Meshing Prescott/Braun and Mishler and Thompson plans?
When Rep. J.D. Prescott (R) began his statewide tour touting his bill to completely eliminate the property tax the reactions were diverse. Many thought he was delusional, some wondered if he was looking to raise his profile on the House Committee on Ways and Means, a few questioned whether he was positioning himself to run for lieutenant governor, some suggested he couldn’t handle basic math, there may have been a cadre that saw him as trying to ingratiate himself with the Governor, and a handful may have believed he wanted to be seen as the new fiscal conservative thought leader in his caucus.
Virtually no one believed that his proposal had any chance of success . . . even looking far down the road.
But as Rep. Prescott began to travel the state and appear at town hall forums with colleagues who were at least willing to give him the benefit of the doubt, something interesting began to unfold: his proposal became refined at each stop. He began his crusade admitting that he did not have all the answers, and that the details needed to be fully vetted, and he invited colleagues and constituents at each stop to express their concerns about what he may have been missing in his package, suggest how to improve it, and what they liked and disliked about it.
As he traveled the state, he incorporated the feedback and ideas that he received, tweaked some provisions that provoked pushback, worked out some problems brought to his attention, and, by the time he reached Noblesville for a mid-August forum with Lieutenant Governor Micah Beckwith (R) at the Life Church, the lieutenant governor’s home congregation, it was clear that Rep. Prescott was not running for LG, and his proposal was one of four that would be under serious consideration as the General Assembly moved toward further modifying the property tax structure as early as next session.
Perhaps most importantly, the Life Church forum served almost as a backroom negotiating session. With Lieutenant Governor Beckwith largely shaping – in real time – a workable package from the Big Four proposals.
You should watch to see just how the Prescott plan may merge with a to-be-released gubernatorial concept for property tax elimination . . . a proposal from Senate Committee on Appropriations Chair Ryan Mishler (R) to end property taxes on homesteads . . . and an offering from House Committee on Ways and Means Chair Jeff Thompson (R) that would impose a rate cap.
So just what is the Prescott plan and what should you expect to see going forward on property taxes?
We won’t spend much time on the rationale for eliminating the property tax – suffice it to say here that a growing number of Hoosiers (particularly as the Baby Boom generation pays off mortgages) are growing concerned that not only can’t they necessarily afford their property taxes (in addition to high inflation and soaring utility costs), they have a philosophical issue with effectively being unable to truly “own” their own property as “paper” gains are taxed and people become “house-rich” and “cash-poor.” They see themselves as effectively renting from the government – forever. Then there’s the problem of inconsistent property assessments.
Rep. Prescott, much like Governor Mike Braun (R), offers a solution: eliminate property taxes for everyone: residential homeowners and renters, businesses, and agricultural land owners (like himself).
He wants to compensate for the estimated $10.6 billion in annual lost revenue with a 7.0% tax on “any type of labor-based services,” and commission-type fees with the sole exemptions being healthcare and education (including day care and nursing homes, he emphasizes) – already exempt categories.
There would be no new debt or TIF districts tied to property taxes nor school referenda after passage. He says that the proposed tax on services would generate between $13 billion and $15 billion annually – not his math, he assures forum attendees, but rather independent projections prepared by the Legislative Services Agency for his bill last session. He adds that the service taxes would raise $20 billion each year if medical services were not exempted.
Prescott expects that the burden of the taxes would fall upon those who can afford to spend more on services.
He looks toward a two-year transition under which the package would be phased in, and, to assuage the financial community, he has incorporated new provisions – perhaps even maintaining some tax on business property for a decade to establish a sinking fund – that would allow schools and local units of government to help pay off some $58 billion in existing debt.
While Prescott dismisses “band-aid” approaches to property tax reform that have merely shifted the burden from one category of landowner to another, he would offer relief for everyone . . . while also eliminating local assessors and “half of the Department of Local Government Finance,” for taxpayer savings of between $150 million and $250 million annually.
As we understand the current construct, counties and cities would each be entitled to 20% of the new service tax, based upon population.
So where are we now? First, it’s necessary to take a look back at where we were 18 months ago.
“The Governor and I have had many conversations about this,” Lt. Governor Beckwith says about the property tax, and the state’s chief executive is “frustrated. “The Senate really screwed the Governor in 2025” on property tax reform adds Beckwith, who presides over that body with a Republican supermajority. He says that the upper chamber “gutted” the Guv’s keystone property tax elimination initiative “behind closed doors” simply to “teach this new governor who’s the boss.” That was “one reason” why Governor Braun sought to unseat some senators from his own party in the May primary election – and “got rid of some of those senators who had lost their way.”
