Friday Night Lights at the Statehouse

Good Friday afternoon, and welcome to the Indy Chamber’s first Legislative Update of 2026!

We’re counting the hours until IU plays Oregon in the Peach Bowl while looking back on a week with no shortage of action at the Statehouse. On both fronts, it’s fair to say, go Hoosiers!

Statehouse observers predicted a lower-activity legislative session this year following a contentious December redistricting fight. Instead, the first week of the 2026 Indiana General Assembly has offered a packed playbook, showing that lawmakers aim to tackle weighty issues – from housing to taxes and childcare – even in a short session.

We’re pleased to see that many of these issues line up with the priorities in our 2026 legislative agenda: Grow Our Economy and Build Our Talent.

So, put on your cream and crimson and read up on what happened in the arena this week!

The Lineup:
Quarterback (Affordability)
Second-Half Adjustment (Property Tax Updates)
A New Playbook (Economic Development)
Opening up the Field (Childcare) + Leveling the Playing Field (K-12 Education)
Building the Bench (Work-Based Learning Liability)
Celebrating a Win! (Cigarette Tax Revenue)

Quarterback

If this session had its own Fernando Mendoza, it would unquestionably be the topic of affordability – an issue  linking several policy matters together and driving the overarching Statehouse agenda. Like the beloved Indiana University quarterback, this theme has been broadly embraced by Indiana Republicans and Democrats.

⬆️The Upshot: Hoosiers want their elected officials to focus on kitchen-table issues, and the legislature seems to be listening, judging by the early action in session. Here’s where the affordability theme is showing up. 

• Housing (HB 1001): Rep. Doug Miller introduced a bill that would ease the process of building housing to increase supply, with the goal of making housing more accessible and affordable for Hoosiers.  
• Miller, a Republican from Elkhart who works in the housing industry, aims to lower barriers and costs required to build new units through reforming the zoning process and loosening building regulations if local governments do not opt out of the lighter requirements. 

• Under the bill, single-family homes and townhouses would be allowed in residential zones, accessory dwelling units could be added to single-family homes, and affordable housing could be built on property purchased by a religious institution – without a hearing. If local government units do not adopt a provision to opt out, the bill also would limit local governments’ ability to regulate design, parking, lot sizes, and density, and would require approval of multifamily and mixed-use developments in commercial zones.  
• Electric Utilities (HB 1002): This bill, introduced by Hamilton County Republican Rep. Alaina Shonkwiler, aims to make Hoosiers’ utility costs more affordable and consistent. It would make “budget billing” plans – where payments are spread evenly throughout the year with periodic true-ups to reconcile higher or lower usage – the default for residential customers unless they opt out. It also includes provisions to protect income-eligible customers from utility shutoffs during extreme heat and requires utilities to offer a low-income customer assistance program. And it would require investor-owned utilities to set rates over three years, rather than annually, and include incentives for performance that factor in affordability. 

👀What to Watch: HB 1001 will be heard in the Local Government Committee, and HB 1002 will be heard in Utilities, Energy and Telecommunications, both on Tues., Jan. 13.  

🏆If these plays can make it into the endzone, affordability may become this session’s Heisman Trophy recipient.  

Second-Half Adjustment

As policymakers seek to make life more affordable for their constituents, there’s a need to recognize that local government services go hand-in hand in helping communities thrive. While stability or even reduction in property tax payments is important to residents, it must be balanced with governments’ ability to provide critical services, such as public safety and infrastructure. 

SEA 1, which passed last session, will reduce property taxes for homeowners and cut revenue for local units of government.  

