The Indiana General Assembly has reached the halfway point of its 2025 session, and local governments are closely watching several key issues that could significantly affect cities and towns across the state. In a recent conversation Abdul-Hakim Shabazz spoke with Matt Greller of the Association of Indiana Municipalities about housing policy, data centers, water resources, and local tax structures.
A major focus this session is House Bill 1001, a housing measure aimed at increasing the state’s housing stock, particularly affordable housing. Greller said there is broad agreement among local officials that more housing is needed, but there is concern about how the bill would limit local planning and zoning authority. He credited Central Indiana’s past “measured, planned growth” as a key reason for the region’s success and warned against changes that could undermine long-term planning, public safety access, and neighborhood stability.
Local officials, he noted, support tackling genuine cost drivers—such as stormwater retention requirements—that can slow or increase the cost of housing, but they want to do so without eroding local control.
The conversation also turned to property rights and aesthetic standards. Greller said local governments see themselves as protecting residents’ investments by maintaining predictable rules for neighborhoods. If development rules change “midstream,” he argued, that can affect home values and residents’ expectations.
Another growing issue for municipalities is the rapid expansion of data centers. Indiana’s tax climate and relatively inexpensive land have attracted large technology companies looking to build these facilities. Greller said many cities and towns are interested but are still learning about the impacts on electric grids, water usage, traffic, and infrastructure. He compared today’s hesitation about data centers to past resistance to cell phone towers, predicting that understanding and technology will evolve and facilities may become smaller over time. Data centers, he added, can improve assessed valuation and potentially ease the property tax burden on homeowners, though they don’t typically bring thousands of jobs.
Water remains a long-term concern, especially as data centers, housing, and economic development increase demand. Indiana has strong water resources in some regions and more limited supplies in others. Greller said careful planning and zoning will be essential to ensure that major new developments are located where water resources can support them. He also pointed to infill housing in urban areas as one way to meet housing demand while making efficient use of existing infrastructure.
On the fiscal side, Greller said last year’s Senate Enrolled Act 1 signaled that property tax cuts are likely here to stay, even if local governments are uneasy about the impact. His larger concern is the state’s local income tax (LIT) structure, which he said is already causing actual revenue decreases—sometimes by as much as 50 percent—for more than 70 cities and towns. With roughly 70% of Hoosiers living in cities and towns, Grell argued that any new tax model must reflect where most services are delivered.
He suggested that a future phase of reform should address where income taxes are credited—whether to the county where a person lives or where they work—using communities like Jasper as examples of cities that host far more workers during the day than live there. Greller said lawmakers understand the problem; the challenge is designing a fair and workable solution.
The discussion closed with a look at township consolidation, ongoing talks about governmental efficiency, and debate over moving municipal elections to higher-turnout years. Greller expressed concern that combining local races with presidential elections could drown out local issues, but welcomed that any change now under discussion would be optional for communities, not mandatory.
