Report: Financial pressures increasing for Indiana’s local governments – Indianapolis Business Journal

Report: Financial pressures increasing for Indiana’s local governments  Indianapolis Business Journal

The outlook for funding local government services across Indiana has become more cautious as communities grapple with changes to tax laws, slower growth and rising infrastructure needs, according to a recent survey. Katz, Sapper & Miller issued its second annual "State of Local Government in Indiana" report on Thursday, highlighting the moods of dozens of local city, county and and town government leaders in 2026. In 2025, about 31.3% of respondents classified their local government's financial situation as "excellent to very good," but in 2026, that count fell to 18.6%. The classification that saw the largest growth in 2026 was "fair," rising from 22.5% in 2025 to 35.7% in 2026. Meanwhile, just 10% of respondents classified their local financial situation as either "poor" or "very to extremely poor" in 2026.

Sarah Iglehart, KSM's managing director of government consulting and the report's author, said those changes in outlook were largely a result of Indiana's 2025 property tax overhaul bill (often referred to as Senate Enrolled Act 1 or SEA 1), which led to lower collections for local governments. The issue of declining revenues ranked second among financial concerns for local government leaders in 2026, according to the report. "While I would certainly not characterize it as a crisis, it is certainly a shift in a perspective of financial health within communities,"