Financial Analysts: State Should Have Cash For Pence Tax Cut

The governor-elect's proposal banks on 2.5-percent revenue increases in the next two years and on spending 1.5-percent more in the next state budget.

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Photo: Jasont82 (Wikimedia)

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The newest state revenue estimates forecast that Indiana will be able to afford Governor-elect Mike Pence’s proposal for a 10-percent, across-the-board individual income tax cut.  But lawmakers are still taking a wait-and-see approach.

Pence estimates his tax cut would leave the state with nearly $800 million dollars less in revenue over the next two budget years.  But he also projects state revenues will grow enough to more than offset that.  A new revenue forecast unveiled Monday falls in line with those projections.  But Senate Appropriations chair Luke Kenley (R-Noblesville) says the success of Pence’s proposal will come down to the legislature’s priorities.

“There’s going to be a push to spend a lot of money on things that maybe haven’t been spent in recent years and there’s going to be other pushes that say, ‘Look, we started down the path towards a leaner, smaller government, we need to keep going down that path.’  I think it’s going to be a pretty lively discussion the next four months,” Kenley says.

Sen. Karen Tallian (D-Portage), who sits on the State Budget Committee, says Pence’s tax cut simply requires too much money.

“All these agencies and everybody has already taken a huge hit so we can’t afford to give away all the growth for the next two years into a $50 tax cut.”

Kenley says it will be easier to judge the feasibility of Pence’s proposal when the revenue forecast is updated again in April.

Brandon Smith, IPBS

Brandon Smith, IPBS has previously worked as a reporter and anchor for KBIA Radio in Columbia, MO, and at WSPY Radio in Plano, IL as a show host, reporter, producer and anchor. Brandon graduated from the University of Missouri-Columbia with a Bachelor of Journalism in 2010, with minors in political science and history. He was born and raised in Chicago.

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