Senate approves 2- year budget plan

INDIANAPOLIS – The Senate on Wednesday approved a two-year budget proposal that would steer more money to education and a bill that would overhaul Indiana’s property tax system.\nBoth bills now head to joint House-Senate conference committees, where lawmakers from both chambers will work to hammer out compromises before the regular legislative session comes to a close at the end of the month.\nSenate Appropriations Chairman Robert Meeks, R-LaGrange, said the bills help property tax payers and give Indiana a balanced budget.\n“I think the Senate has passed two of the most significant pieces of legislation in recent years,” Meeks said.\nHouse Speaker Patrick Bauer, D-South Bend, has said there are common elements in the budget and property tax proposals that could pave the way toward a House-Senate compromise.\nSen. Lindel Hume, D-Princeton, was equally optimistic Wednesday, saying the House and Senate have kept lines of communication open on important issues, including the budget.\n“That is a good sign,” he said. “We’re all working for the good of the state of Indiana.”\nThe GOP-controlled Senate voted 36-13 for a $26.3 billion budget plan that would provide more money to universities, prisons and Medicaid while capping overall spending increases at a maximum of 4 percent each year.\nMeeks said the budget was fair and responsible.\n“We attempted to take care of the needs of the people of Indiana,” he said. “We have done that.”\nRepublican Gov. Mitch Daniels said Wednesday he hoped the final version of the budget would be similar to the Senate’s.\n“This budget holds spending growth to 4 percent, as I asked, and therefore balances without a tax increase while adding strongly to education funding,” he said.\nBasic spending on schools – always a top priority among lawmakers – would grow by 3.5 percent the first year and 3.4 percent the second. That’s lower than the 4 percent increases House Democrats proposed in their version of the budget, but more than schools have received in recent years.\nDaniels has proposed phasing in full-day kindergarten over three years, eventually mandating that all elementary schools offer it. House Democrats put that plan in their budget bill at an initial two-year cost of $160 million.\nBut the Senate budget plan would make full-day kindergarten optional and allocate about $93 million toward the programs. Meeks says when that money is combined with federal funds, every school district that wanted full-day classes could offer them.\nThe Senate’s budget proposal dovetails with its plan to restructure the state’s property tax system, which passed on a 44-5 vote.\nUnder that bill, the state would assume all school operating costs, largely ending the practice of subsidizing local property taxes. It would allow counties to use local income taxes instead of property tax increases.\nThe Democrat-controlled House failed to pass a property tax restructuring plan earlier this session, leaving it to the GOP-led Senate to revive the issue. Members of both parties have labeled property tax relief and restructuring as a top priority as homeowners brace for tax increases expected to average 15 percent this year.\nSenate Republicans said if all elements of the plan were implemented and all counties adopted maximum allowable income tax increases by 2010 – and dedicated all of one increase to homesteads – average property taxes for homeowners would be 62 percent lower than they would have been.\nThe plan would increase the homestead credit from 20 percent to 28 percent for property taxes payable this year. Supporters say that would reduce homeowner bills by an average of 5 percent this year.\n“There are some significant tax reductions that can be accomplished with this,” said Senate Tax Chairman Luke Kenley, R-Noblesville.