For months, Southern Indiana officials have pointed to the potential impacts of a recent tax measure as they made decisions about future spending and operations.
Senate Enrolled Act 1 provides new property tax deductions and credits. It also restructures local income taxes.
Some local officials have been concerned about getting less in property tax revenue for operations, as well as how the income tax restructure will affect revenue.
State lawmakers who advanced the measure say property owners need relief and that taxing units will still see positive property tax revenue, just a smaller increase than what they expected.
Here’s how the legislation has informed the budget process this year:
Jeffersonville
The Jeffersonville city council approved cuts presented in Mayor Mike Moore's budget proposal, including slashing the summer concert series nearly in half next year and taking funding away for the annual fall event, Steamboat Nights, and the employee health center. The amount for capital purchases in 2026 was reduced by $500,000.
“It’s a lean but balanced budget,” Moore said in a news release. He noted the proposal fully funded police and fire contracts and provided them raises, but he blamed other cuts on lower revenue because of the new law.
Jeffersonville City Council President Evan Stoner said there are a lot of unknowns surrounding the legislation and he wants to better understand its impacts.
“If we're all looking at this from a worst-case scenario perspective, and it's actually not going to be as bad as it's being made out to be, then that would be great,” he told LPM News last month. “I just hope that we get that opportunity to learn what our cities and towns are facing, because I know it's caused a lot of fear.”
Clarksville
Clarksville Town Manager Kevin Baity said there weren’t big changes in the town’s 2026 budget, but that they were going to keep some town positions open to see how things turn out with the tax revenue.
He said he expects one of the biggest impacts to be the personal property tax breaks to businesses. That, between SEA 1 and companion bill HEA 1427, will allow businesses to exempt up to $2 million in property such as furniture and equipment.
Baity said the restructuring of local income taxes, or LIT, will also be a big hit to the town. He said the town could lose around $2.5 million in LIT dollars in the coming years.
Clarksville leaders wrote in a recent town publication that without changes to the legislation, services like police, fire, parks and street repairs could be impacted.
“Simply put, the things we rely on every day — safety, services, and quality of life — are all on the line,” according to the publication.
Baity is a board member with Accelerate Indiana Municipalities, or Aim. He said the organization, which advocates for municipalities, was working on suggested changes to the legislation.
Aim recently hosted meetings with leaders in Jeffersonville and Speedway, as part of a series of discussions on concerns and ideas to improve the legislation.
Charlestown
The Charlestown City Council approved a 2026 budget with cuts across all departments except police. That included around $115,000 cut from the parks department and about $70,000 from the city maintenance department.
Mayor Treva Hodges said that will mean fewer free community events, fewer people available to fix things and less overtime hours.
“And less overtime doesn't sound like a bad thing until it snows,” she said.
She said if there aren’t adjustments to the law, in a few years, “I think people have to start coming to terms with the fact that what they want out of their government looks very different.”
New Albany
New Albany City Council President Adam Dickey said the city expects to see a decrease in planned property tax revenue for next year, but may be in a better position than some others right now.
They have some unassigned tax revenue that will help them absorb the property tax changes next year.
“There's still critical questions brought forward by Senate Bill 1 with regards to future budget cycles,” Dickey said.
The council passed a budget last month that included 10% raises to non-union employees and elected officials.
Floyd County
Floyd County Council president Danny Short previously said the county’s 2026 budget wouldn’t have big changes. He said the hit to the county isn’t huge, especially next year.
“The main thing is, there’s still a lot of unknowns,” he said, adding that it had been hard to get solid numbers from the county’s financial advisers. The legislature could also make changes.
But as the law rolls out over the next few years, he said residents could be paying the same or less in property taxes, yet possibly more in income taxes.
Clark County
Clark County Council President Brian Lenfert told LPM News in September he supports property tax relief “and if that means we’re making cuts to the county budget, so be it.”
He said a lot of people have been unhappy about how high their property tax bills have gotten over the past few years, and he’s one of them.
“So I am supportive of property tax relief,” he said. “And governments will just have to tighten their belt.”
For the 2026 budget, Lenfert said the council received department requests including employees for the public defender’s office and vehicles for the sheriff’s office, which he said the county likely can't afford at this time.
Coverage of Southern Indiana is funded, in part, by Samtec Inc., the Hazel & Walter T. Bales Foundation, and the Caesars Foundation of Floyd County.
