Continuously serving Kosciusko County since 1854
The state of Indiana gets zero dollars from property taxes, but is responsible for them, Sen. Ryan Mishler said Tuesday at the last Legislative Review Session of the year hosted by the Kosciusko Chamber of Commerce.
“All we really do is limit what the locals can collect because it’s not our money. So when people come and complain about their property taxes, that’s what we find ourselves do - always just limiting what the locals can collect,” he said.
When the state does that, people assume “it is our issue because we kind of make it our issue because we’re the ones who make the changes to it. But all we really do is reduce the amount of money that the locals can collect. Quite frankly, that’s all we ever really do with property taxes.”
Mishler said this year there were a couple key factors, one that he calls “churning”
“You always hear schools go on TV and say, ‘We’re going to build a new auditorium, new swimming pool, all this stuff and it’s not going to cost you any more money. Well, what happens is they paid off debt and they’re going to run that debt back up, so they don’t give you a break,” Mishler stated.
Earlier in his comments on Senate Bill 1, state Rep. Craig Snow said, “As a school pays off its bond, its GO (General Obligation) Bond, it has to wait a year before it can go and get another bond. It kind of sets it back to square one and then you have to go and do a referendum, to some degree. The other thing that I asked them to put in the referendum language is, today, as I understand it, in a ballot it’ll say ‘we’re asking for this much money for this project.’ And down in little print it says something to the effect, ‘this won’t increase your tax rate.’ To some degree, that is accurate. But what I suggested they put in there is, this is the cost of the project and this is the cost to finance that project.”
Just telling people a project will cost $10 million, for example, doesn’t tell the whole story, Snow said. “So now, what’s going to happen in a ballot is, you’re going to tell the project costs plus the costs to finance it.”
As an example, he said a $10 million ask at 22 years to pay it off at 4% interest is roughly $5 million in finance costs. “That may or may not change somebody’s vote yay or nay on that. But it’s going to be in bold print this year whenever schools ask for more money,” Snow stated. “And at the bottom it is going to say this will increase your taxes, because it does, let’s be honest.”
Mishler said he thinks that’s fair.
“I think the taxpayer needs to know when schools are doing something,” he said.
Mishler said the second most important thing in SB1 is “going to a rate-based system.”
“So, currently, if a county lowers their rate, somebody else can pick it up - it doesn’t mean your property taxes are going to go down,” he said. “So one county, Marshall County, said we lowered our rate but the library ate it up. Okay, so the system we’re kind of working toward right now would - you would think if you lowered your rate, your taxes would go down, and that’s what should happen. So, what’s happened in Senate Bill 1 is it goes to a rate based off one unit lower, so your taxes go down.”
Everyone gets upset about their property’s assessed value.
“People don’t like to hear this, but if your assessed values are going up, the system is working because market value is going up. People are selling their homes for record numbers, record amounts - not as much as they probably did the last couple years - but it’s trending so it’s going off the last couple years,” Mishler explained.
Just because a person’s property’s assessed value goes up doesn’t mean their taxes have to increase, he said.
“It’s all about the rate and the locals set the rate. So if your assessed value goes way up, the locals can lower their rate and your taxes go down. But, for, another unit tries to take it up, so there’s no incentive for anyone to lower their rate, so we feel this bill will incentivize people to lower their rate because the taxpayer will see the break,” Mishler said, adding that he thinks those two principles are probably the most important things in SB1 that will help people with their property taxes.
On personal property taxes for businesses, which some people down at the state don’t like, Mishler said he was against eliminating that in SB1.
“It’s going to shift to the homeowner. So, if the only tools the locals have to replenish any of this money is through a local income tax (LIT), only the consumer pays the income tax. So if this large corporation over here doesn’t have the personal property tax anymore, and the only way to make it up is through a local option income tax, who pays that? The individuals. The corporations don’t pay a local income tax. So, it shifts over to the individual and that’s why I don’t like it. And the only reason it’s in there is some of our members have a philosophical problem with personal property tax. I pay it, I don’t have a problem with it,” Mishler stated.
The state has a couple years to work on the personal property tax before it’s removed. Mishler said he was concerned that if the counties go with a LIT, it’ll shift to the taxpayer.
