This year’s session of the Indiana General Assembly was largely framed by two debates – Governor Mike Pence’s proposed 10 percent income tax cut and implementation of the Affordable Care Act.
Budget And Tax Cut Compromise
A 10 percent cut of the individual income tax was the cornerstone of Mike Pence’s gubernatorial campaign. But even before the election, legislative leaders expressed reluctance at his proposal. That reluctance did not change when Pence took office and began touring the state, stumping for his plan.
As the session’s end drew closer, Pence began to indicate his willingness to compromise on some things, such as a longer time frame for implementation of his tax cut. But he never wavered on his call for a ten percent cut.
“It’s important that we take this moment in the life of our state to enact the kind of tax relief that will make Indiana more competitive and attract more investment and more jobs to the Hoosier state,” Pence says. “I do believe that a significant, 10 percent reduction in the personal income tax rate is an important element in that.”
The final income tax cut number? Five percent over three years. Senate Appropriations Chair Luke Kenley says the longer phase-in will allow the state to ensure it can support the tax cut in the next budget.
“I think the governor finally agreed with our cautious approach to making sure that we have the ability to fund our needs, keep our triple-A bond rating and do everything else,” Kenley says.
The legislature also eliminated the inheritance tax and continued a reduction of the corporate tax rate. Pence called the deal a great victory for taxpayers, praising the blend of tax cuts that he says will impact every Hoosier.
Roads And Education Funding
Indiana’s two-year budget also contains $215 million per year in increased roads funding for the state and local governments while setting aside $400 million over the biennium in the Major Moves 2020 fund for future projects such as finishing Interstate 69 and widening I-70 and I-65 to six lanes statewide.
K-12 education funding sees a 2 percent increase in the first year, with another one percent increase in the second. Speaker Brian Bosma says that more than restores education funding to pre-recession levels.
But Senate Minority Leader Tim Lanane says the budget doesn’t truly restore funding to all schools.
“If fact, we understand that if you look at all the school districts in the state, 50% of the school districts will receive less in the future under this budget than they did in 2011,” Lanane says.
Lanane says another issue with education funding is that money for the state’s school voucher system comes out of public school dollars. And the legislature this session expanded the voucher program established two years ago.
The original House expansion plan, pushed by Governor Pence, eliminated the requirement that voucher recipients attend one year of public school past kindergarten. The Senate scaled it back, requiring students to at least attend public kindergarten.
But House Education Committee Chair Bob Behning says that likely won’t end the expansion discussion.
“The governor obviously had additional expansion ideas in it. I’m the sure the governor, if we don’t move that far forward this time, then he’s not going to say, ‘I’m done with it.’ So I think there’s obviously always room for more consideration,” Behning says.
Every Hoosier public school was nearly given a mandate this year to employ armed personnel. A bill providing grant money for schools to improve safety drew controversy after a House committee added the armed mandate.
The full House later stripped the bill of that language but the mandate’s proponent, Rep. Jim Lucas (R-Seymour), says the discussion should continue.
“When a person commits themself to going to a school and murdering innocent women and children and staff members, the only defense that we can provide at that time is somebody that is trained and equipped to combat what is going on,” Lucas says.
A study committee will consider the broader issue of school safety this summer.
Casinos And Competition
With revenue from the state’s gaming facilities dropping, lawmakers pushed for a bill to help boost the riverboats and racetrack casinos. The Senate version’s combined tax breaks and credits with provisions that would allow live table games at the racinos, replacing current electronic games, and permit riverboats to move their facilities completely on land.
But the House removed those provisions, saying they constituted expansion of gaming in the state. One of the arguments for the expansion is it would have created good paying jobs.
Overall, that is something House Minority Leader Scott Pelath says Republicans failed to accomplish this session.
“Most important thing the middle class needs is jobs, nd they need middle class jobs,” he says. “They punted on the opportunity to provide 30,000 private sector jobs through the expansion of healthcare under the Affordable Care Act.”
While the House and Senate filed bills urging the governor to negotiate with the federal government over healthcare expansion, neither bill survived the process. House Republican leaders say legislation passed in 2011 authorizing the administration to negotiate for expansion through the Healthy Indiana Plan, the state’s insurance program for low-income Hoosiers, is sufficient.
Pence has been clear from the start.
“We are not pursuing an expansion of traditional Medicaid,” he says. “I think Medicaid is a system that’s broken. It’s rife with waste and even fraud.”
Pelath says Pence and the Republican legislature’s refusal to start implementation of the Affordable Care Act will hurt them and the state in the near future.
The Democrats call the session one of missed opportunities, failing to help the middle class. But Republicans trumpet their achievements, dubbing the session one that focused on fiscal integrity, job growth and enhancing education opportunities.