With a packed assembly room behind him, Mayor Joe Hogsett stepped up to the podium Aug. 11 to present a $1.7 billion budget proposal to the City-County Council.
And despite having $43 million less than the city anticipated, Hogsett says the city is poised to pass its ninth consecutive balanced budget that includes no new tax increases.
“We had to ask our agencies to do more with less, but thanks to our strong fiscal discipline over the past 10 years, the city of Indianapolis will not falter,” Hogsett said.
Despite the cutbacks, Hogsett is proposing a 3.5% increase over last year’s approved budget, even as the city grapples with the impacts of state property tax reform.
Impacts of Senate Bill 1
Like other Indiana municipalities, Indianapolis is contending with declining property tax revenues in the coming years after state lawmakers passed legislation that provides some property tax relief to homeowners at the expense of funding for government services.
As a result of that legislation, the city is expected to lose $10 million in property tax revenue next year, with that number expected to increase to nearly $20 million in 2027 and about $30 million in 2028, according to City Controller Abby Hanson.
Indianapolis faced other financial constraints heading into this year’s budget process.
State lawmakers cut $38 million used to cover the cost of medical care at Eskenazi Health for low-income or uninsured patients.
Get the backstory
And when the city finalized contracts with most of its worker unions in 2024, salary increases were front-loaded in 2025 to adjust for future years of more modest growth, Hanson said.
To make up for the lost revenue, meanwhile, most departments were asked to submit budgets that cut costs by 4% — with the exception of the police department, fire department and sheriff’s office.
Those agencies aren’t facing cuts. Instead, they are limited to 2% growth above what they are expected to spend in 2025.
Road funding
One positive outcome of the legislative session, Hogsett said, was House Bill 1461, which allows the city to access an additional $50 million in state road funding beginning in 2027 — provided it comes up with $50 million in matching funding from new revenue sources.
The city is committing $10 million in new income tax revenues next year toward that fund, which will go toward strip patching. It’s unclear where the remaining $40 million will come from.
Get the backstory
“This is an exciting opportunity, but securing $50 million in additional city funding in a single year is a challenge. Therefore, this budget focuses on laying the groundwork to support that investment,” Hogsett said.
Overall, the 2026 budget for the Department of Public Works — $257 million — accounts for about 15% of the city’s anticipated spending next year.
Public safety
Public safety-related services, including the police and fire departments and the sheriff’s office, takes up the biggest piece of the pie, making up about 40% of the city’s total spending.
As was the case last year, the 2026 budget includes funding for 1,743 police officers, despite there being only 1,461 officers on staff.
Some community members and city officials have questioned the need to continue funding for hundreds of IMPD positions that remain unfilled.
Outside the City-County Building, a group called LiveFree Indiana held a press conference calling for more investments to reduce gun violence and chronic homelessness.
Councilor Carlos Perkins, a Democrat from the west side, stood alongside the group and echoed their concerns.
“We must also make a commitment to public safety, but can I be clear: Public safety is not just a badge. We’re not just funding IMPD,” Perkins said. “We must ensure that our budget reflects prevention services, and the needs of the community that we’ve heard so much over the last year.”
IMPD has struggled to fill new officer positions. In 2024, federal funding that was meant to fill new positions was instead used as retention bonuses for existing officers, IndyStar reported.
Housing and crime prevention
The budget includes $4.5 million for the Indy Peace Program, a violence reduction initiative of the Office of Public Health and Safety that connects mentors with individuals at risk of gun violence.
And the city will continue to fund the Clinician Led Community Response team, which sends licensed mental health professionals to respond to 911 calls instead of police when appropriate.
The city is also directing $10 million for the next phase of Streets to Home Indy, part of the city’s effort to reduce homelessness.
Other housing programs slated to receive funding include:
- The Tenant Advocacy Project, which provides free legal assistance to tenants facing eviction
- The “master leasing” program, in which the city works with landlords to cover housing costs in order to keep residents in their homes
- The homeowner repair program, for an estimated 100 homes in need of emergent repairs to keep residents in their homes
- “Vacant to Vibrant,” a new initiative aimed at turning vacant and blighted properties into affordable housing
What’s the next step?
Over the next two months, department and agency heads will present their spending plans to various committees of the City-County Council, where the public will have the opportunity to provide input.
A full schedule of upcoming committee hearings can be found online.
The council is expected to adopt a final budget at its Oct. 6 meeting.
Mirror Indy data reporter Emily Hopkins contributed to this story.
Mirror Indy, a nonprofit newsroom, is funded through grants and donations from individuals, foundations and organizations.
Peter Blanchard covers local government. Reach him at 317-605-4836 or peter.blanchard@mirrorindy.org. Follow him on X @peterlblanchard.
Republish our articles for free, online or in print, under a Creative Commons license.
