Though no two states are alike – nor are their local governments – a new online study of 102 local government leaders in Indiana, done by KSM (Katz, Sapper & Miller), an advisory, tax and audit firm, reveals many of the challenges confronted not just in Indiana but other states. 

A report that came out recently titled State of Local Government in Indiana,  summarized the findings of this research. The top challenges revealed by the survey included:

• Budget Constraints (66 percent) – “The strain is especially acute in smaller communities, where 70% of leaders say budgets are among their top concerns. By contrast, only 36% of leaders in larger jurisdictions report the same level of pressure.”

• Housing Availability (51 percent) – “Homes are . . . selling at record speed, with the average time on market dropping from 45 days in 2024 to just 15 days in 2025. Limited availability fuels this rapid turnover, creating intense competition among buyers and driving prices higher over time.”

• Housing Affordability (45 percent) –  “As of August 2025, Indiana was ranked as the fifth most affordable state for home buyers according to Realtor.com. However, there is still an income gap for the average resident seeking to purchase a home, as the statewide median income is about $10,000 less than the income needed to afford the median-priced home. . . Counties are especially affected, with 58% citing affordability as a significant concern, along with 40% of mid-sized cities.”

• Aging Infrastructure (39 percent) – “For towns and rural areas, limited budgets and dependence on outside funding make large-scale replacement or modernization difficult, even as systems near or exceed their intended lifespan.”

• Talent Attraction (22 percent) – “Mid-sized communities felt this most acutely, where 46% of leaders report talent attraction as very or extremely challenging. In small communities, one in three leaders (33%) share this concern. This compares to only 7% of leaders in larger communities, which typically benefit from more diverse job and talent pools”

The report also included the areas that leaders are prioritizing for 2026:

• Attracting new businesses. “86% of cities report business attraction as a key priority, seeking to grow their tax base, diversify local economies, and capitalize on regional momentum. For smaller towns and rural counties, business attraction is often tied to reversing population decline and expanding access to jobs that align with residents’ skills. However, limited funding, staffing, and site readiness remain key execution barriers, underscoring the need for coordinated strategies and external support. 

• Revitalizing Downtowns “Nearly half of leaders (46%) rank downtown revitalization among their top three priorities. The focus is strongest in cities (62%), where revitalization work is focused on vibrancy and small business growth. Revitalization efforts are often seen as central to broader talent retention and placemaking strategies, blending infrastructure upgrades with mixed-use development, housing, and cultural investments. For many jurisdictions, these projects aim to reintegrate underutilized corridors and historic districts into the community’s economic fabric.“

• Supporting Small and Local Businesses “Supporting local businesses was identified as a top three priority by 44% of communities. This focus is especially strong in towns and counties, where small businesses form the economic backbone. Leaders noted that rising costs, workforce shortages, and limited access to capital are threatening local entrepreneurs, prompting communities to consider small-scale incentives, grant programs, façade improvement funds, and buy-local campaigns to sustain business health and community identity. 

• Improving Affordable Housing “Housing is an economic priority for 44% of respondents, with leaders increasingly linking housing availability directly to job growth. Affordable housing is ranked as the most pressing issue for 56% of counties and 43% of mid-sized communities, where workforce housing shortages are seen as a constraint on employer recruitment and retention. This concern is also spurring new interest in zoning reform, developer partnerships, and regional housing coordination, especially in areas experiencing rapid growth or places with mismatches in housing types.

• Industrial Site Readiness and Workforce Development “For mid-sized jurisdictions, industrial site readiness and workforce development are top concerns, with 41% naming them as priorities. This reflects their strategic positioning between large metropolitan areas and rural markets. These communities are investing in shovel-ready site planning, utility access, and workforce training programs to attract industrial users and logistics employers. Leaders recognize that without ready-to-deploy land and a skilled workforce, economic development opportunities may bypass their regions entirely.”

#StateandLocalGovernmentManagement #StateandLocalGovernmentPerformance #StateandLocalPerformanceManagement #CityGovernmentManagement #CityPerformance #StateandLocalEconomicDevelopment #DowntownRevitalization #StateandLocalGovernmentBudgeting #StateandLocalHousingAffordability #StateandLocalHousingAvailability #StateandLocalWorkforceDevelopment #StateandLocalIndustrialSiteReadiness #StateandLocalSmallBusinessSupport #StateandLocalInfrastructureManagement #StateandLocalWorkforce #StateOfLocalGovernmentIndiana #StateandLocalGovernmentChallenges  #StateandLocalGovernmentPriorities2026 #StateandLocalManagementNews #KatzSapperAndMiller #KSM #BarrettandGreeneInc