Local roads would get a dramatic increase in funding in the 2027 city budget proposed by Mayor Joe Hogsett, even without the increased vehicle taxes that were pushed by the Indianapolis City-County Council.
Indianapolis’ budget is projected to increase 11% to nearly $1.9 billion next year, with only a few minor programs facing cuts or future uncertainty thanks to strong tax revenue growth, city officials say.
On Aug. 10, Hogsett presented the 2027 budget, which shows major departments like police, fire and public works are all set to receive multi-million dollar increases from last year. The budget includes new road funding that assumes the city will receive $50 million from a state matching-grant program.
Officials say the city’s required contribution to get that road funding will come largely from expected income tax growth over the next five years. Under Senate Enrolled Act 179, the city must devote $50 million in 2027 and increase that amount to $100 million by 2031 to continue receiving the full $50 million from the state.
If the council overrides the mayor’s veto of vehicle tax increases Aug. 10, however, the 2027 budget could change substantially to account for increased revenues that could mean more money for some departments.
Some smaller city-backed programs don’t appear to have fared as well in the budget that presumes there will be no increase in the vehicle tax. Funding for Indy Achieves, which provides financial aid for college students, fell 25% from last year to $1.5 million.
The city attributed multiple budget challenges to state issues.
The city increased public safety pension payments by over 20% after a vote by the Indiana Public Retirement System board, City Controller Abigail Hanson said. Likewise, jail populations remain higher than expected because of delayed transfers to the state prison system, while the city is getting fewer state grant dollars for community corrections programs, she said.
The budget keeps growing in part because of growth in constituents’ incomes and property values, officials say. The city expects to realize a $40 million increase in income tax dollars and a $47 million increase in property tax revenue from last year, according to the budget.
Because property taxes are paid with a lag, city officials said they don’t expect the worst hits from Senate Enrolled Act 1, the 2025 state property tax reform law, for a couple more years. The delayed effects mean city officials, along with government leaders across Indiana, could be forced to weigh higher income tax rates in the coming years to avoid cutting services, Hogsett Chief of Staff Chris Bailey said.
The city says it will spend about $72 million on multiple housing initiatives, including Streets to Home Indy, the effort to end unsheltered and chronic homelessness in Indy by 2028, and a master leasing program that will fund 100 units of housing for low-income people in 2027. The budget also includes operating money for the Housing Hub, the 150-bed publicly funded homeless shelter that’s set to open southeast of downtown in the latter half of next year.
Alongside the budget, the city plans to issue a $27.5 million bond issuance to fund a new north district headquarters at 38th Street and Sherman Drive and to repair a Department of Public Works operations facility south of downtown.
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Email Indianapolis City Hall Reporter Jordan Smith at JTSmith@indystar.com. Follow him on X @jordantsmith09 and Bluesky @jordanaccidentally.bsky.social.
This article originally appeared on Indianapolis Star: Roads get dramatic funding bump under Hogsett’s proposed 2027 budget. What else changes
Reporting by Jordan Smith, Indianapolis Star / Indianapolis Star
USA TODAY Network via Reuters Connect
By Jordan Smith, Indianapolis Star | USA TODAY Network
