Legislative Update: 4.25.25

The 2025 legislative session ended a smidge ahead of schedule, with work wrapping up during the early hours of Friday, April 25 (for those who read their email promptly: today). This capped a dynamic four months that started with a boatload of bills; included many substantive debates over issues like taxation, education, and health policy; and concluded with major budget negotiations – and programmatic cuts – to resolve a $2.4 million shortfall in projected revenue over the next biennium. We’re summarizing it for you in three parts.

Warning: Today’s missive is long, but we’ve aimed to make things as skim-worthy as possible with lots of bullets and headlines.  

The Big Wins: Indy Chamber Legislative Priorities

Road Funding Changes Offer New Revenue and Benefit Central Indiana 

• What Happened: Faced with declining gas taxes and changing vehicle technology, Indiana must shore up additional funding to support state and local infrastructure. To help address this, lawmakers passed HB 1461 (Road Funding), which enables the state to request a waiver from the federal government to toll interstate highways; allocates $50 million from a state fund to Marion County beginning in 2027 if locals can match the funds; and for communities that have a wheel tax, distributes additional state dollars to them based on total lane mileage, which factors in the number of lanes and not just the length of a road. 
• What It Means: Central Indiana and other growing parts of the state will benefit from these changes, which start to allocate funds based on where traffic is the heaviest and, therefore, maintenance needs are the greatest. And tolling would be a game-changer to ensure our state has the resources (now recoupable from out-of-state drivers) to remain the Crossroads of America, which is critical for business.  
• What Comes Next: We’re continuing to partner with Mayor Joe Hogsett’s administration and the Indianapolis City-County Council to identify additional funding to match the $50 million from the state that kicks in starting in 2027. And just a heads up that another provision in the bill increases the speed limit to 65 miles per hour on I-465.  

Indiana Raises Tobacco Taxes for the First Time Since 2007 

• What Happened: In a major win for Hoosier health and economic momentum, state lawmakers supported a $2 per pack increase to Indiana’s cigarette tax and proportional increases for other forms of tobacco in HB 1001 (State Budget). This was among the Indy Chamber’s top legislative priorities, and we’re immensely grateful to all of you who reached out to your lawmakers in support.  
• What It Means: The tobacco tax increases are projected to generate nearly $810 million in new revenue over the next biennium. Evidence also shows that raising the cigarette tax by $2 per pack has a meaningful impact on reducing smoking rates, with an estimated 45,000 adults projected to quit and 17,800 young people deterred from taking up smoking. The long-term economic impacts are important, too, as Medicaid expenditures are rising, and reducing smoking has a positive impact on slimming these costs.  
• What Comes Next: The new tax goes into effect with the new fiscal year, which starts July 1, 2025.  

New Measures Will Help Align Education and Training with Industry Needs 

• What Happened: Indiana faces a workforce shortage, with over 160,000 unfilled jobs, and we’re not adding enough workers to the mix to fill the gap in coming decades. Two new laws will help align higher education and career training with the needs of industry so that we prepare more graduates with the skills needed for high-demand fields – with a focus on bolstering efforts to build a world-class professional apprenticeship system in Indiana. 
  • SB 365 (Education Matters) requires the Indiana Department of Education and Indiana Commission for Higher Education to track career and technical (CTE) program completion and how many students remain in their fields of concentration after graduation. The bill also creates a statewide career coaching initiative and grant fund to give students support in identifying their career paths of interest.  
  • SB 448 (Higher Education and Workforce Development Matters) requires Secretary of Education Dr. Katie Jenner to prepare a framework for earning “stackable credentials,” such as industry certifications, training programs, and postsecondary degrees that ladder up to mean strong competency for jobs in high-demand industries. It also requires the Management Performance Hub to annually report data related to credential supply and demand.  
• What It Means: These changes build upon years of effort to increase college enrollment in Indiana while also creating pathways for career preparation and training beyond four-year degrees. SB 448, in particular, will support efforts to build a statewide apprenticeship program in Indiana, with a focus on preparing talent with the skills employers in high-demand fields require, starting in high school. 
• What Comes Next: Secretary Jenner’s framework must be completed by Nov. 1, 2025. 

