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Financial Analysts: State Should Have Cash For Pence Tax Cut

By Brandon Smith

Posted December 17, 2012

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.

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