AAMFT Post-Session Legislative Update
The Indiana legislature concluded its business early Friday (April 25) morning, a few days ahead of the statutory deadline of April 29. Many important issues lingered until the final day of session, including several health care bills, the anti-DEI bill, the education “deregulation” bill, the partisan school board elections bill, and of course, the budget bill.
This year, the two legislative chambers nearly tied in their bill passage rate – a rare occurrence. The Senate had 104 bills successfully make it through the entire legislative process and go to the governor, which means that with 521 active bills filed at the beginning of session, they had a success rate of 19.96%. The House had 140 bills make it through the legislative process and go to the governor, so with 708 active bills filed at the start of session, they had a success rate of 19.77%.
Governor Braun has already received 181 bills during the course of session and thus far has signed 110 of them into law. Over the next several days the governor will receive the remaining bills, many of them being the bills that passed out of the legislature during this final week of session.
Below are summaries of some of the biggest issues this session, as well as updates on bills/issues of specific interest to you. Please note that bills which successfully made it through the legislative process are now titled SEA (Senate Enrolled Act) or HEA (House Enrolled Act).
Biggest Issues This Session:
State Biennial Budget (HEA 1001):
Last week’s State Budget Committee revenue forecast meeting identified a $2.4 billion revenue shortfall for Indiana over the next two years. The main architects of the budget – Rep. Jeff Thompson (R–Lizton) and Sen. Ryan Mishler (R–Mishawaka) – stated that all possibilities were on the table to ensure Indiana funded its priorities while still maintaining a balanced budget and current reserve levels (which are typically 11-12% of spending). The final version of HEA 1001 included a new tax increase on tobacco and nicotine products, the first tax increase on such products in over 17 years; cigarette packs and individual cigars will see a $2 increase, while other products like chewing tobacco and nicotine pouches will have a formula-based increase of roughly 10%. This measure will help raise more than $800 million over the biennium, with the new revenues to be applied to Indiana’s Medicaid spending and reducing the revenue shortfall to $1.6 billion over two years. HEA 1001 reduces local public health funding from $225 million (per the last budget) to $80 million over the next two years. State agencies received a 5% cut in spending across the board. K–12 education funding grows by 2% each year from the last biennial budget. Two components of the budget received a significant amount of pushback from Democrat legislators. The first makes Indiana’s school voucher program universal, removing the income cap in the second year of the budget. The second removes the current process of Indiana University alumni electing their trustees by now giving this authority to the governor to appoint trustees; this language did not appear at all this session until the final version of the budget bill was released. HEA 1001 passed along mostly party lines in both chambers early Friday morning.
Property Tax Relief (SEA 1):
Property tax relief to residential taxpayers was the biggest legislative priority for Governor Braun as well as House and Senate leadership this session, and it ultimately became law earlier this month via SEA 1. The bill allows a homeowner to take a property tax credit of 10% of their property tax bill – up to $300 – cumulatively saving homeowners $1.4 billion over the next three years. An additional $150 credit is available for certain fixed-income seniors and a $250 credit is available for disabled veterans, though other existing deductions for veterans expire under this bill. SEA 1 phases in further deductions for homesteads to achieve a two-thirds deduction by 2031 while creating a new deduction for non-homestead residential property and farmland to achieve a one-third deduction by 2031. The final version of SEA 1 has certainly been met with controversy and pushback, with local units of government lamenting the significant loss of property tax revenue that will be caused by the bill, and opponents of the bill predicting that local units could increase local income taxes on taxpayers, ultimately leading to Hoosiers paying more in taxes, not less. The bill has also been criticized for not providing any tax credits or deductions for renters, but favoring businesses through business personal property tax exemptions. An additional provision included in SEA 1 – that was originally found in another bill, SB 518, from this session – requires public schools to split property tax revenue with brick-and-mortar charter schools, which critics say will place a further financial strain on public schools. The bill passed by a party-line vote in the House but by a narrower mixed vote of 27-22 in the Senate, and was signed into law by Governor Braun on April 15.
Business Personal Property Tax (SEA 1/HEA 1427):
The final version of the property tax relief bill – SEA 1 – phased in an increase in the acquisition cost threshold for the business personal property tax (BPPT) exemption from $80,000 to $2 million, as well as provided that the 30% minimum valuation limitation would not apply to business personal property placed in service after January 1, 2025. However, these two provisions ended up being amended via another tax-related bill, HEA 1427, which passed out of both chambers on the final day of session. The new language eliminates the phase-in of the new $2 million de minimus exemption so that the exemption goes immediately to $2 million for the 2026 assessment date. It also removes the exception to the provision exempting personal property from the 30% depreciation floor if property tax revenue attributable to the depreciable personal property is pledged as payment for bonds, leases, or other obligations.
