the county could adopt is a 2.9% local income tax rate."
Lewis also reviewed property tax deductions mentioned in SEA 1.
"Currently, what you will have in 2026 on your homestead, you're going to have a $48,000 fixed homestead deduction off your gross assessed value," said Lewis. "Anything remaining after that fixed amount, 40% more is going to come off on a supplemental deduction. Basically, deductions are going to go way up. Will taxpayers save on that? Yes, on property taxes, but it also depends on what tax district you're in."
"Under the supplemental deductions for homesteads, isn't the theory that the people who have more expensive homes are going to see much greater relief?" asked Commissioner Sue Ann Mitchell.
"Correct," said Lewis.
"So, although (the county is) going to get a little bit of relief because we're getting a deduction, it's going to be somewhat absorbed in the fact that our tax rate is going up," said Council Vice President Kathy Groninger.
Under SEA 1, all cities and town can opt into countywide LIT. Municipalities may choose to opt-in regardless of population. Lewis also noted a municipal unit strategic task force may be established but is not required.
New legislation updates were also discussed. With SEA 179, counties may not impose a wheel tax on vehicles registered within a municipality with its own wheel tax. This is effective Dec. 31. Municipalities that establish their own wheel tax after Dec. 31, 2025, will not receive a portion of their respective county's wheel tax, effective Dec. 31, 2026.
For property tax rates, Lewis noted that Kosciusko County's 2025 tax rate was the 19th lowest out of 20 counties similar to Kosciusko's net assessed value. He stated neutral tax rates are more difficult to maintain as SEA 1 deductions grow.
With cash reserves in the county's general fund, unused appropriations and interest revenue are big factors to cash reserve increases.
"Probably in the near future, especially for the wheel tax fund, I think cash reserves are getting really low on that, so you might have to move that somewhere else," said Lewis. "Keep that in mind when you're looking at budgets. And obviously, continue to be prudent when developing budgets because you just don't know what's going to happen right now."
Financial considerations Lewis asked the group to consider from SEA 1 include a continual circuit breaker increase. He also noted Reedy Financial Group will continue to monitor any legislative updates and explore additional options to help mitigate additional changes.
Those in attendance agreed to schedule an additional meeting with Reedy Financial Group to discuss the county's 2027 budget sometime in July.
