(ANGOLA) - Angola Mayor Dave Martin says a state law approved during the 2025 Indiana legislative session could lead to significant budget cuts or higher taxes for city residents. In a letter to Angola residents, Martin outlined how changes included in a property tax relief package affect local income tax distributions to cities.
Steuben County residents currently pay a 1.99 percent local income tax, which is shared among county and city governments. Angola's share totals about five million dollars a year, accounting for roughly 25 percent of the city's operating budget. Martin says that money supports police and fire protection, street maintenance, parks, and other core services.
Under the new law, the county will reduce its income tax rate to no more than 1.2 percent and retain all of that revenue for county operations. If Angola takes no action, the city would lose its income tax funding entirely. The legislation allows cities to adopt their own income tax of up to 1.2 percent, but Martin says even at the maximum rate the city would still face an estimated two million dollar annual shortfall, or about ten percent of its operating budget.
Martin says the changes could put the city in a position of raising taxes while reducing services. He notes that Angola is not alone, with cities across Indiana facing similar financial impacts. The mayor says he plans to work with state legislators during 2026 to seek changes to the law, which he believes had unintended consequences for local governments.