Photography // Submitted
In April 2025, Indiana’s Senate Enrolled Act 1 (SEA 1) was enacted, introducing sweeping reforms to the state’s property tax system. While aimed at providing tax relief to homeowners, the legislation has sparked significant concern among public institutions, notably Carmel Clay Public Library (CCPL) and Carmel Clay Schools (CCS). Both entities are now grappling with the potential financial ramifications of the bill.
Impact on Carmel Clay Public Library
SEA 1’s restructuring of property tax revenues poses a substantial threat to public libraries across Indiana. The Indiana Library Federation (ILF) has voiced strong opposition, highlighting projected funding reductions exceeding $11.6 million in 2026, escalating to nearly $32.4 million by 2028. Such cuts jeopardize the essential services libraries provide to their communities.
Bob Swanay, Director of CCPL, expressed deep concern over the bill’s implications.
“We’re still trying to assess the impact,” Swanay said. “One of the difficult parts is that it’s so complicated and phased in. The full effect doesn’t take place until 2031. That makes planning exceedingly difficult.”
Swanay emphasized the uncertainty introduced by the legislation, noting that CCPL’s long-term fiscal planning documents may need to be overhauled. He also highlighted the potential loss of approximately half of the library’s revenue stream if the county opts not to levy a tax to fund libraries, a decision now subject to annual review.
“They set up a system of winners and losers,” Swanay stated. “Not every county is going to do that for their library system. So, we’ll have even more exacerbated differences in quality of libraries because of that.”
Additionally, Swanay pointed out the compounded challenges arising from federal funding cuts.
“The Institute of Museum and Library Services was zeroed out,” Swanay explained. “That’s the federal support organization for libraries. On top of that, they cut the state library [funding] by 30%. That state library covers the Inspire databases, the state courier system and more. All of that is in jeopardy.”
Consequences for Carmel Clay Schools
Carmel Clay Schools are also facing significant financial challenges due to SEA 1.
Superintendent Dr. Michael Beresford commented on the potential impact of SEA 1 on the Carmel Clay Schools.
“We’re still reviewing SEA 1 and its potential effects,” Beresford stated. “The Legislative Services Agency projects an average gain of 1.7% in property tax revenues for Carmel Clay Schools over the next three years, but also shows we’ll receive millions less than the district would have prior to the passage of SEA 1.”
Community Response and Advocacy
The enactment of SEA 1 has galvanized educators, parents and advocacy groups across Indiana. Hundreds rallied at the Statehouse, expressing concerns over the financial strain on public education and library services.
The ILF continues to advocate for the restoration of funding and urges community members to contact lawmakers. They emphasize that the combined impact of SEA 1 and federal funding cuts threatens the sustainability of vital library services statewide.
As SEA 1’s provisions are phased in, both CCPL and CCS face a landscape of financial uncertainty. The annual nature of funding decisions complicates long-term planning, potentially affecting services and staffing. Community engagement and advocacy remain crucial in addressing these challenges and ensuring the continued provision of essential public services.
SEA 1 Summary
Synopsis of Indiana Senate Enrolled Act 1 (2025 Session)
Topic: Local Government Finance
Authored by:
Senators Travis Holdman, Chris Garten, Scott Baldwin
Co-Authored by:
Senators Mike Gaskill, Linda Rogers, Brian Buchanan, Tyler Johnson
Sponsored by:
Representatives Jeffrey Thompson, Edward Clere, Craig Snow, Jack Jordan
Senate Enrolled Act 1 (SEA 1) – Property and Income Tax Reform (2025)
SEA 1 implements sweeping changes to Indiana’s property and local income tax systems. It:
- Restricts bond issuance and phases out excess property tax levies tied to assessed value (AV) growth.
- Caps levy growth at 4% in 2026 and requires fiscal bodies to vote on levy increases following public hearings.
- Phases out the standard homestead deduction by 2031 and phases in a supplemental deduction up to 2/3 of AV.
- Introduces a new 1/3 AV deduction for properties subject to the 2% circuit breaker, also effective by 2031.
- Increases the business personal property exemption threshold from $80K to $2M and removes the 30% floor for new assets.
- Amends referendum processes, limits timing of school referenda, and mandates revenue sharing between schools and eligible charter schools starting in 2028.
- Raises the local income tax (LIT) cap to 2.9% for counties and introduces a municipal LIT option (up to 1.2%) in 2028.
- Eliminates local income tax councils in 2027, transferring authority to county and municipal fiscal bodies.
- Establishes a property tax deferral program for qualified homeowners (capped at $10,000 deferred).
- Requires a property tax transparency portal and budget agency reporting on LIT distributions.