Alliance Will Foster Collaboration and Resource-Sharing Among Schools

• What Happened: With HB 1515 (Education and Higher Education Matters), the legislature created the Indianapolis Local Education Alliance, an advisory body of Indianapolis leaders tasked with developing collaborative solutions within Indianapolis Public Schools’ (IPS) district boundaries. Indianapolis has myriad public school options for families, including public charter schools, which are run by nonprofits; district-run schools; and a hybrid approach called Innovation Network Schools, which have nonprofit operators but operate within IPS. Today, about 60% of parents send students to either public charter or Innovation Network Schools, and there’s a need for a more cohesive system, especially when it comes to governance and sharing resources for school operations. The ILEA will be charged with creating cohesion by making recommendations on facilities and transportation, identifying collaborative governance structures, and aligning on future referendum proposals, among other topics.  
• What It Means: The recommendations of the board will not be binding, but they could include any structural changes required “for a collaborative system of schools that can serve all students within the geographic boundaries of the school city fairly.”  
• What Comes Next: Appointments to the nine-member Alliance will be made before the group’s first meeting on July 1, 2025. Mayor Joe Hogsett will chair the board and has four appointments, including one representing the business community. The Indy Chamber has raised its hand to be part of the Alliance and hope we can represent your interests in this consequential work. As an advocacy organization representing the needs of Central Indiana’s business community – and a partner with IPS for the last two decades – we care deeply about advancing conversations around education quality and maximizing school resources in our community. Notably, our 2018 audit of IPS resources provided us with a strong grounding in IPS operations and resources, and we have been highly engaged since then on matters such as referendums and tax-sharing.  

State Stands Up New Office for Entrepreneurs and Small Business 

• What Happened: Small businesses are the lifeblood of Indiana’s economy, and nationally, young companies create the most net new jobs. Aligned with Gov. Mike Braun’s enhanced focus on “main street businesses,” the legislature created an office dedicated to supporting small businesses and entrepreneurs in Indiana in SB 516 (Economic Development). 
  What It Means: In a 2022 voter survey, small business advocacy organization Right to Start showed that while 43% of voters have considered starting a small business, only 21% have tried, signaling how daunting the task can feel. Dedicated support for this endeavor will be a win for Indiana’s business community. We hope the state also stays focused on supporting companies into the growth stage through other policy efforts.  

Other Big Issues

Lawmakers Pass Lean Budget under Tight Revenue Forecast 

• What Happened: HB 1001 (State Budget) made it across the finish line in the wee hours of Friday, April 25. After a $2.4 billion shortfall was identified in the state’s April revenue forecast, legislative and fiscal leaders had to make tough decisions about funding other programs in the $46.2 billion allocation over two years. Nearly half (47%) of the state’s general fund is spent on K-12 education and nearly a quarter (22%), the fastest-growing portion, is dedicated to Medicaid. 

• Here’s a line-by-line look at some of the key items we were watching – and where they landed in the final budget: 
  • ⬇️ Public Health Funding: Initially funded at $200 million in the House and Senate passed version of the budget, funding for the Health First Indiana program for improving public health outcomes was reduced to $80 million over the biennium.  
  • ⬇️ Career Scholarship Accounts (CSAs): The $30 million allocated toward Career Scholarship Accounts was reduced to $10 million in the final version of the budget. CSAs provide high school students (grades 10-12) with $5,000 annually in career-based scholarship funding for work-based learning opportunities, such as apprenticeships, internships, and more. 
  • ↔️ Residential Infrastructure Revolving Loan Fund (RIF): Funding remains at $50M over the biennium for RIF. The fund provides low-interest loans to Indiana counties, cities, and towns to finance infrastructure projects that support residential housing development. Additional guardrails for the program can be found in HB 1005 (Housing and Building Matters). 
  • ⬇️ Hoosier Workforce Investment Tax Credit: Previous iterations of the budget included a tax credit meant to incentivize employers to upskill their existing workforce; however, funding for this program was not included in the final version of the budget.  
  • ↔️ Workforce Innovation: Lawmakers allocated $36 million toward workforce innovation, which can be used for employer training grants, workforce-ready grants, and workforce innovation programs, including the reemployment skills training pilot program.  
  • ↔️ Statewide Sports and Tourism Bid Fund: The Indiana Sports Corp. uses the bid fund to attract major events to the state. The budget allocates $10 million to the fund.  
  • ⬇️ Child Care: The final budget provides $147 million of hold-harmless funding for families currently receiving childcare through the Child Care Development Fund (CCDF). It cuts CCDF, On My Way Pre-K, the school-aged care grant, and Visually Impaired Preschool Services by roughly 5%. 
  • ⬆️ Universal Vouchers: Beginning July 2026, there will be no income restrictions on Hoosiers eligible to access universal vouchers to pay for private K-12 education through Indiana’s Choice Scholarship Program. 

