Here's why Indy schools and libraries are set to lose $16 million

By Mary Claire Molloy

Indianapolis schools, libraries and local governments are set to lose about $16 million in property tax revenue as the county’s top health agency maneuvers to make up for steep state budget cuts.

That projection comes from a Sept. 17 budget presentation from the Health and Hospital Corporation of Marion County, which operates the county public health department and Eskenazi Health.

For more than a decade, state lawmakers gave the municipal corporation $38 million each year to help cover the cost of providing medical care to low-income and uninsured patients at Eskenazi Health, Indy’s public hospital system.

In exchange, the amount in property taxes HHC could collect from Marion County residents was reduced by $35 million each year.

But now, that deal is over.

The state’s support for Eskenazi Health was eliminated in the 2026 budget passed by a Republican supermajority and signed by Gov. Mike Braun. And the rules reining in the health agency’s property taxes were scrapped, too.

Now, the corporation has proposed maximizing the amount of property taxes it can collect this year to pull in more money to cover some of the $38 million loss.
 

A spokesperson for HHC said the move would not raise the amount of property taxes paid by Marion County residents; it just means the corporation will take a bigger portion of the money collected this year.

Who will be hit hardest and how remains unclear. But the corporation’s leadership acknowledged the move will leave other public institutions with a smaller piece of the pie.

“We’re trying to provide health care to the most vulnerable, and that still is a financial challenge,” HHC CEO Paul Babcock said.

Another cut to public health

Indy Democrats blamed the situation on the party in power.

“This is Statehouse Republicans cutting local budgets while they themselves are the fat cats,” said Councilor Jared Evans, the chair of the City-County Council’s Municipal Corporations Committee, which reviews HHC’s budget proposals.

The cut affecting HHC is one of many to emerge from the state legislature, which also slashed funding for county health departments, local governments and higher education. As Indianapolis agencies craft their own budgets, the fallout has started trickling down.

“That’s money that can’t go to homeless initiatives, public safety or infrastructure,” said Evans, a westside Democrat. “I don’t want to live in a world where we have to pick and choose winners for funding.”

A spokesperson for Braun did not respond to Mirror Indy’s request for comment.

But Braun, who was elected governor in 2024, has repeatedly talked about the importance of budgeting efficiently and cutting taxes for residents.

“I understand this tax relief will have an impact on local governments, but taxpayers are struggling and we have to put their needs first,” Braun said in his State of the State Address. “All governments need to do more with less.”

HHC estimates 1% reduction

During HHC’s budget presentation, CFO James Simpson estimated a 1% reduction in property tax revenue for other local taxing bodies. Those include township trustees, schools, libraries, public transportation and the city of Indianapolis.

Each public body proposes its own property tax levy — or the amount from property taxes it can collect — but those numbers are subject to government approval and state caps, which limit how much residents can be taxed.

Mayor Joe Hogsett’s office highlighted the problem in the 2026 proposed budget book.

“Our local public hospital, Health and Hospital Corporation, lost funding received directly from the state for the work they do,” an executive summary reads. “This forced them to increase their property tax levy to recoup the funds that were lost, which negatively impacts the City-County’s property tax revenue as a result.”
 

A spokesperson for the Indianapolis Public Library said the system is broadly dealing with the impact of property tax cuts — though the spokesperson did not answer specific questions about HHC’s levy.

“Our current reserves should help to absorb the financial impact in the next few years,” Mary G. Barr wrote in a Sept. 24 email to Mirror Indy.

During the budget presentation, Simpson said HHC expects to pull in about $29 million from its property tax levy, which will then be used by Eskenazi Health to cover some of the loss in state funding.

But first, the corporation’s budget needs to be approved by the City-County Council and then ratified by the Indiana Department of Local Government and Finance.

The council’s Municipal Corporations Committee will meet at 5:30 p.m. on Wednesday, Oct. 1, at the City-County Building for a review and analysis of the budgets presented to the committee.

Then, on Oct. 6, the full council is scheduled to vote on whether to approve the city-county budget.

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Mirror Indy reporter Mary Claire Molloy covers health. Reach her at 317-721-7648 or email maryclaire.molloy@mirrorindy.org. Follow her on X @mcmolloy7.