New House budget increases spending for schools and road - yet no income tax cut 

By Lesley Weidenbener

House_budget_infograph.jpg

The Indiana House passed a two-year, $30 billion budget on Monday that spends more on education, roads and Medicaid but doesn't include Gov. Mike Pence's income tax cut.

The GOP-written plan would leave the state with $2.1 billion in the bank at the end of fiscal year 2015, slightly less than the state has in the bank now, but it pays off debt and pays for several university construction projects in cash.

"That protects our children and our grandchildren," said Rep. Eric Turner, R-Cicero. "Collectively this budget helps our state by making it more attractive for new investment in jobs by focusing on those priorities of funding roads, of sign education funding, protecting fiscal integrity and lower taxes."

The budget - crafted by majority Republicans and passed 68-28 on party lines - speeds up a phase-out of the state's inheritance tax. But it would not trigger an automatic taxpayer refund because the plan makes changes to that program so the state can put more money away in the bank for a future recession.

House Minority Leader Scott Pelath, D-Michigan City, said that "today matters as well."

"The middle class is out there struggling right now. There's nothing to address that problem. There's nothing to help that," Pelath said. "People need consumer power so they can jumpstart the economy."

The budget would spend 2 percent more on education in the first year and 1 percent more in the second year, which would send a total of $334 million more to schools.

It also earmarks $16.7 million to be distributed to schools based on an achievement formula that has not yet been determined.

Ways and Means Chairman Tim Brown, the primary architect of the budget, said the plan will spend more money on schools than any budget before it.

But Indianapolis Democrat Greg Porter - the committee's ranking Democrat - questioned whether the bill truly creates much new money for education or whether it simply shifts money from one fund to another.

click to enlarge House Speaker Brian Bosma, R-Indianapolis, listens during a debate about the state budget on Monday. - LESLEY WEIDENBENER
  • House Speaker Brian Bosma, R-Indianapolis, listens during a debate about the state budget on Monday.
  • Lesley Weidenbener

"It's not a good budget. It's not a sound budget," he said. "It's not a budget for all."

The plan makes changes to the state's automatic taxpayer refund program, which former Republican Gov. Mitch Daniels pushed into law. Currently, the program requires the state to provide tax credits to Hoosiers when the money in the state's main checking and savings accounts totals more than 12.5 percent of the next year's budgeted spending.

The House budget plan will change the formula so that it doesn't count money set aside in a tuition reserve fund for schools. The GOP proposal puts $300 million over two years into the fund. And so while Republicans project the state would have $2.12 billion in the bank on June 30, 2015 - nearly 14 percent of spending - that would no longer be enough to trigger the refund because the $30 million in school savings would be subtracted. The GOP plan also takes gasoline tax money now allowed to state police and the Bureau of Motor Vehicles and uses it for road construction. It also transfers some of the sales tax revenue collected from gas purchases for the same purpose.

In all, that will add about $250 million per year to the state's Motor Vehicle Highway Account, from which about 53 percent of the money is spent on state projects and 47 percent is sent to local governments for their road budgets.

Brown said that will be a big help for local officials who have been "demanding help for their roads."

The budget plan would also:

* Boost funding for the Department of Child Services by $40 million annually so the agency can hire new case workers and intake specialists, in part to implement improvement plans for its abuse hotline.

* Increase funding for universities by 3.5 percent over two years.

* Pay off bonds for the Indiana State Museum and the state Forensics Science Laboratory.

* Boosts funding for Medicaid but orders its administrators to make changes that control costs for the aged, blind and disabled programs.

It now moves to the GOP-controlled Senate, where it's expected to undergo changes.

Lesley Weidenbener is managing editor of TheStatehouseFile.com, a news service powered by Franklin College journalism students and faculty.

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