Lawmakers Pass Tax Reform Package

• What Happened: SB 1 (Local Government Finance) will usher in changes to Indiana’s taxation system, with reforms in three big buckets: 
  • Residential Property Tax Reductions: The bill provides homeowners with relief by phasing up the homestead deduction from the current 60% of a home’s assessed value (or $48,000, whichever is lower) to 66.7% of a home’s assessed value by 2031. It also provides all homeowners with a $300 tax credit, with additional credits for seniors, disabled homeowners, and disabled veterans. 
  • Business Personal Property Tax Reductions: SB 1 also gives businesses a new tax break by raising the ceiling on the value of business personal property that can receive deductions, from the current $80,000 to $2 million in 2026. It also eliminates the 30% depreciation floor, which says that for tax purposes, business property cannot be valued at less than 30% of its original value. The depreciation floor lift only applies to new property and will be phased in over time.  
  • Important Note: One of the final bills passed this session – HB 1427 (Department of Local Government Finance) – makes adjustments to some of the business personal property tax language passed in SB 1, including removing the BPPT changes for 2025 since property tax bills have already been sent out.  
  • Local Income Tax Changes: The bill provides local governments with greater ability to generate additional revenue. Cities and towns can adopt their own local income tax rates, and the cap for local income taxes at the county level will be raised from 2.5% to 2.9%.
• What It Means: Businesses benefit from this bill through changes to the business personal property tax provisions. While it also provides relief to homeowners, by giving local governments the ability to raise local income tax rates, individuals could see taxes shifted elsewhere to help offset the loss to local governments.  
• What Comes Next: These changes will go into effect July 1, impacting 2026 tax bills.  

A Big List

Education & Workforce

• Several bills made it across the finish line, impacting education and workforce this legislative session. Below are some of the key bills to review:  
  • Deregulation: HB 1002 (Various Education Matters) is a House Republican priority bill intended to “deregulate” education. The 139-page bill strikes several optional provisions and mandates from existing code.  
  • Child Care: There were multiple bills aimed at increasing childcare options in Indiana, including HB 1248 (Child Care and Development Fund), HB 1253 (Child Care), SB 463 (Child Care Matters).  
  • Partisan School Boards: SB 287 (School Board Matters) is the bill that adds partisanship to school board races by requiring a candidate to choose a political party affiliation, declare as an independent, or identify as non-partisan on the ballot. The concurrence just passed the Senate with a vote of 26-24. 
  • DEI: There were some tweaks made to SB 289 (Unlawful Discrimination) during conference committee, but ultimately the bill that passed 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. 
• To view additional legislation impacting education and workforce, click here. 

Healthcare

• Addressing the cost of healthcare remained a top priority for House and Senate leadership, but how to do that was hotly debated this legislative session. These are some of the bills that passed impacting the health care space:
  • Both HB 1003 (Health Matters) and HB 1004 (Health Care Matters) were priority bills for the House Republican caucus. HB 1003 includes several provisions intended to improve transparency in pricing, including language impacting prior authorization, while HB 1004 threatens a hospital’s non-profit status if their costs are higher than a statewide average.
  • Meanwhile SB 2 (Medicaid Matters) was a priority bill for the Senate Republican caucus and targets Medicaid fraud through a variety of measures.  
  • As introduced, SB 140 (Pharmacy Benefits) would have prevented vertical integration between PBMs and health insurers in Indiana. The bill was heavily amended in the House.  
  • SB 480 (Prior Authorization) mirrors the prior authorization language found in HB 1003 and prohibits private insurance companies from requiring prior authorization for the first 12 physical therapy or chiropractic visits for new injuries or “episodes of care.”
• To view additional legislation impacting healthcare, click here. 

