Senate Republicans Push for Medicaid Caps & Tax Breaks: What You Need to Know!
As Indiana gears up for its 2025 legislative session, property tax relief has emerged as the banner priority for Senate Republicans. However, top leaders are sounding the alarm that a solid plan is still a work in progress.
On Wednesday, the majority caucus rolled out an ambitious agenda, promising to tackle not just property taxes, but also the skyrocketing costs of Medicaid, the management of water resources, and ensuring accountability in state contracts.
As the House convenes on the first day of the session, House Democrats are also stepping into the spotlight to outline their priorities.
Senate Majority Leader Rodric Bray made it clear that the 2025 session will be primarily focused on crafting the next state budget. With Indiana’s economy showing signs of cooling, he acknowledged the challenge of developing a new two-year spending plan will be “particularly challenging.”
“While our revenue growth remains positive, it’s not at the record levels we’ve seen in the past,” Bray observed. “Couple that with a Medicaid budget that’s poised to balloon and inflation pushing up costs across the board, and you can see why this budget is going to be a tough nut to crack.”
Senator Travis Holdman, R-Markle, revealed that Senate Bill 1 will be the cornerstone of property tax relief this session, directly responding to Gov.-elect Mike Braun’s proposed tax reforms.
Holdman explained that the initial draft of the measure aligns with Braun’s four-pillar plan, which aims to deliver immediate property tax cuts for homeowners while implementing a cap to control future increases. Other facets of Braun’s vision include enhancing transparency regarding tax calculations and reforming the tax referendum process.
However, the bill’s precise language is still under wraps; Senate GOP staff indicate that priority measures are not expected to be unveiled until early next week.
“Property taxes are always a hot topic in this building, but they’ve been especially in the spotlight lately. Thankfully, Indiana boasts some of the lowest property taxes in the nation, yet many Hoosiers are understandably frustrated by the steep, year-over-year increases,” Holdman noted, mentioning that property tax relief was a key issue during the 2024 gubernatorial campaign.
Our goal is to find a sweet spot for this bill
– Sen. Travis Holdman, R-Markle
Holdman also emphasized that with “a plethora of ideas on the table” from fellow senators and the House, the final property tax bill is likely to be a patchwork of various proposals.
“I anticipate this legislation will evolve as it travels through the Senate and House process. Our commitment is to meet the property needs of Hoosiers while balancing the necessary funding for our schools and local governments,” he stated. “Our goal is to find that sweet spot for this bill.”
Medicaid Proposal
Another high-priority piece of legislation aims to impose a cap on the state’s Healthy Indiana Plan (HIP), which offers Medicaid-like services to moderate-income residents who lack affordable options.
Sen. Ryan Mishler’s proposal seeks to limit enrollment to 500,000 individuals—significantly lower than the current 692,028 beneficiaries—and restrict coverage to 36 months over a lifetime.
“Let’s remember, these are able-bodied, working individuals without children who are currently on this plan,” Mishler pointed out. “While there’s much work to be done with Medicaid, this bill is a crucial first step toward regaining control.”
The exact fiscal implications of this legislation remain murky, given that 90% of HIP’s funding is federal, with the remaining 10% sourced from a hospital provider tax and cigarette tax.
Additionally, the bill would reinstate work requirements—pending federal approval—with few exceptions. Mishler did not dismiss the possibility that this proposal could lead to another waitlist.
“If we want to eliminate waitlists, we are faced with some tough choices. Are we willing to cut education funding to do this? Those are the kinds of decisions we’ll have to confront,” Mishler noted.
House Democrats, however, took a different stance.
“Where there’s a will, there’s a way,” asserted House Minority Leader Phil GiaQuinta.
GiaQuinta, D-Fort Wayne, and his colleagues pointed to plans to expand school vouchers for wealthier Hoosiers and the funds directed to the Indiana Economic Development Corp. as potential resources for Medicaid and public school funding.
Eliminating waitlists—affecting seniors, disabled Hoosiers, and parents seeking childcare—is a primary goal for the caucus in 2024, alongside securing property tax relief and “fully funding” public education.
Tackling Water and Vendor Accountability
Another crucial bill on the Senate’s agenda seeks to mandate permits for large, long-distance water pipeline projects and basin-to-basin water transfers. This initiative arises in the context of a contentious discussion surrounding a pipeline aimed at transporting water from a Tippecanoe County aquifer to a significant industrial site in Boone County.
“Indiana is truly fortunate to have an abundance of water resources. However, as experts have pointed out, these resources aren’t evenly distributed throughout the state. Recently, Indiana has become a hot spot for industries that rely heavily on water, such as electric vehicle battery plants and data centers,” explained bill sponsor Sen. Eric Koch, R-Bedford. “This development is promising for Indiana’s future but also raises critical questions about how we manage our water resources.”
Senate Bill 4 aims to ensure that water projects are evaluated from both an economic and hydrological perspective. Under this legislation, utilities or large private sector entities must gain approval from Indiana’s Department of Natural Resources prior to initiating any water project.
Additionally, a second permitting process outlined in the bill would involve Indiana’s Utility Regulatory Commission “for all large, long-haul water pipelines.”
Meanwhile, Senate Bill 5 focuses on enhancing accountability in large state contracts. Sponsored by Sen. Scott Baldwin, R-Noblesville, this legislation proposes that state contracts exceeding $500,000 include clear performance expectations for vendors, along with potential penalties for unmet expectations.
Baldwin aims to create a “no-bid list” for companies temporarily disqualified from bidding on state contracts, though these businesses would have the right to appeal their disqualification.
The bill also mandates that state agencies submit quarterly progress reports on major contracts to the state budget committee, ensuring thorough oversight for significant contract amendments or applications for new federal funds requiring an Indiana match.
“The General Assembly devotes extensive time to crafting a state budget, determining how funds should be expended. Thus, it makes perfect sense to enhance our legislative oversight of budget implementation,” Baldwin noted, clarifying that the bill does not aim to “single out” any specific vendor.
He also mentioned that the measure would apply to state officeholders. Baldwin has been refining this bill for “several months,” even before recent revelations regarding multiple no-bid contracts awarded by the Secretary of State’s Office.
While the current draft does not specifically address no-bid contracts, Baldwin remains open to incorporating such provisions in future versions.
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