New budget proposal announced in Senate

The Indiana Senate unveiled a two-year $29.5 billion budget that would include a small income tax cut and guarantee funding for roads and education.

The proposed two-year state budget was passed by the Senate Appropriations Committee by a vote of 9-4 Thursday and now heads to the full Senate.

At a press briefing, Gov. Mike Pence said the latest version of the budget is a good start.

“From the outset of this administration, we have been clear about our expectations for this budget: Hoosiers expect to have an honestly balanced budget that holds the line on spending that funds our priorities, that protects our fiscal strength,” Pence said in the briefing.

The budget includes an individual tax reduction worth approximately $25 per resident, which amounts to a $150 million tax reduction statewide. It cuts income tax rates from 3.4 percent to 3.3 percent and eliminates the state inheritance tax.

However, Pence is continuing to push for a deeper cut that would reduce the income tax rate to 3.06 percent.

“I’m pleased that this budget provides permanent income tax relief for every Hoosier,” Pence said. “I’m also pleased to see the inheritance tax phase out more quickly.”
Sen. Mark Stoops, D-Bloomington, said the tax cut proposed by the Senate only benefits the wealthy.

“Most people, especially low income people, will see no money at all,” he said.
The budget proposes more than $300 million to increase K-12 funding, which is a 3-percent increase throughout the next two years. It also increases infrastructure and road funding by $600 million in two years.

Stoops said the budget fails on multiple levels.

“For one thing, there is very little increase in funding for public education,” Stoops said. “There’s no money for preschools, which was a bipartisan priority in the legislature last year.”

He said omitting the inheritance tax cut only benefits the wealthy.

“There’s a proposal for only part of that income tax,” Stoops said. “That’s at a time when the cuts in public schools have a very devastating impact, yet they haven’t restored funding for schools anywhere near the levels it was cut from two or three years ago.”

The budget also fully funds the Medicaid forecast and creates a $600 million Healthy Indiana Plan savings account to cover costs of the Affordable Care Act.

Senate Democrats offered four amendments Monday to the budget, all of which were rejected.

In one amendment, Democrats offered a proposal to expand health care coverage to 400,000 workers and offered to separate funding allocated for the state’s voucher program.

Stoops said there’s been a battle trying to obtain a mechanism which expands Medicaid under the Affordable Care act.

“It appears that there is money in the budget to set aside,” Stoops said. “If the state of Indiana decides to expand Medicaid, we can do it. I think that’s some good news in the budget.”

Other aspects of the budget proposal include increasing funding for the Department of Child Services by $30 million per year and increasing student aid by $43 million in fiscal year 2014 and by $28 million in fiscal year 2015.

Pence said the latest version of the budget signals there is a pathway to creating a successful budget that will meet the objectives of his administration.

“Now that as we enter the final phase of this year’s session of the General Assembly, I believe that we are getting on the same page,” Pence said. “But let me be clear, there are still details and differences of levels of spending and priorities.”

However, Stoops said he doesn’t see any real changes to the proposed budget outside of a few minor corrections.

“This budget is all about transferring more money into the hands of the wealthy and the state and nothing for jobs and nothing for education,” he said.