Recent property tax reforms in Indiana and Missouri are starting to impact school districts and local governments there, with one Missouri municipality facing a revenue shortfall that will affect its bond issue.
In Missouri, where voters in August defeated a push
Glendale, a city with a population of 6,176 about 13 miles southwest of St. Louis, may be a canary in the coal mine. Voters there passed Proposition S in April 2025; the
The city issued
But under the senior property tax freeze, nearly a quarter of Glendale residents didn't have to pay the new levy, City Administrator Frank Johnson told
The projects funded by the bond proceeds include three major stormwater improvement projects, street paving and reconstruction, new sidewalks and sidewalk repairs.
Johnson told The Bond Buyer that St. Louis County tried several measures to blunt the impact of the state law, such as means testing, that were subsequently struck down.
"We had thought based on the advice of (bond underwriter) Stifel that the debt service would be exempted from the freeze, so that you could still capture that," he said. "It wasn't until August 2025 when the county clarified their ordinance and said no this actually does apply to (debt service)."
The $9.7 million bond issue covered the first three years of the infrastructure improvement plan, he said. The official statement warned that "the potential financial impact of the Senior Property Tax Credit Program on the City is not yet ascertainable."
The city now
"We're projecting a shortfall only if assessed values go up very conservatively," he said. "Residential properties here have been really increasing in value... The board has shown no interest in raising taxes. It would be an absolute last resort; in fact, I don't think they'll do it."
State lawmakers should change the law to exempt debt service, Johnson said.
"I don't feel like it's great public policy," he said of the freeze.
"Most of the larger counties have all passed it," said David Stokes, director of municipal policy at the Show Me Institute, a St. Louis-based think tank that favors free markets, of the senior property tax freeze. "Most of the counties that have not adopted the senior property tax freeze yet tend to be more rural counties, where, yes, the population is old and would theoretically want it, but the property taxes in rural Missouri are already extremely low. It's not like people are screaming about their property tax bills in rural Missouri."
Stokes noted that Webster Groves School District, which covers a small portion of Glendale, has a large property tax increase on the ballot in November. "And they certainly are saying that one of the reasons they need the tax increase is because of the senior property tax freeze," he said.
"So you've got the people in the eastern part of Glendale being asked to raise property taxes for the school district significantly, and then you've got all of Glendale being told, 'Well, we're not going to be able to do to fully fund this bond issue you approved because 25% of you got to vote in favor of a bond issue that you didn't have to pay for,'" he said.
That dynamic — voters imposing a property tax increase on their neighbors that they don't have to pay for themselves — will only worsen if voters approve a measure on November's ballot in St. Louis County, he said. The measure would raise property taxes to fund a senior service fund for the county.
"Some people are maintaining that (seniors are) going to have to pay it in part," he said, casting doubt on that assertion. "But you have this absurd scenario where seniors are being asked to vote on increasing property taxes that, generally speaking, they're not going to have to pay. They get the services but don't pay for them."
It points to the larger problem with property tax reform efforts around the region and the country, Stokes said, which is that much as residents complain about property taxes, they are the least damaging tax to economic growth.
"We're now changing our tax system to benefit the senior citizens, which, from a long-term economic growth perspective, is just terrible public policy," he said. "All these seniors still depend on services as much as anybody else, and in some cases more."
In addition to hurting the ability of local governments to fund services across a Midwest whose demographics are increasingly graying, it creates "a constant pressure" to raise property, income, local earnings or sales taxes on younger workers and families, Stokes said.
Glendale, he said, is a warning to policymakers that tax reform can be done the right way or the wrong way.
Some people may heed the example, he said. "But you know, you've got a significant section of the population now that can vote for tax increases and not have to pay them, and that's terrible policy."
Indiana
Indiana's Senate Enrolled Act 1, passed in 2025,
Hoosier lawmakers
Now a report from the Indiana Coalition for Public Education has shed more light on how SEA 1 is likely to hit public school districts in the state.
The
"In 2026, it is hard to overstate the scope of the challenges facing Indiana's K-12 public education," the report said, noting that on top of SEA 1's impact, "90.3% of all school corporations expect future funding to be negatively affected by the level of budget allocated by the Indiana General Assembly, and 87.5% expect future negative impacts from the state's universal voucher program."
The report also claimed public sentiment has shifted against school bond referendums amid a campaign by "anti-public-education activists."
"On an inflation-adjusted basis, school funding for public schools — that means federal, state and local taxes — will have been flat," said Stephanie Wells, president of the Indiana Fiscal Policy Institute, a nonpartisan fiscal policy nonprofit. "The state tuition support for schools has been, when you adjust for inflation, really flat for 20 years."
Wells said that while school revenues ticked up slightly for calendar year 2026, they still came in far below expectations, creating budgeting headaches for some school districts.
"They're seeing significantly less revenue growth," she said. "It was still a (major) change to their budgeting and to their long-term plans."
Indiana also
"We found out about that during the fiscal year closeout in July, and so if you're reverting that amount, that either means that you need to tweak the school funding formula so that you can put all that money out on the street to the schools, or not. But that's not a small amount to revert back," she said.
In a school funding comparative analysis released in January, IFPI found that in 2024, traditional schools received $1,215 of federal funding per pupil and charter schools received $2,061 federal funding per pupil, excluding pandemic relief funds.
Indiana spent an average of $6,652 per pupil on the state's Choice Scholarship Program in fiscal year 2024, and charter schools got an additional $1,400 per pupil through a state charter and innovation grant in FY2025, according to the analysis. Traditional schools received $8,527 per pupil from the state in 2024.
While Indiana municipalities have local income taxes, that revenue is not available to school districts.
"So you add those things together, and then you take cost of living and inflation in the last several years, and yeah, of course superintendents are going to have to tighten their belts," Wells said.
The coalition's report found 66.2% of school corporations have already cut or committed to cutting support staff, and 30.4% more are actively considering it. Over 60% have cut or committed to cutting teaching staff, and another 32.4% are actively considering that step.
Additionally, over 88% of districts have already pared back wage increases for staff or are considering doing so, the report said.
Wells noted that nearly 40% of superintendents said in the survey they couldn't get a referendum passed. "There is no other choice for these schools than to cut spending," she said. "Also, we're talking about potential property tax reform again in the 2027 budget process. So if I were a school leader, I would keep that in mind when I'm budgeting for the future."
"Gov. Braun is proud of his historic property tax cut, putting $1.3 billion back in the pockets of Hoosiers, and by 2031 two-thirds of household assessed values will be exempt," Griffin Reid, a spokesman for Gov. Mike Braun, said by email.
Reid noted that about half of the state's biennial budget currently goes toward K-12 education, and Braun's executive budget called for K-12 education increases even as it directed other state agencies to cut their budgets by 5%. He said Braun has "funded education to its highest historical level and increased the minimum teacher salary by $5,000 along the way."