Local Government & Fiscal Policy 

• How local governments are funded took center stage this session. While SB 1 has the biggest fiscal impact, there’s language in a variety of bills that could impact overall fiscal policy. Below are two key bills to review: 
  • HB 1427 (Department of Local Government Finance) starts as the Department of Local Government Finance agency bill every session but gets heavily amended throughout session. It now includes cleanup for SB 1, impacting Business Personal Property Tax, agricultural property taxes, and reduces franchise fees (a source of revenue for local units maintaining rights of way). It also includes language that allows hotels and motels in an economic enhancement district (EED) to collect a special benefits assessment of $1 per night from each person renting lodging to go toward the special benefits assessment.  
  • SB 5 (State Fiscal and Contracting Matters) creates a process for budget committee review when a state agency is awarded federal funds that may require a state match or additional staff. It’s also meant to increase transparency and accountability for state contracts. 
• To view additional legislation impacting local government and fiscal policy, click here. 

Transportation, Infrastructure, and Environment 

• HB 1461 was the main transportation and infrastructure bill passed during the 2025 legislative session, but there were a number of bills impacting transportation and infrastructure this session.  
  • HB 1198 (Local Public Works Projects) allows a local unit to complete a public works project without awarding an outside contract if the cost of the project is less than $375,000 (increased from $250,000 in current law). Moving forward, this amount will be adjusted annually based on inflation.  
  • Increasing housing stock continues to be a goal for members of the General Assembly. HB 1005 (Housing and Building Matters) makes changes to the Residential Infrastructure Revolving Loan Fund. 
• To view additional legislation impacting transportation, infrastructure, and environment policy, click here.  

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.

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:

• Transportation, Infrastructure, and Environment
• Local Government and Fiscal Policy
• Healthcare
• Education and Workforce

Legislative Update: 4.11.25

We’re T-minus 2.5 weeks until the end of session, and—perhaps not surprisingly in this budget year—the most dominant issues at this stage are all about the Benjamins. 

Discussions over money—from the budget to how much money property taxpayers and local governments should keep, to how much the state and communities must collect to fund roads—were this week’s focal point.

Bills that didn’t move out of committee by Thursday, April 10, will not advance. Meanwhile, nearly 100 bills have already been sent to Governor Mike Braun to sign into law (you can track them here).

Here’s what we will be watching in the home stretch of the session:

Never Count Your Money When You’re Sittin’ at the Table

When a bill gets passed out of its final committee as many did this week, it’s a major milestone. But we’ll take this moment to remind readers that much can happen in the next two weeks—and nothing will be final until Sine Die on April 29 (or potentially sooner).

A process reminder: If a bill was amended by the opposite chamber from which it originated, it becomes eligible for conference committee. And the conference committee process can be, shall we say, involved. 

If the original bill author agrees with the changes made in the second chamber, it’s mostly smooth sailing. The author will “concur” with the changes, and both chambers must vote to approve the concurrence. (A chamber can defeat a concurrence, but it’s rare.)

Things get more complicated if the original bill author does not agree with the changes or wants to further amend their bill. The author then must file a dissent and work through the changes via conference committee. Once these changes are negotiated, a conference committee report is adopted and must be approved by both chambers.

The process may sound boring, but in practice, it’s a critical point in the legislative session where concepts that didn’t previously move forward can be inserted into bills.

• The lesson? Don’t go on a spending spree until it’s all over. Stay tuned for updates over the next two weeks.  

Moneyball

Much like the Moneyball principles that go into developing a top sports team with limited funds, the theme of this year’s budget-making process can be summed up as making the most of limited resources. This week’s budget from the Senate was no exception. While it offers some variations from the House-passed version of the budget, the chambers’ versions align on many core principles and embrace the same ethos of efficiency. Lawmakers will negotiate the discrepancies between their versions of the budget until the last days of session.

Highlights from the Senate-passed version include: 

