Local leaders discuss SEA-1 impacts and possible solutions 

MISHAWAKA, Ind. — Several regional leaders gathered in Mishawaka Monday evening to talk about the real-world impacts they are starting to see in their communities due to Senate Enrolled Act 1 (SEA-1), the statewide reform to property taxes passed in April.

The organization that hosted the roundtable, Accelerate Indiana Municipalities (Aim), came with a set of potential SEA-1 reforms to share, as they have been searching for a balanced way for municipalities to give needed property tax relief, while still providing the required essential services.

Mishawaka Mayor Dave Wood also serves as the current president for Aim. He explained they can’t turn back time, so instead they’re looking forward.

Aim put together committees to look at the impacts and functions of SEA-1, developed several potential reforms to the legislation that already exists, and held meetings with regional leaders across the state over the last week to hear from and share some of those ideas, with Monday’s meeting marking Aim’s ninth and second to last roundtable.

“We have been all over the state, nine communities over the past week and every corner of the state, big cities and small, and the one thing I found interesting is that most seem to be impacted in the 20 percent range. No matter how big or no matter how small, no matter how rural, no matter how urban,” said Mayor Woods.

Mishawaka is one of those cities expected to face about a 20 percent, or $15 million, budget cut by 2028, but as Mayor Wood put it, every leader is in the same boat. They must provide essential services and residents will be impacted by SEA-1. Some of those effects are already impacting things such as public safety and job opportunities. In the City of Elkhart, they had to implement wage freezes.

“…it’s not just staffing, it’s not just the quality of place, quality of life issues, it’s the planning that really makes us feel very concerned about our future, because how do we plan to be a better community when we don’t have the funds to maintain the community that we currently have?” said Elkhart mayor, Rod Roberson.

Aim’s CEO, Matt Greller, said a bulk of SEA-1’s problems lie with the new income tax structure. One of Aim’s proposals is a reformed SEA-1 Local Income Tax (LIT) structure.

“We’d like to see part of that rate that the county has reallocated over to the city and town side, about half a percent of that to come back over to the city and town side, to get us to a point where we’re at least treading water with what we’ve had in years past,” said Greller.

Some of Aim’s other recommendations include looking at the annual income tax rate adoption requirement in SEA-1 and adjusting the population thresholds for cities and towns that want to adopt their own LIT rate. The overall goal is getting local governments back near the same amount of revenue they are raising now, prior to sea-1 taking effect.

“We will find a way as a state, in the state of Indiana, as local government, to provide the essential services our communities need…what may not get provided… it may be some of the quality of place and quality of life projects… there will be consequences,” said Mayor Wood.

The next legislative session is about to start in January. Aim has been working with legislators during this whole process and Mayor Wood said those legislators have acknowledged the need for fixes to SEA-1.

To view the recommendations in full, click here.