HB 1120 / Chamber Supports
The Ways and Means Committee considered a bill last week that would extend the cap on annual school operating referendum increases. House Bill 1120, authored by Rep. Jeff Thompson (R-Lizton), limits the increase to not more than 3% over the maximum operating referendum tax that a school corporation could have levied in the previous year. This limitation on the growth of school operating referendum levies will have a notable impact on the business community in Indiana. This cap is expected to result in significantly lower maximum operating referendum levies for 2025 than would have been the case under the current law.
During the 2023 legislative session, the cap was enacted to limit large increases in school operating referendum levies due to quickly escalating property values in areas of the state. When voters approve an operating referendum for a school corporation, a maximum rate is set which does not change from year to year — unless the school board elects to reduce the rate — and is not subject to the property tax caps.
As property values have increased rapidly over the past several years, school corporations with voter-approved operating referenda have enjoyed greater than anticipated revenues. By capping the growth of these levies, HB 1120 aims to control the escalation of property tax liabilities. The legislative services agency estimates that the cap extension will save taxpayers approximately $86.7 million in 2025. For the business community, this translates into a potential reduction in the financial burden posed by property taxes.