• No Universal Vouchers: While the House-passed version of the budget included $170 million to provide private K-12 vouchers for all Indiana families, the Senate bill removes the additional funds. This means that the current law, which provides K-12 vouchers for families making up to $220,000 per year, would stand, and higher-income families would not qualify.  
• Funding for Medicaid and Public Health: Nearly a quarter (22%) of the $46.8 billion budget would go toward the state’s share of Medicaid. The Senate budget fully funds the Medicaid forecast at $10 billion over the biennium, a $2.1 billion increase over two years. It also funds two health initiatives supported by the Indy Chamber: community mental health at $100 million over the biennium and Health First Indiana at $200 million over two years. It requires that 90% of the local public health funding be spent on core public health services, such as chronic disease, maternal and infant health, and more. Though language in the amendment removes tobacco prevention and cessation and emergency preparedness as eligible core public health services. Funds may also only be used for Indiana residents who are legal citizens.  
• Childcare Funding: The Senate’s version of the budget also would pare back who qualifies for childcare subsidies from the current income cap of $48,500 for a family of four to about $41,000. This restores qualifications that were in place two years ago before expansion and helps address a waitlist that Gov. Eric Holcomb’s administration announced late last year.  
• Hoosier Workforce Investment Tax Credit: Like the House-passed version, the Senate’s budget includes a tax credit available to Indiana employers who offer their employees training and elevate their pay by at least 25% and above the average annual wage in the region. Employers with at least five employees qualify to apply to the Indiana Economic Development Corporation for the credit and can receive up to $5,000 per employee for up to 10 employees. The budget for the program is capped at $4 million per fiscal year.  
• Regional Economic Development: The Senate also included a requirement in the budget that would require Indiana Secretary of Commerce David Adams to develop a collaborative framework with regional economic development organizations to identify and implement targeted, actionable economic growth strategies on a regional basis. This work would begin in June 2025 and be completed in June 2026. 
• Innovation Development District Changes: The Senate amendment to the budget includes changes to the IEDC’s Innovation Development Districts, tools designed to create incentives for large-scale economic development projects, including the LEAP District in Boone County.  Under the amendment, the total investment plan must be at least $750 million before the IEDC can take steps to designate it as an IDD. The local unit of government and the IEDC must reach an agreement before an IDD can be designated—a requirement that now only applies to projects under $2 billion. And the IEDC also would have to notify the Department of Local Government Finance and the Department of Revenue of an IDD designation. All changes are designed to improve communication between government units and increase transparency. 
• Larger Senate Surplus: While House lawmakers set state reserves just below 12%, the Senate version of the budget creates a larger rainy day fund at more than 13% in both years.  

Unsurprisingly, the budget drafts do not include increasing the tobacco tax, which remains a top Indy Chamber priority. But we’ll have more clarity on whether that could be in the cards after the state releases its revenue forecast next Wednesday, April 16. If you want to dive deeper into the budget, you can view the Senate’s budget proposal here.

The Price Is Right

After months of back-and-forth about how to balance property tax relief with local government needs, Gov. Braun and the legislature are closer to having a deal. SB 1, the home to various plans and proposals addressing property taxes and local income taxes, passed the House 65-29 this week. It includes the following key provisions:

• Residential Property Tax Relief: Homeowners will receive property tax relief in the form of a $300 tax credit beginning in 2026, with larger credits available for seniors meeting income requirements and disabled veterans.  
• Public School Property-Tax Sharing: The bill also requires public school corporations to share operating funds with public charter schools, a provision previously in SB 518. Capital fund-sharing is not included. It also requires that referenda be held in general election years so that voters have more transparency about the tax impact of these ballot questions. 
• Business Personal Property Tax Reductions: The House Ways and Means passed version of the bill would’ve phased out business personal property taxes over a 10-year period, but that provision was removed. Instead, the bill exempts small businesses with up to $2 million in equipment, up from the previous threshold of $80,000 in equipment.  
• Local Income Taxes: The bill decreases the local income tax rate by reducing the cap from 3.75% to 2.9%.

The legislation will likely be concurred upon by the Senate, but if not, it will have to be adjusted through the conference committee process. A summary of all the provisions in the current version of the bill can be found here.

Money on My Mind

Lawmakers have been hard at work this session to identify infrastructure funds to support roads, bridges, sidewalks, and more—especially as vehicle efficiency and driver patterns put a strain on gas taxes. HB 1461, as we’ve told you previously, would allow for tolling of interstate highways, distribute some state funds based on total lane miles in a win for growing communities, and allocate $50 million for much-needed infrastructure in Marion County if locals can match those dollars.

To compensate for the lack of gas taxes their drivers incur, it also now includes increases to registration fees for electric vehicles (from $150 to $340) and hybrid vehicles (from $50 to $170). We’re encouraged by the progress in the bill and will continue to advocate for provisions including tolling, total lane mile allocations, and the $50 million for Marion County. 

Works Hard for the Money

Educating is hard work, and solving for governance, student outcomes, and operations puzzles are only pieces of the large equation—as evidenced by the tumultuous debates at the Statehouse this year. This week, state lawmakers created a mechanism for locals to roll up their sleeves.