HB 1259 attempts to help local governments by providing flexibility to recoup some of their lost funding through additional local income tax (LIT). Under the bill authored by Republican Rep. Jeff Thompson, the House’s Ways and Means Committee Chairman, cities and towns with at least 3,500 residents that already have a municipal LIT of 1.2% may increase that rate to up to 2.9%. The bill also would allow counties to adopt a tax rate to distribute funds to school corporations. And, it contains a clarifying provision that if local governments do not adjust their LIT rate annually, the rate will default to the minimum amount required to pay debt service. Beginning in 2030, counties’ and municipalities’ tax rates must be renewed every four years, which is a partial win for the Chamber and other local government advocates pushing for increased consistency with local income tax rates.  

 👀What to Watch: HB 1259 is being amended and will be heard in House Ways and Means in the coming weeks.   

A New Playbook

Indiana is seeking to shift its economic development muscle from the state to regional entities. House Bill 1101, authored by Rep. Dave Heine, a Republican representing Allen County, would divide Indiana into 15 economic development regions and create a regional commission in each one to coordinate local economic development efforts. Each commission would include representatives from across the region and would be responsible for developing a shared economic strategy. The commission would also appoint or designate a lead organization to carry out that plan.   

🤔Indy Chamber’s Take: We are enthusiastic supporters of regions forging their own economic development strategies and look forward to being a strong partner in this discussion. We do believe there will be a robust discussion on the mechanics of this bill, including who sits on these regional commissions – for instance, we believe private sector representation (not currently required in the bill) is essential for the formation of economic development strategy. Also, regions need flexibility to design governance structures that fit their local realities. This is especially true in Central Indiana, which already operates under unique statutory frameworks. 

🏈In Football Terms: Expect plenty of back-and-forth before the final whistle. 

📋Also of Note: We’ll be watching HB 1397 and SB 264, which seek to reform two of the state’s most prominent economic development tax credits—the redevelopment tax credit and the EDGE tax credit—to ensure they’re maximized for our state’s economic competitiveness. 

Opening up the Field + Leveling the Playing Field

Childcare: State of Play 

Indiana’s childcare system is under strain as federal pandemic-era funding has ended, state subsidy expansion has paused, and providers are responding to cuts and uncertainty. This has created long waitlists, led to provider closures, reduced access, and exacerbated affordability challenges – with ripple effects across the workforce and economy. Our members are feeling this pain and responded to our 2025 policy survey identifying access to childcare for employers as a key issue. 

Getting More Families in the Game 

HB 1149 will not fully solve the full childcare access crisis, but it’s a meaningful step. The bill would expand the state’s existing law around Scholarship Granting Organizations, or SGOs, which currently enable donors to provide grants to offset tuition for pre-K through grade 12 education for income-qualifying students in exchange for a 50% tax credit. The new bill, authored by Rep. Dave Heine, would extend the law to qualified early childhood education providers, which would have to be certified through the Indiana Department of Education. School corporations that provide early childhood education would be eligible to participate, and they would have to enable students who do not reside within their boundaries to access their programs.  

🤔Indy Chamber’s Take: This bill marks progress, and we’re supportive of measures that make childcare access easier and more affordable. 

👀We’re Also Watching: SB 66, which tasks the state’s Early Learning Advisory Committee with putting in place kindergarten readiness indicators to align early care and learning with academic readiness.   

K-12: State of Play 

Families in Indianapolis have a diverse array of options for where to send their children to public schools. Within Indianapolis Public Schools (IPS) boundaries, there are not only various models of schools, but also different governance structures: public charter, district-run, and a hybrid model called Innovation Network Schools (“innovation schools” for short). 

These options have created opportunity, but also operational complexity. Today not all schools within IPS boundaries have access to facilities and transportation, and myriad different systems exist to provide those services for students. The result is both inconsistency and inefficiency in the delivery of services. 

Uniting the Field 

HB 1423 would create a new Indianapolis Public Education Corporation (IPEC) to manage facilities and transportation for all schools within IPS boundaries. The corporation would include 9 members appointed by the Mayor of Indianapolis with an equal distribution of board members from IPS, public charters, and the residents at large. It would have the authority to levy taxes and would be tasked with creating a common system for school accountability, a feature that’s currently lacking from Indianapolis’ landscape.   