The LG then begins to discuss how the Prescott plan could end up being the basis for reform going forward.
Senate fiscal leader Mishler offers the “gold standard” in all of this says Beckwith: ending the property tax on homesteads. He is advocating a 100% deduction for homesteads, and, the LG believes, “If we can get that done this year, that’s win.”
And that’s where Lt. Gov. Beckwith is coming from. He understands that “It’s a matter of numbers inside the caucus,” and that absent some major unanticipated turnover in numbers or minds, the wholesale elimination of property taxes is unattainable in 2027.
However, Beckwith adds, the buzz over the Prescott plan and response has opened up the discussion, and “conversation is now at a fever pitch.” Chair Mishler “likes J.D.’s plan,” and believes that “it’s realistic,” according to the LG, but can’t deliver the votes with the current Senate lineup.
Ways and Means Chair Thompson favors a rate cap . . . but that’s not an obstacle to Prescott’s mission as the LG sees it. Beckwith thinks that the Thompson concept can be meshed with the Prescott/Braun preferences and Mishler’s ideas to land on a measure that blends all three options, with the first focus on homeowners . . . but which retains the “long-term goal of eliminating all property tax.”
You might also watch to see whether whispers that we’re hearing about Rep. Thompson perhaps taking a step back and moving to vice chair of Ways and Means or chairing its Subcommittee on K-12 Education . . . allowing Rep. Craig Snow (R) to take over the reins of the full panel. We’re not sure what impact that might have on property taxes if it should actually occur, but Kosciusko County and its medical equipment manufacturers would likely applaud having the House and Senate budget chiefs represent their home county.
If you don’t believe that (or if you have doubts about the property tax package being Job One in 2027), set aside the evening of Tuesday, September 9 for a trip to Warsaw for hot dogs and fellowship mixed with a “Property Tax Freedom Town Hall & Rally” at the Zimmer Biomet Pavilion. You’ll be able to “meet the authors of the bills to end property taxes on the home you live in” (emphasis omitted): Sen. Chris Garten (R), Sen. Mishler, and Rep. Snow.
If Indiana becomes the first state to eliminate property taxes, Prescott and Beckwith believe the state will grow population, particularly in rural areas. They expect people – particularly young people – will be encouraged to purchase homes in Indiana . . . but Prescott also recognizes, as concerns have been expressed to him – that there may need to be protections incorporated in state law that would prevent corporations from jumping in to buy up properties . . . and some provisions, such as we have done with the 1-2-3 caps – may need to be baked into the Constitution, for example the 7.0% rate, so that if a group of “bad” actors are subsequently elected to the legislature, as the LG characterizes it, they can’t simply increase the tax rate via statute.
Beckwith encourages the public to be a “counterbalance” to local government lobbyists who “are in the ears of legislators. “If you hear it enough ….” he says of the lobbying effort, while noting that the constant feedback he gets from lawmakers is that “I’m not hearing about this from anybody in my district.”
The LG says that he is also concerned about protecting the state with a new tax structure “for when the weave hits and the dollar’s worth zero,” a concern he says, that is also shared by the Governor. “I don’t know if there’s a way to fix it outside of the dollar collapsing,” he notes as he looks at the broader perspective.
He also cautions against being gaslighted by local government units and schools. “Guys, you’re already taking more than half out state budget,” he would say to them, adding about schools, that when he asks officials how much is enough., “the response is always, ‘I don’t know.’ ” He tells them to find innovative ways to save money, including having student-athletes mow baseball, football, soccer, and lacrosse fields.
While he understands that reducing state and local reliance upon property taxes will be a “staggered” process, Lieutenant Governor Beckwith firmly believes that ”We’re going in the right direction.”
But he’s also realistic, already figuring out the best alternatives should solons determine that property taxes should remain at the heart of the tax structure. “ ‘Value’ is what someone would pay,” he says of assessed value. “If we have to have them (property taxes), tax it at the value you paid, for life.” He believes that would protect taxpayers with a fixed, unchangeable rate for the duration of their ownership – perhaps one percent – with local units cashing in on new purchasers, and having an incentive to attract new residents and housing stock because spending would effectively be restrained at the rate new residents would be moving in.