This week, the House Education committee adopted an amendment to create the Indianapolis Local Education Alliance (ILEA) as a mechanism to chart a new course for the future of public schooling within the bounds of the IPS district—one that takes steps towards creating fiscal equity between schools and improving education outcomes. SB 373 also creates a statewide pilot program for transportation and facilities management, wherein other communities could opt in to develop similar solutions. 

In the latest development, the legislature removed specific organizational appointments to the task force and gave the majority of the board seats to Mayor Joe Hogsett, who will also chair the body. The remaining seats will be appointed by IPS leadership. 

The ILEA will have six months—from July to December of 2025—to develop recommendations for management of school facilities and transportation, revenue sharing between charter and district-managed schools, student outcomes accountability structures, and collaborative governance models—all of which might culminate in a plan for a future taxing referendum, very likely in the Fall of 2026. The question will be, can this group successfully develop broadly endorsed solutions for the future of public schooling in the district? In large part, that will depend on who gets appointed to participate in the ILEA. 

The Indy Chamber helped develop the concept of the ILEA as a mechanism to take IPS-centered debates out of the Statehouse and put them into the hands of local leaders. 

We are glad to see the mayor’s office take a leading role in carrying this conversation forward, and we believe the Indy Chamber’s voice on behalf of the business community will be critical to have represented on this body—particularly to ensure that students in the heart of our capital city are prepared for the jobs of the future. We look forward to partnering with the mayor and local leaders in this effort.

Turning Over a Coin

Changes to a controversial bill around diversity, equity, and inclusion practices this week provided clarity for those seeking to implement it and helped alleviate some critics’ concerns, but fears over the impact the bill could have on free speech and inclusive practices remain. A key amendment offered by Rep. Chris Jeter (R-Fishers), Indiana House Judiciary Chairman, shifted the language in the bill to focus on practices, rather than the existence of DEI offices. “I think it can be difficult to legislate words and acronyms, and so we really tried to home in on the actions we’re trying to address,” Jeter said, noting the desire for codification of the 2023 U.S. Supreme Court decision banning race-conscious admissions.

The bill applies to discrimination in public education, public employment, and licensure, and does not affect private companies. Rep. Earl Harris (D-East Chicago) offered an amendment to clarify that the new provisions would not impact existing scholarships to minority students, such as the Next Generation Hoosier Minority Educators Scholarship Program, and the House adopted that amendment.

The next two weeks are certain to be fast-moving, and a lot can happen between now and April 29. Continue following updates here and via our socials, and check out our bill trackers below:

• Transportation, Infrastructure, and Environment
• Local Government and Fiscal Policy
• Healthcare
• Education and Workforce

Legislative Update: 2.21.25

For the policy lovers among us, session drama around tax policy, education funding, and healthcare spending sets our wonky hearts aflutter—but we’d be lying if we said we weren’t a little relieved about the fact that it’s now intermission. 

Next week lawmakers exit stage left to prepare for the second act of session. We’ll also be leaving the Statehouse theater and taking a break from this update next Friday, so read on for a substantive recap of where things stand at the halfway point of this months-long show.

Center Stage

The Indiana House passed its version of the next two-year budget on Thursday, moving forward a proposal that includes many of Gov. Mike Braun’s spending priorities. The Senate will now review and almost certainly amend the budget before the final version is approved in late April. 

• In broad strokes: The $46.7 billion general fund budget is lean and increases spending by only 5 percent in light of a modest revenue forecast and decreases in some pandemic-era infusions of cash.
• Key funding priorities: Education spending, which makes up nearly half of the budget, got a 2 percent increase. All families in Indiana, regardless of income, can access private-school K-12 vouchers under the House-passed version of the bill. The budget also maintains childcare vouchers for income-qualifying families who currently receive them by allocating $155 million in state funds to replace pandemic-era federal relief funds that bolstered the program in the current budget cycle. But unlike Braun’s more robust childcare spending proposal, it does not eliminate the wait lists that the state announced late last year or allocate an additional fund for local childcare assistance.
  • The budget fully funds Medicaid, which has seen ballooning costs and now accounts for 22 percent of the House-passed version of the budget, and keeps public health funding generally consistent at $200 million over the biennium (down from $225 million in the current cycle, but up from pre-pandemic levels of roughly $14 million).
• Business funding victories: The budget increases spending on Career Scholarship Accounts, which provide students with financial support to participate in career-preparation programs such as apprenticeships and internships. It also creates a tax credit designed to help companies upskill their workforce, reflecting Braun’s economic development approach of supporting existing businesses’ growth. While both efforts reflect Indy Chamber priorities, we hope to work on the details of the tax credit during the second half of session to ensure it’s practical for businesses to implement. In an effort to increase housing supply, the budget maintains a $25 million fund created in 2023 to allow municipalities and counties to apply for funds to help pay for utilities and other infrastructure to support new housing developments. The Indiana Sports & Tourism Bid Fund will receive $10 million over the biennium to support efforts by Indiana Sports Corp and its partners to land major events in Indiana.
• On the fiscally conservative side: Public colleges and universities will not receive funding for new buildings but will get allocations for maintenance of existing buildings. The Indiana Economic Development Corp. also will see a $2.2 million drop in funding, including cuts to a $500 million fund that could be used for investment incentives or infrastructure.

