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: 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.