Medicaid
Snow said this past legislative session was a long one and they deal with the budget. He said they got a balanced budget passed, which is required by the Indiana constitution.
“As you may know, in April we got a negative revenue forecast to the tune of $2.4 billion that we were not going to receive, so that’s where the real work began, after that announcement,” Snow said.
The Department of Education, grades K-12, were given a budget increase of about $800 million, he said. Medicaid went up over $2 billion, and that’s the state’s biggest discern for the budget.
“If you’re following the Fed, we don’t know exactly what that’s going to mean. They’re looking at lots of cuts as well. As you know, that will flow down to the state and we’ll have to deal with that,” Snow said.
Mishler said he got “beat up pretty bad” on Medicaid.
“We have something called a Healthy Indiana Plan (HIP) and it’s for abled-bodied working adults between the ages of 18 to 65. There were 390,000 people on it pre-Covid. There’s over 700,000 now. So, we have not right-sized after Covid,” he said. “The other thing is, we’re locked in. We get a 90% match from the federal government, but there’s no way out of it. It’s part of our amendment. We want to make it a waiver because if the federal government - which, if I’m in Congress, I want to say, ‘Hey, we can’t afford 90-10 anymore, folks, it needs to be 70-30, 60-40’ - so I’m a realist. They can’t afford to keep giving us a 90-10 match.”
If the federal government were to cut the state’s Medicaid match back, Mishler said Indiana would be stuck because it can’t do anything and would have to pick up that 90% or whatever percentage it happens to be at, at that time.
“The bill allows us to go waiver, so we are in control. So if the federal government cuts us back, we can adjust accordingly, and decide not to do certain services, whatever, to stay within our means because I can tell you that within the last four years, our Medicaid budget has doubled in four years. It went up $2.3 billion last budget; went up $900 million mid-year in the budget; $2.1 billion. So it’s gone up $5.3 billion in four years. It was $5 billion four years ago, so it’s more than doubled in four years,” Mishler said.
Medicaid is 22% of the state’s budget now, up from 15% in the 2021 budget and 18% in 2023.
“So that means it’s squeezing out K-12 and all these other programs for Medicaid. So when I’m sitting here trying to make adjustments to Medicaid, you have to see why. Do we want to educate our kids and things like that? If we don’t get a handle on it, it’s going to really put us in a bind on those things as well,” he stated, adding that Medicaid was really the biggest driver of the budget.
Local Impact
One question asked to the state legislators was about the $5 million Kosciusko County taxing units were purported to lose in tax revenue with the passage of SB1.
Mishler said they weren’t losing anything, their revenue increases were just going to be slower.
“They’re not taking a cut. It’s a reduction in their increase until year three because of the personal property tax,” he said.
Snow said Kosciusko County, in 2026, will have a growth of 1.8%. In 2027, it’ll grow 4.9%. Warsaw will grow 3.7% in 2026 and 6.6% in 2027.
“So these are growth numbers,” he said. “Part of the problem I’ve learned about was, when we do modeling down at the state, our LSA group, what they do is they basically say - they have to report on negative numbers. So if you have a budget that’s $200 this year, and next year we’re expecting $300, but somebody puts a new formula in place that’s going to drop that growth $50, what’s reported from LSA is negative $50. So people look at that and they go, ‘Wait a minute, we’ll lose $50.’ No, you’re not going to gain $100, you’re only going to gain $50. So it’s the way it’s reported and the way it’s understood, and what I’m trying to work on with that messaging when it comes out of LSA,” Snow explained.
The true winners of the legislative session this year were Reedy Financial Group and Baker Tilly, he said. “These are people that are hired by all units of government - and they need to be, I get it - but holy cow! When you come into a group - the county, the cities, the schools - and you start presenting this stuff, present it in an accurate fashion because the sky is not exactly falling, you’re going to get a little less of your gain. It’s not that you’re going to lose that money.”
The state’s growth in 2026 is 0.8%, Snow said, and 0.1% in 2027 and those are “really tight” margins.
“But we’re going to do it. We went through a really tough budget year by cutting,” he said, acknowledging that the schools will get a decrease in dollars. Warsaw Community Schools will lose about $1 million in 2026. However, the county, cities and towns will just not get as much of a gain. They won’t start out the year with large deficits, they just may not be able to do a project in 2026, but have to wait a year to do it.