Leading Actors

K-12 education and healthcare (Medicaid, specifically) collectively make up 68 percent of the state’s budget, so it’s logical that the budgetary plot would revolve around these two characters. Both topics have generated significant debates so far this session.

• K-12 education: Democrats strongly opposed the House budget’s removal of income caps on K-12 vouchers, which they say skew public benefit towards wealthy families. In current law, families who earn more than $220,000 per year do not qualify for private school vouchers, which provide an average of $6,200 per student in tuition support for families (90 percent of what public school students receive). But Republicans say parents deserve the right to use their tax dollars for their students’ education.
  • Meanwhile, SB 518 (School Property Taxes), a bill that enables public charter schools to access local property tax dollars narrowly passed the Senate after being amended on second reading. The legislation is intended to create funding parity for public schools regardless of whether they are operated by a school district or a nonprofit operator.  
• Healthcare: While House lawmakers propose fully funding Medicaid costs, about 10,000 Hoosiers remain on waitlists for waivers that provide services for home- and community-based care. Gov. Eric Holcomb’s administration enacted the waitlists to cut costs in light of a $1 billion Medicaid shortfall in 2023 due to a forecasting error. Now, lawmakers are looking to address the waitlists by scrutinizing the Medicaid program to root out fraud and find efficiencies as is proposed in SB 2. This bill also seeks to limit enrollment in the Healthy Indiana Program, which is 90 percent federally funded, to free up funds. At the core of this debate is how to rein in spending on healthcare needs to make it sustainable amidst the huge growth during COVID-19 and beyond.  

Rising Action

Indiana’s road funding proposal—HB 1461—moved through the House and will be taken up by the Senate.

•  A key change would benefit growing communities in Indiana by capping one of the state’s key road funding sources to local communities, the Community Crossings Matching Grant Program, at $200 million. Starting in the 2026 fiscal year, surplus beyond that amount would be distributed differently.
  • Indianapolis would receive an additional $50 million from the surplus, as long as the city matches that amount with local funding.
  • Additional surplus would be allocated to communities based on total lane mileage, which benefits populous areas with wider roads.
  • Both of these changes are strongly supported by the Indy Chamber and we look forward to working with stakeholders and members of the Senate during the second half of session.  

Cliffhanger

Most good narrative tension involves a question that doesn’t get answered until late in the story. In the first act of session, the tension revolves around raising the cigarette tax.

A $2 per pack increase to Indiana’s 39th lowest rate of $0.995 would generate an additional $356 million in much-needed annual state revenue. But will lawmakers include it? We likely won’t know until the budget negotiations during the last week of session.

• Sen. Fady Qaddoura included a $1 per pack increase in SB 394, which was heard in Senate Tax & Fiscal Policy Committee but did not move out of committee.  
• Rep. Ed Delaney offered an amendment to the House budget bill to increase the tax by $2 per pack, but it was not adopted. 
• House Republicans voiced support for the policy, but House Ways and Means Committee Chairman Jeff Thompson indicated they need to see support from the Senate before implementing it. That’s why the decision likely comes down to final budget negotiations. 

Act Two: Coming Soon!

Legislators have departed the Statehouse and won’t return until Monday, March 3, when they’ll begin the process of reviewing bills passed in the other Chamber. There were 1,250 bills and resolutions introduced this session with only 337 (27 percent) passing in their original Chamber. Below are updated lists of bills still moving that the Indy Chamber is tracking for you to review:

• Transportation, Infrastructure, and Environment
• Local Government and Fiscal Policy 
• Healthcare 
• Education and Workforce 

Don’t hesitate to ping us with any questions, and we’ll see you back here on March 7.