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Indiana House Republicans are mulling legislation to delay local referendums to increase school property taxes until the fall election, a move that could have major implications for a rebuilding plan for Indianapolis Public Schools.
House Speaker Todd Huston, R-Fishers, said Tuesday his caucus is concerned about costly tax increase proposals being placed on the May 2 primary ballot given the uncertainty surrounding property tax bill increases after a year of record inflation and soaring home values.
“We’re exploring options to make sure people don’t move forward with spring referendums in a world where there’s this much uncertainty,” Huston told IBJ.
Rep. Bob Behning, chair of the House Education Committee, said one of the options being explored involves passing legislation to delay all referendums until the November general election.
Doing so would ensure that Hoosier homeowners aren’t footing an even larger property tax bill while also addressing long-term concerns about referendums being held during primary elections, which typically have lower turnout than general elections, he said.
“I generally think it ought to be in the fall of a general election because you’re going to have more participation in the process,” Behning said.
The move comes as IPS looks to advance a ballot measure to increase property taxes above the state’s property tax cap to support more than $400 million in operating expenses as part of the district’s re-organization effort known as Rebuilding Stronger.
The plan to address declining enrollment amid a boom in charter schools involves closing six buildings, expanding academic offerings, increasing teacher pay and reconfiguring grades throughout the district.
The school board already approved a separate $410 million ballot question for capital expenses as part of the planned overhaul, potentially bringing the total cost of the referendum proposals to $810 million.
The funding requests need to be voted on by referendum because they would exceed the state’s property tax caps, which mandate that property tax bills can’t be more than 1% of assessed value for owner-occupied homes, 2% for other residential properties and farmland and 3% for all other property.
IPS officials have said the increase would amount to a $72 annual increase in property tax payments for the average homeowner in the district.
The Rebuilding Stronger plan has faced pushback from charter school advocates, including the 18 charter schools that are part of the district’s Innovation Network.
Under a current revenue-sharing proposal, the charters would receive roughly $1,000 for each student compared to about $1,900 for traditional public school students. Independent charter schools not affiliated with IPS wouldn’t receive any funding.
Charter supporters have said IPS’s latest revenue-sharing offer still treats charters unfairly.
Behning has also filed legislation that would require districts to share tax revenue gained through referendums with charter schools. If the bill passes, it wouldn’t become law until June 30, 2023, but if Republicans can successfully delay the referendums until the fall election, it could mean that IPS would be forced to share more money with charter schools.
Any House legislation to delay referendums would likely go through the Ways and Means Committee, Behning said. Rep. Jeff Thompson, R-Lizton, who chairs the committee, said he wasn’t aware of discussions to prevent referendums from getting on May ballot.
Rep. Greg Porter, an Indianapolis Democrat and the ranking minority member on Ways and Means, said he was concerned that Republican moves would siphon away more resources from already cash-strapped school districts such as IPS.
“School corporations have referendums in order to pay teachers and for capital needs, and for the supermajority to entertain taking away another tool in the toolbox to educate—I find it somewhat despicable,” Porter said.
Sen. Travis Holdman, who chairs the Senate Tax & Fiscal Policy Committee, said he would consider the idea if it advances out of the House but was hesitant to endorse the proposal. Holdman has introduced legislation to establish a commission to examine the feasibility of phasing out the personal income tax and reforming the state’s complex property tax system.
The last time IPS asked for a referendum came in 2018, when voters approved a $272 million tax increase for the district to fund teacher pay raises and upgrades to school buildings.
IPS officials did not respond to a request for comment. The district faces a Feb. 17 deadline to certify the two ballot measures and place them on the May ballot.
School districts’ success in winning referendums for new property tax revenue in last fall’s election was spotty. Statewide, four of eight referendums were defeated.
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