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Members of the Carmel City Council on Monday night voted to approve Mayor Sue Finkam’s budget proposal after about seven weeks of sometimes difficult negotiations as the city faces a steep drop in revenue due to the state’s new property tax law.
Councilors voted 9-0 in favor of next year’s appropriations after nearly an hour and a half of discussion, during which they made final touches to 2026’s $144.2 million budget.
The state’s new property tax law, known as Senate Bill 1 as it moved through the Legislature, is expected to lead to steep drops in property tax revenue for Indiana local governments. City leaders had to manage a $10 million shortfall in property tax revenue as they worked to craft next year’s budget.
“I appreciate the hard work that you spent over the past seven weeks, and I know that you’re all trying to do the right thing for the city of Carmel,” Finkam told council members following the vote.
‘Sign of cooperation’
Carmel’s 2026 budget includes a 10.2% funding increase for the Carmel Fire Department, a 7.9% budget increase for the Carmel Police Department and a 6% increase for Carmel Clay Parks and Recreation. However, 10 other departments will experience budget reductions.
To cut costs, the budget calls for the elimination of 11 positions. Seven open jobs will not be filled, while four other positions will be cut through layoffs.
In one cost-cutting proposal, Finkam initially sought to create a new nonprofit called Experience Carmel that would have replaced many of the services currently managed by the Marketing & Community Relations Department, such as handling the city’s nearly 50 events and festivals and the city’s marketing efforts. However, she removed the nonprofit from the proposal following disapproval from multiple City Council members.
Following the vote Monday night, Councilor Matthew Snyder said it is a good thing if everybody involved in negotiations comes out of the process feeling that they did not get everything they wanted.
“If this is a good budget, then [the councilors] up here and the mayor should feel disappointed because I believe that is the sign of success. It’s a sign of cooperation,” Snyder said. “Clearly, there’s things I wanted and, yeah, I’m disappointed, but that’s a sign of a good negotiation.”
Looking ahead
Future budgets could become more difficult to craft.
Carmel’s current property tax rate of 78 cents per $100 of assessed value will not increase next year following a separate vote by the council on Monday, but Finkam said last month that the flat tax rate likely cannot be sustained past 2026 due to the anticipated impact of the new law.
Carmel will be especially affected because of the city’s large residential tax base and high assessed value. By 2030, the city expects to receive $38 million less in property tax revenue than was anticipated.
During this year’s legislative session, Statehouse leaders said they worked to find a compromise that will balance widespread property tax relief with adequate funding for local governments, whose services heavily rely on property tax revenue.
Among its many provisions, the new state property tax law allows homeowners to claim up to a $300 tax credit and limits how much local governments can raise their property taxes.
To compensate, cities and towns with more than 3,500 people will be able to implement a 1.2% local income tax in 2027. Indiana’s roughly 350 cities and towns that have fewer than 3,500 residents will be reliant on their counties, which can also put a 1.2% local income tax in place.
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