Education Matters:
This session saw a significant amount of education legislation, which included (as mentioned above) the push to make Indiana’s school voucher program universal. Arguably the biggest education bill this session was HEA 1002, a 138-page “deregulation” bill that strikes entire sections of current state education code/requirements. Earlier this month the bill faced a heated debate in the Senate over the initial removal of many “Social-Emotional Learning” (SEL) requirements in code, with legislators on both sides of the aisle expressing concerns over removing provisions that would ensure teachers were experienced in trauma-informed care and cultural competency when working with students. Due to this pushback, some of the SEL provisions were added back into the final version of HEA 1002; but additional last-minute changes – including twelve new code repeals (not discussed by the legislature) and eliminating the requirement that school administrators contact employment references before hiring teachers and other school personnel – prompted another heated debate in the Senate on the last day of session. Ultimately, the bill passed out of the House by a party-line vote but was met with a much narrower vote of 27-21 in the Senate. Other education bills that are headed to the governor include SEA 287, which makes school board elections partisan, and SEA 482, which seeks to address chronic absenteeism in schools.
Health Care Costs/Transparency:
The 2025 session was also an important session for health care issues, with the legislature prioritizing transparency and lowered costs in health care. HEA 1003 cleans up previous “site of service” language passed in 2023 to require a health care service to be reimbursed at the same rate regardless of whether the service was inpatient or outpatient. The bill also: requires good faith estimates (within two business days) for patients to increase price transparency; requires by September 1 the Department of Insurance to obtain information on ways to better enable patients to compare and shop for health care services; and seeks to address health care fraud and waste by giving more authority to the state’s Medicaid Fraud Control Unit. HEA 1004 requires by June 30, 2029, Indiana nonprofit hospitals’ aggregate average inpatient and outpatient hospital costs to be equal to or less than the statewide average, or else risk losing their nonprofit status. SEA 3 puts a fiduciary responsibility on third-party administrators, pharmacy benefit managers, and others to pass rebates and other savings on to employers and their employees. Finally, SEA 140 requires an insurer, pharmacy benefit manager (PBM), or other administrator to ensure their network is “reasonably adequate and accessible” to patients and prohibits a third-party administrator from requiring that a plan sponsor enter into a contract with a particular PBM or charging a different fee for services based on the PBM being used. The bill also requires plan sponsors to pay a dispensing fee for prescription drugs, with the reimbursement amount determined by the pharmacy’s size.
Additional Bills/Issues of Interest:
Early in the 2025 session we worked on HB 1520, which proposed several sweeping changes to various professional licenses. One of those changes involved a complete rewrite of the educational requirements for Marriage and Family Therapists. The proposed changes would have called into question several universities and their accreditation standards. We successfully defeated HB 1520 by ensuring it was not heard in committee.
The language resurfaced later in the session via SEA 216, when the proposed educational requirement changes were amended into the bill during a House Public Health Committee hearing. We were able to work with the bill sponsor, Rep. Lori Goss-Reaves, to restore SEA 216 to its original version. The bill now focuses on creating uniformity in Indiana Code citations for all behavioral health professionals by removing the existing “first-available exam” language. The bill is currently awaiting the governor’s action; he has until May 2 to sign the legislation, veto it, or allow it to become law automatically. We do not anticipate any issues with the governor taking action.
Another bill we monitored this session was the anti-DEI bill, SEA 289 (unlawful discrimination). This legislation in its final form seeks to specifically outlaw discrimination “based on a personal characteristic of the person” in state education, public employment, and health care licensing settings. The Republican-led bill focuses on moving away from DEI (Diversity, Equity, and Inclusion) initiatives and more towards a “merit-based” process where the “personal characteristics” of race, religion, color, sex, national origin, or ancestry are not a condition of being admitted to a school, employed by state government, or receiving a license in the health care field. Our primary concern was the licensing aspect would impact Marriage and Family Therapists. Current educational requirements mandate that applicants complete coursework covering gender, sexual orientation, ethnicity, race, and socioeconomic status. After discussions with the House sponsor of the bill, Rep. Chris Jeter, we believe there will be no adverse impact on applicants seeking licensure. The Professional Licensing Agency (PLA) would be directed not to consider those specific education components when evaluating an application. We hope to address this further next session as we continue working with Rep. Goss-Reaves and PLA to modernize and streamline the educational requirements for Marriage and Family Therapists.