Story Summary

Statehouse budget battle

statehouseLegislators are developing a biennial budget for the state of Indiana, but their plan doesn’t include an income tax cut proposed by Gov. Mike Pence. The House budget plan focuses on providing money for schools and roads. The Senate has heard bills that include the proposed cut, but lawmakers are committing to it just yet. Pence said he’s “disappointed” in the lack of support for the cut, which was a critical part of his gubernatorial platform.

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It was a long night for state lawmakers, with several key issues getting settled on the last day of this year’s legislative session.

Both the House and Senate worked past midnight to approve the state budget early Saturday morning, which now includes the compromise plan to cut income tax 5 percent by 2017, instead of the 10 percent cut Governor Pence had requested.

The 3.4 percent income tax will drop to 3.3 percent beginning on Jan. 1, 2015.  That 3.3 percent tax will later drop to 3.23 percent by Jan. 1, 2017.

“The combination of a 5 percent individual income tax cut, inheritance tax repeal and additional tax relief for businesses is the right tax relief at the right time and will give a much needed boost to working families, small businesses and family farms,” Gov. Pence said in a written statement.

Lawmakers also approved the bill to loan money to the Indianapolis Motor Speedway, to help fund improvements at the track. But it was a disappointing night for some lawmakers who wanted live table games for casinos in Shelbyville and Anderson. While the gaming bill passed, the final bill did not include live table games.

A bill that would make it illegal to shoot undercover video at Indiana farms and other businesses got pulled from the House floor, and won’t be put into law this year.

There were also a number of issues relating to Indiana schools. The House and Senate both pased an expansion of the state’s voucher program, while a bill funding grants for school resource officers also passed both chambers. A provision requiring armed officers in every school was taken out of the bill earlier this month.

Lawmakers voted to put the issue of common core on hold, to study the issue further.

The mass transit bill was also sent to a study committe, as expected.

INDIANAPOLIS, Ind.– Gov. Mike Pence and Indiana legislative leaders reached an agreement Thursday to cut income taxes for Hoosiers by 5 percent over a four-year period.

“Today Hoosier taxpayers won a great victory,” said the governor. “The agreement reached between our administration and legislative leaders will be the largest state tax cut in Indiana history.”

The 3.4 percent income tax will drop to 3.3 percent beginning on Jan. 1, 2015.  That 3.3 percent tax will later drop to 3.23 percent by Jan. 1, 2017.

“The combination of a 5 percent individual income tax cut, inheritance tax repeal and additional tax relief for businesses is the right tax relief at the right time and will give a much needed boost to working families, small businesses and family farms,” Gov. Pence said in a written statement.

Taxpayers will notice the cuts on their first 2015 paycheck.

The debate over the tax cut has been one of the key points of negotiation during this year’s legislative session. Initially, the budget passed in the House did not include a tax cut, while the Senate budget cut the state’s income tax rate by 3 percent.

“I think the governor finally agreed with our cautious approach to making sure that we have the ability to fund our needs,” said Senate appropriations chair Luke Kenley, R-Noblesville. “With all of the tax cuts we have planned and on the table, we’re giving tax cuts of over a billion dollars that will reach every Hoosier in the state.”

Tea party groups, like Americans for Prosperity, spent thousands advertising and promoting the governor’s tax cut plan.

“I think it’s good news,” said AFP Indiana president Chase Downham. “Hoosiers spoke and I think our legislative leaders in the General Assembly listened.”

“We always said we were open to discussion,” said House Ways & Means Chairman Tim Brown, R-Crawfordsville.  “Part of the issue is we wanted to come out with an investment in education, and investing in our roads, as well as protecting the taxpayer.”

The budget compromise also gets rid of the inheritance tax, increases funding for education, including $20 million for school resource officers.

Funding for roads and bridges will increase more than $200 million per year, while also paying off state debt.

House and Senate leaders also issued statements on the budget compromise Thursday.

“When fully implemented, this is the single largest tax cut in the history of our state,” said Senate president pro tem David Long. “We believe these tax cuts are responsible and will have a positive impact on every Hoosier taxpayer and provide a meaningful boost for the Hoosier economy.”

“Our budget meets our goals of prioritizing education and road funding while maintaining strong fiscal reserves,” said House speaker Brian Bosma, R-Indianapolis. “After meeting each of these goals and with a proven track record of fiscal integrity, we are in a positive fiscal environment to give Hoosiers the largest tax cut in the history of Indiana. This blend of tax relief will have a positive impact on Hoosiers across the state and will result in a tax cut for every Hoosier.”

The budget compromise will still have to be approved by the full House and Senate, which will likely vote sometime tomorrow, before closing out this year’s legislative session.

In the midst of an ongoing budget battle with members of his own party, Gov. Mike Pence told local economic leaders he has no plans to back down on his calls for a ten-percent income tax cut.

Gov. Pence addressed a group of local economic leaders at the Indianapolis Chamber of Commerce luncheon Wednesday, using his speech to again make his case for tax relief.

However, it’s been a tough sell in the General Assembly. The House-authored budget made no cuts to the personal income tax rate, while the Senate budget plan cut income tax by 3 percent. Pence said this week’s state revenue forecast proves the state can afford a larger tax cut, with an estimated $290 million in increased revenue headed to the state over the next two years.

“Reducing income taxes means more jobs, and I believe Indiana should seize this moment to make that a reality in our state,” said Gov. Pence. “Indiana has the ability to fund our priorities including increases in roads and schools, and provide a blend of tax relief that includes the ten percent.”

Pence seemed to suggest he may be willing to accept a longer phase-in for the tax cut, spreading it out over a longer period of time than the two-year plan he had originally suggested.

“The details of how we do that and when it’s phased in, we are all talking through,” he said. “But I think the objective of arriving at a 10 percent income tax reduction is important.”

“If we’re going to spread it over a number of years why not make the decision which we know we make now,” said Senate appropriations chair Luke Kenley, R-Noblesville. “Then if the time comes, then we can make that decision then. I don’t know what the point would be of making that decision now.”

Wednesday, a joint House-Senate committee heard testimony from supporters and opponents of the tax cut plan.

“There are going to be tax cuts of a half billion dollars, tax cuts that will touch everyone in the state of Indiana,” said House Ways and Means Chairman Tim Brown, R-Crawfordsville, referring to other proposed tax cuts, including a cut to the inheritance tax which Gov. Pence now supports.

“I think compromise is a two way street,” said Sen. Kenley of the talks with the Governor. “Maybe he can compromise too.”

The conference committee will continue to debate the budget until an agreement is reached before the end of the session on April 29.

INDIANAPOLIS – The governor’s plan to cut taxes is getting some new support from a national conservative organization that’s spending thousands of dollars to promote the governor’s proposal.

Americans for Prosperity, the well-known conservative group founded by the Koch brothers, is now inserting itself into the state’s  tax cut debate, after announcing the campaign at the Statehouse on Thursday.

“Today we’re encouraging Republicans in the state legislature to come on board with this reform,” said Tim Phillips, the group’s president.

“We believe this tax cut is critical to keeping our state competitive and growing our economy,” said Chase Downham, head of the group’s Indiana chapter.

AFP Indiana plans to buy TV ads as part of a six-figure campaign targeted at Indianapolis, and other strategic markets across the state. The ads could start airing later this week.

“They’ve been a close ally of Gov. Pence throughout his career,” said House Speaker Brian Bosma, R-Indianapolis. “I’m very confident they want to see his campaign promise viewed as successful.”

The governor has said he believes the state has enough money for the 10-percent tax cut, a key part of his gubernatorial platform. But lawmakers in Pence’s own party were hesitant to support the tax cut, saying they’ll wait for the April revenue forecast to see if the plan is viable.

Instead the House budget plan, passed last month, left out Pence’s tax cut and called for more spending on schools and roads.

“We had an opportunity to discuss and vote on Gov. Pence’s proposed middle class tax cut,” said House minority leader Scott Pelath, D-Michigan City, “We had a chance to vote for a middle class tax cut that we proposed and we missed that opportunity.”

The Senate Appropriations Committee met Thursday morning for its first hearing on the budget.

“I do think Indiana has already set a very aggressive standard with our corporate tax cuts and our inheritance tax that we hope to eliminate,” said Senate appropriations chair Luke Kenley, R-Noblesville. “Gov. Pence’s proposal sort of cuts across our present plan, and I think the trick is going to be how do we meld these plans together.”

“I think that the amount that he’s requested is not doable, in my opinion,” said Sen. Karen Tallian, D-Portage.

“The key is to make a smart decision for the state, and that’s what we’re going to do,” said Bosma.

AFP officials said the group’s marketing campaign was an independent effort, and was not coordinated by the governor’s office.

Pence was in Terre Haute, but his office issued a brief statement on the issue late Thursday.

“Gov. Pence appreciates any effort by anyone to support Hoosier taxpayers and the 10 percent tax cut,” said Pence press secretary Kara Brooks.

Senate committee members are expected to spend several weeks in hearings before voting on the budget in April.

INDIANAPOLIS – A Senate committee will start work on a new state budget as lawmakers consider the fate of Gov. Mike Pence’s proposed personal income tax cut.

The Senate Appropriations Committee is scheduled to meet Thursday.

The governor said he believes the state has enough money for the 10-percent tax cut, which was a key part of his gubernatorial platform. Other lawmakers are more cautious in regards to the cut, saying they’ll wait for the revenue forecast to see if the plan is viable.

The House’s budget plan leaves out Pence’s tax cut and calls for more spending on schools and roads.

Senate committee members are expected to spend several weeks in hearings before voting on the budget in April.

INDIANAPOLIS – On the last day for state representatives to make amendments to the House budget, two Democrat-sponsored amendments failed to gain a majority of votes in the Republican-controlled chamber.

Democrats presented an alternative to the Republic budget that they said would do more to cut taxes and fund schools.

The amendment failed, which prompted Democrats to try to force a vote on Gov. Mike Pence’s plan to cut income taxes by ten percent.

Legislators did not take a vote on that amendment because House rules prevent it due to similar legislation that had been pending in the House.

“We need to have a vote on Gov. Pence’s signature item,” said Rep. Scott Pelath, D-Michigan City, House minority leader.

“This is not a vote on the tax cut, you may claim (next election) that it is, but this is a vote on our rules and whether or not we follow our rules,” said Rep. Jerry Torr, R-Carmel.

Democrats had hoped their budget alternative would draw some bipartisan support.

“This is a good budget,” said Rep. Greg Porter, D-Indianapolis, of his party’s proposal.

Earlier this week, the budget-writing House Ways and Means Committee passed its two-year, $30 billion budget that does not include the Pence tax cut.

The full House will vote on the budget early next week.

The Senate Tax and Fiscal Policy committee discussed two budget bills that included the tax cut but didn’t vote on them.

Rep. Tim Brown, R-Crawfordsville, said Monday that the tax cut isn’t dead, but its future is uncertain.

“We’re waiting for more information relating to the revenue forecast,” said Brown, who chairs the House Ways and Means Committee. “And also the potential of sequestration as it impacts Indiana.”

Brown is among those who say they don’t know if the state can afford the $500 million tax cut. Instead of focusing on that issue, the House budget spends more money on schools and roads.

The tax cut issue has put House Republicans at odds with the Republican governor.

Pence campaigned on the tax cut and has made it a priority for his administration. He called the House budget “disappointing.”

The situation raises the question of whether the Senate will try to insert the tax cut into the budget after the House sends it over.

The issue will likely not be resolved until after a revenue forecast in April. That will be the last available look at the state’s finances before lawmakers meet the deadline for passing the budget.

Politics
02/19/13

House budget moves forward without income tax cut

INDIANAPOLIS – Gov. Mike Pence didn’t get much help from state lawmakers Tuesday in making his promised 10 percent income tax cut a reality.

The budget-writing House Ways and Means Committee passed a 2-year, $30 billion budget that does not include the tax cut. The vote sends the budget to the full House for a vote early next week.

The Senate Tax and Fiscal Policy committee discussed two budget bills that included the tax cut but didn’t vote on them.

Rep. Tim Brown, R-Crawfordsville, said the tax cut isn’t dead, but its future is uncertain.

“We’re waiting for more information relating to the revenue forecast,” said Brown, who chairs the House Ways and Means Committee. “And also the potential of sequestration as it impacts Indiana.”

Brown is among those who say they don’t know if the state can afford the $500 million tax cut. Instead of focusing on that issue, the House budget spends more money on schools and roads.

The tax cut issue has put House Republicans at odds with the Republican governor.

Pence campaigned on the tax cut and has made it a priority for his administration. He called the House budget “disappointing.”

The situation raises the question of whether the Senate will try to insert the tax cut into the budget after the House sends it over.

Sen. Mike Delph, R-Carmel, made it clear that he hopes that happens.

“It’s the people’s money, whenever you have a projected surplus, that means the government is taking in more than it’s spending,” Delph said. “So I think there’s an obligation and it’s incumbent upon the government to return that money to the taxpayer.”

Sen. Luke Kenley, a Noblesville Republican who plays a key role in the budget-writing process, did not commit to the tax cut. He’s still leaving the door open.

“I think we need to fulfill the obligations that we’ve made,” Kenley said. “And if we can do that, and deal with his tax cut, then we’ll see if we can work that out.”

The issue will likely not be resolved until after a revenue forecast in April. That will be the last available look at the state’s finances before lawmakers meet the deadline for passing the budget.

INDIANAPOLIS – A House committee has approved a budget that does not feature the income tax cut advocated by Gov. Mike Pence.

The Ways & Means Committee approved the House Republican budget in a 16-7 vote that fell along party lines. That version of the budget will now head to the full House.

During his campaign, Pence made a 10 percent personal income tax cut a key component of his platform. The tax cut was not part of the budget House Republicans submitted last week.

House lawmakers said they haven’t ruled out the tax cut.

The tax cut remains part of the Senate’s budget plan. The Tax and Fiscal Policy Committee met Tuesday to discuss the budget and examine the impact of Pence’s proposal.

On Monday, Pence said he would continue to advocate the tax cut, adding that it’s still early in the negotiation process.

INDIANAPOLIS – The state of Indiana could restore hundreds of millions of dollars in funding to schools as part of the House budget proposal released on Friday.

Lawmakers allocated $442 million of additional money to Indiana schools, but did not include the Gov. Pence’s much-discussed tax cut plan in the state’s bi-yearly budget proposal.

“There are a lot of needs out there, and different interests,” said Ways & Means Committee Chairman Tim Brown, R-Crawfordsville. “We’re making priority investments in education, and priority investments in transportation.”

The budget adds $250 million per year in sustainable funding for roads and bridges, $40 million per year for the Department of Child Services, and $33 million for workforce training programs.

But it’s the governor’s tax cut plan that continues to draw the most attention and debate at the Statehouse, where both the House and Senate are controlled by Republican supermajorities.

“The governor and his staff are aware that the income tax cut is not in the House budget,” Brown said. “But we’ll continue to have discussion and debate.”

Gov. Pence responded Friday in a written statement, calling out members of his own party for not including his tax cut proposal.

“I am very disappointed in the House budget proposal,” Pence said. “Despite having the largest budget surplus in history, this House budget increases spending without giving hardworking Hoosiers one cent of new tax relief. As our administration’s budget clearly showed, we can afford to do both. Indiana can fund our priorities including increases for roads and schools and reduce the personal income tax.”

The governor gained an unlikely ally in his cause Friday. House Minority Leader Scott Pelath, D-Michigan City, told reporters he would try to get an up-or-down vote on Pence’s tax cut plan on the House floor this session.

“We’re going to ensure that’s going to happen, and some Democrats are going to support it,” Rep. Pelath said. “I can assure Gov. Pence and the two supermajorities there’s going to be some Democratic support for this effort. They don’t think it’s the best idea ever, but it’s an idea.”

Pelath was asked if his motive was simply to put Republican legislators in a corner, forcing them to cast a vote against either the Governor’s plan, or that of their own leadership.

“They don’t have to vote against it,” he responded, adding that he might also support the tax cut if it came to a vote on the floor.

“This is the one bold idea that’s been brought forward, and I think to ignore it is a mistake,” he said.

Brown said his focus was on restoring funding to Indiana schools.

“Every legislator had education on their heart,” Brown said. “That’s why it was a top priority.”

Tonya Schwartz, a parent in Brownsburg, told Fox59 that she was glad the state was putting some money back into education.

“It’s good to add it back in,” Schwartz said. “Kids need all kinds of programs, and funding is important to continue that.”

Lawmakers plan to finalize the budget before the end of the legislative session in late April.

A breakdown of the state’s proposed budget has been posted online.

Politics
01/15/13

Lawmakers react to Pence’s budget plan

INDIANAPOLIS – On his second day as Indiana’s governor, Mike Pence is getting mixed reaction to his proposed two-year budget.

State Budget director Chris Atkins presented an overview of the numbers to the State Budget Committee Tuesday afternoon.

“It is an honestly balanced budget,” Atkins said. “It maintains a strong structural surplus, well in excess of $200 million by the end of fiscal year 2015.”

The two-year, $29 billion plan increases overall spending by 1.4 percent, which the Pence administration said is responsibly below projected inflation of 2.5 percent over ten years.

While most state agencies will remain at or slightly below current funding levels, the budget provides an increase for public schools.

In 2014, K-12 education would receive a 1 percent increase. In 2015, K-12 education would receive an additional percent—but that second-year increase would be performance based. Criteria for the increase would include graduation rates, third grade reading level tests, and the A thru F grading system.

While some are happy to see any increase for public schools, others are already calling it lackluster after several years of flatline spending or cuts.

“The new budget restores less than half of the cuts that we’ve made to public education,” said State Sen. Karen Tallian (D, Portage).

Republican State Sen. Luke Kenley expressed concerns that performance-based funding will move Indiana away from the current formula of the dollar following the child.

“It might be that the rewards all go to schools where it’s a little easier to produce the performance,” Kenley said.

Kenley also said lawmakers will have plenty of time to work through specifics of the budget. Those discussions will include the viability of a planned ten-percent personal income tax cut, which the budget proposes and Pence advocated while campaigning for governor.

That $500 billion tax cut would come from structural surpluses which are projected in 2014 and 2015.

Atkins said Indiana will have healthy reserves and surpluses in the next two years, even with a tax cut.

Rep. Tim Brown, who chairs the State Budget Committee, likes the idea.

“I’m comfortable having it on the table and listing the tax cut as a job creation and a stimulus issue,” Brown said.

Others worry about a permanent tax cut without knowing the ultimate cost of Indiana’s share of Medicaid.

Other parts of the budget include:

  • A 7 percent funding increase for the Department of Child Services
  • A $6 million increase for teacher excellence grants
  • $6 million for Jobs for America’s Graduates, which is a dropout prevention program
  • Full funding for full day Kindergarten
  • $3 million to create the Indiana Applied Research Enterprise, which is a partnership between universities and life sciences companies

Overall, the proposed budget forecasts Indiana having funding reserves between 14 and 16 percent over the next two years.

Lawmakers will have a few weeks to crunch the numbers before a report is expected in the House Ways and Means Committee in mid-February.

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