HB 1423, authored by the House Education Committee Chairman Rep. Bob Behning, follows recommendations in December from a task force of civic leaders, the Indianapolis Local Education Alliance. 

🤔Indy Chamber’s Take: We see this bill as an important step toward financial responsibility and public trust. It would ensure students have safe buildings, reliable buses, and clearer accountability—no matter which public school they attend. By handling these big, complex operations at the system level, schools and educators can focus on what matters most: teaching, learning, and student support. 

Schools must be fully funded, especially for students with greater needs—but in today’s high cost-of-living environment, taxpayers are right to expect that existing education dollars are being used efficiently before being asked for more. HB 1423 helps create that discipline by reducing duplication, improving coordination, and increasing transparency. 

In short, the Chamber believes HB 1423 moves the conversation away from “district versus charter” and toward a single commitment to students, with smarter operations, clearer accountability, and a more sustainable system for the future. 

📣We’ll Be Sharing These Key Points: On Monday, Jan. 12, when HB 1423 is scheduled to be heard in the House Education Committee.  

Building the Bench

The Indiana Career Apprenticeship Pathway (INCAP) is a new, statewide program that lets high school and adult learners gain real, paid, on-the-job experience in high-demand careers—while helping employers build a stronger workforce. The Indy Chamber supports this initiative and its goal of reaching 50,000 Hoosiers by 2034 as it aligns with our key priority of building our region’s talent. 

But there’s a roadblock at the line of scrimmage. 

Research commissioned from the Indiana Fiscal Policy Institute shows that some employers hesitate to participate because of workplace liability concerns related to employing youth under 18. The Indy Chamber supports putting clear guidelines in place to address these concerns and ensure employers know the rules of the game so they can engage.  

HB 1098, authored by Republican Rep. Matt Commons, takes a step toward addressing these liability concerns. The bill aims to reduce uncertainty by clearly assigning liability when a student is placed with an employer through an intermediary. It puts primary responsibility for legal and administrative claims on the intermediary, rather than leaving roles ambiguous. It also protects employers from insurance discrimination by prohibiting insurers from denying coverage, canceling policies, or charging higher rates simply because a worker is under 18 or enrolled in a work-based learning program. Any insurance decisions must be based on objective, risk-based criteria, not age alone. 

🤔Indy Chamber’s Take: We applaud attention to this issue, but we believe employers should maintain liability, not intermediaries, as they are used to assuming the risk and intermediaries are nonprofits with limited capital. With this liability, we also advocate for guardrails: 

• To give employers peace of mind, we should create a statutory safe harbor – modeled on HEA 1007 (2018), which offers employers limited legal protection when they follow state safety guidelines to hire or retain employees with particular conditions. 
• HB 1098 also should direct the Indiana Department of Education to develop safety standards for work-based learning – in consultation with insurance and industry experts – to create a common framework for age-appropriate work, required training, site safety, and documentation requirements. This would give employers consistency and clarity. 
• The bill has been referred to the House Insurance Committee, where amendments can be made.  

Celebrating a Win!

Like you, we’re hoping for victories on the field tonight and beyond for the Hoosiers, but in the meantime, let’s celebrate another substantive win for our state.  

Last session, you helped advocate for an increase to the state’s cigarette tax, and lawmakers adopted a $3 per pack tax rate that went into effect on July 1. 

The cigarette tax increase is bringing in money than expected—about $152 million above projections and nearly $149 million more than last year, more than doubling revenue from this source in a year, according to the Indiana Fiscal Policy Institute. That is one factor contributing to the state collecting about $422 million more than was forecast through November 2025 – and $912 million more than this time last year. 

Even more important, cigarette use dropped by about 40% in the first three months after the tax increase went into effect. That’s a reason to celebrate.  

Until next week, go Hoosiers!