Legislative Update: 4.18.25
With about a week to go until the end of session, there’s good news—and there’s bad news.
To start with the positive, lawmakers passed major road funding legislation representing a smart solution for our state and a huge win for growing communities, including those in Central Indiana.
On the downside, a revenue forecast released this week painted a grim financial picture, showing $2 billion in revenue loss over the coming biennium—a more drastic outlook than during the 2008 recession, in the assessment of longtime fiscal leaders.
Meanwhile, Gov. Mike Braun signed SB 1, propelling property tax reform and sharing of operational funds between public charter schools and districts—and adding to the tally of signed bills so far this year.
Session’s end is in sight, but with less than two weeks to go and some major budget items to reconcile, it’s going to be racecar-paced. (Leaving us wondering, is it May yet?)
Buckle up and read on. And please note our Big Ask, as we need your help to advocate for an increase to the cigarette tax.
Good News: Road Funding
We’re ending the week in part on a celebratory note: both the Senate and House have passed House Bill 1461, which helps address transportation funding in Indiana and its communities.
The debate over a growth-positive funding formula is a decades-old challenge, and we see this legislation as an incredible step forward. Pending Gov. Braun’s signature, the legislation will implement three big changes that we see as major wins for the region and our state:
- Tolling: It grants the Indiana Department of Transportation authority to request a waiver from the federal government to toll interstate highways, with approval from the governor and without requiring a new statute enacted by the legislature. We support tolling as a much-needed source of revenue for roads and other infrastructure, especially in light of declining gas taxes and changing vehicle technology.
- It reallocates dollars from the state’s Community Crossings Matching Grant program in two important ways:
- Marion County Funds: For dollars in the fund above $100 million, starting in 2027, $50 million will be allocated to Marion County, as long as the city/county matches those funds with new revenue.
- New Formula: For local units that have adopted a wheel tax, remaining funds will be directed to communities based on total lane mileage versus centerline miles, meaning a four-lane road will garner more funds than a two-lane road. This is a major win for growing regions like Central Indiana and something the Indy Chamber has supported for years.
Indianapolis Mayor Joe Hogsett commended legislative leaders on the bill and celebrated the changes in a post on X on Thursday. He also said the city will explore ways to find the matching funding within its budgeting cycles between now and June 2027.
✅ The Indy Chamber celebrates this win for all growing Hoosier communities and the capital city in particular. We look forward to continuing to partner with the City of Indianapolis on developing a plan for local match funding and investment in our local roads and streets
Bad News: Revenue Forecast
In a vibe shift stark enough to evoke Debbie Downer memories, we take you to the revenue forecast.
The State Budget Agency presented Indiana’s updated revenue forecast this week. The state expects to collect $2 billion less in revenue in the 2026-2027 cycle than projected in December 2024, leaving lawmakers to make dramatic funding changes to the budget before session ends on April 29.
Senate Appropriations Chairman Ryan Mishler, who has served in the Statehouse for 21 years, deemed the situation more alarming than what he saw during the 2008-2009 recession, in part because the numbers are worse, and in part because back then, there were federal funds to fill gaps. He emphasized the need for fiscal discipline and has drawn a line in the sand: “If anybody has the audacity to come and ask us for more money, [we’ll] more than likely just take them out [of the budget].” While lawmakers have not specified what might be cut first, they’ve emphasized that K-12 education should be protected as much as possible.
They’re also open to identifying revenue generators, with Mishler noting that “everything is on the table” and House Speaker Todd Huston citing the many years of conversations about raising the cigarette tax.
Here’s where our Big Ask comes in.
The Indy Chamber champions raising our state’s cigarette tax, which is among the lowest in the nation, by a minimum of $2 per pack. Critically, this would help to reduce the 11,100 smoking-related deaths annually in a state with the nation’s eighth highest smoking rate.
From a fiscal perspective, it also would:
- Reduce Medicaid costs: Studies show that higher cigarette taxes will lead to 45,000 adult smokers quitting and prevent 17,800 young people from starting. That reduces the growth in Medicaid and leads to long-term healthcare savings of $795 million. In five years, the Medicaid program savings for Indiana are estimated to be $13.3 million.
- Generate new revenue: At a time when our state needs revenue, raising the cigarette tax would lead to $356 million to help meet our state’s budget needs.
- Reduce the cost of living for Hoosiers: The average Hoosier household pays $1,080 per year in taxes related to smoking-caused government expenses, and the annual healthcare cost to our state is $3.4 billion. Indiana simply can’t afford tobacco.
How You Can Help
We need your support. Please contact your State Senator and tell them you support increasing the cigarette tax by a minimum of $2/ per pack. To make things turnkey:
- Here’s a document with a sample email and social post.
- Here’s an easy way to find your State Senator.
Thanks in advance for your support and advocacy. Every outreach makes a difference.
Other News: Bills Still Being Debated
We’ll be watching a variety of bills that are headed to conference committees next week. If you want to see the full list, check this out. Below is a digest of the big ones on our radar:
- HB 1001: The budget bill, which, as noted, will be amended based on the new revenue forecast and likely debated until the final hours of session. Its conference committee negotiations are scheduled to begin on Monday, April 21.
- HB 1002: Known as the “education deregulation bill,” this substantial document is designed to reduce education regulations, but it has sparked debate among lawmakers about the role teachers can and should play in social and emotional learning.
- SB 287: This controversial bill would require school board candidates to declare their political affiliation in general elections, sparking debate about the role of politics in education.
- SB 289: Also controversial, this bill centers around diversity, equity, and inclusion practices of state government and public education. It was heavily amended to shift the focus from whether DEI offices could exist to what practices entities could engage in. Negotiations are ongoing.
- SB 5: Which outlines processes and requirements related to state budgeting and contracting. We’re keeping an eye out to see if it affects private business contracts with the state (not at the moment, but we’ll keep you posted).
Look out for a hefty update next week, when we’ll provide a recap of key issues this session. Thanks for reading, and thanks in advance for contacting your lawmaker about the cigarette tax.
Continue following updates here and via our socials, and check out our bill trackers below: