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.