Scottsburg City Council begins budget planning amid revenue concerns...Senate Bill 1, circuit breaker credits, and expiring income tax threaten future revenues

Scottsburg City Council held a budget workshop recently to begin strategizing for the city’s 2026 financial year, following the close of the 2025 fiscal year on June 30. With declining cash reserves and projected revenue losses, financial experts are recommending that no special projects be included in the 2026 budget.

Experts emphasized the need to focus on maintaining core services and preparing for further financial challenges driven by legislative changes—particularly Senate Bill 1.

Deputy Clerk-Treasurer Tish Richey explained that four primary city funds receive property tax revenue: the general fund (which supports fire, police, and animal control), sanitation, motor vehicle highway (MVH), and parks and redevelopment. Together, these funds account for just under $8 million of the city’s overall budget. Property tax and Local Income Tax (LIT) generate around $5 million, the bulk of the funding needed to run these services.

However, due to rising circuit breaker credits and Senate Bill 1 provisions, the city will lose a growing portion of its expected revenue. In 2024, these losses totaled around $400,000, but projections show that number could rise to $1.2 million by 2031.

“These credits show up on property tax bills as savings to the taxpayer, but they represent money the city never receives,” Richey said. “Senate Bill 1 expands those credits, reducing what we can collect from both homeowners and rental properties.”

The city is also bracing for the loss of an additional monies annually starting in 2027, when a portion of the county’s LIT expires. Though municipalities are permitted to reestablish the tax, but only at that round.

“This isn’t just a Scottsburg problem,” Richey noted. “Cities and towns across Indiana are facing the same situation. But here, we’re trying to plan ahead to avoid drastic service cuts or layoffs.”

In the short term, the treasurer's office is recommending a conservative approach: avoid new initiatives, identify existing budget lines that can be trimmed without reducing services, and carefully monitor the city’s transition to new sanitation and stormwater systems. These changes may help stabilize finances and reduce the current subsidy burden.

“We’ll be looking to cut about $250,000 from the 2025 budget as a cushion for what’s coming in 2026,” said Richey. “But we are determined to do this without reducing services to residents or cutting staff.”

Raises, insurance costs, and payroll budgeting are still under review. Insurance estimates were expected on July 9 and will help guide final budget recommendations.

The goal is to present the first draft of the 2026 budget at the council’s first meeting in September, with adoption expected by the second meeting later that month.

Clerk-Treasurer Jan Hardy reminded the council to stay alert for email updates, as materials may be sent in preparation for another budget workshop.

Meanwhile, accounting firm Baker Tilly will be working with the city to provide advice on how to move forward.