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So What’s the Big Budget Deal?

I think it’s interesting the political class in the great Hoosier state is all abuzz over the “budget battle” between Governor Mike Pence and Indiana House Republicans over the fact that the House Rs did not include Pence’s 10-percent income tax in their initial budget.

Of course it’s news when the Governor and House Republican lawmakers disagree, but there are couple things to keep in perspective.  First, anyone who has been paying attention knows that the House leadership has not been crazy about the income tax idea without a better handle on the state’s finances which will get with the April revenue forecasts.  Second if this is Indiana’s biggest problem, we’re in pretty good shape.

Allow me to map out a few things, I recently took a look at both Pence’s and the House Rs budget plans.  Here’s what they look like side-by-side.

Overall spending

  • Pence  – Approximately $29.2 billion over the biennium
  • HRs – Approximately $30.076 billion over the biennium

Reserves

  • Pence – Capped at 12.5% for the biennium
  • HRs – $1.9 Bil (12.6% in FY 2014), $2.1 Bil (13.9% in FY 2015)

Tax cuts

  • Pence – 10% cut in income tax
  • HRs – Speed up phase out of inheritance tax to January 1, 2018 instead of January 1, 2022.

Education

  • Pence – 2% potential increase, automatic 1% increase in first year, year two increase based on performance
  • HRs – 3.3% total increase  ($344 million total), 2% increase in first year, 1% increase in year two.  Also an additional $16.7 mil to reward performance
  • Both fund Full-Day Kindergarten.

Roads

  • Pence – One-time $347 million increase, from the surplus that would have gone to non pre-1996 teacher pensions.
  • HRs -  $250 million permanent  increase by shifting dollars from state sales tax on gasoline

DCS

  • Pence – $35 million more for caseworkers, supervisors and child protection hotline
  • HRs – $40 million increase.

So let me see if I get this.  We’re spending more money on schools and roads. The Department of Child Services is getting more money.  We’re keeping a budget surplus of at least 12% and the big issue is whether we should cut income taxes to stimulate the economy or speed up the phase out of the inheritance tax?

What’s the big deal here again?  I don’t know if you’ve looked at the budget problems that have been hitting other states lately but I’ll take Indiana’s budget problems any day.  I’ll take budget surpluses over massive debt.  I’ll take more dollars for schools and roads over less any day of the week.  And if you can do all and cut taxes at the exact time?! Once again, what am I missing here?  I can assure you that if you drove a couple hours in any direction on I-65, I-69, I-74 or

I-70 I will bet you a Davidoff Cigar and martini that the elected officials you spoke would gladly trade places with Indiana right now.

I don’t worry about early legislative squabbles, especially over what taxes to cut because I can assure you it beats the alternative discussion that is likely taking place in other states.

 

 

  • pascal

    I don’t think Mike’s 10% reduction is about stimulating the economy but rather jump starting what needs to be done to reduce the numbers of unemployed Indiana workers. It is the only logical step to take after MItch built a better sand box-that is, continue to make Indiana the best sand box for employers to employ people. I’d much rather see this sort of directed target than fluffy R&D credits, or crony capitalism for racetracks, or dumb dumb transport plans, or AGENDA 21 implementation under the radar.

  • AWB

    Well said!

    >or crony capitalism

    Now if we can get the GA to throw out that mess being brought up by the fire protection company owner that wants to mandate sprinkler systems for all newly built homes in Indiana!

  • Dave

    Irrespective of increased or decreased, wanton / wishful / projected, rates of growth; the true girth of government, has expanded under both “brands” of “leadership.”

    Increasing or cutting a projected rate of growth- is an increase! Republicans have failed to provide clarity & therefore lead, in the very areas they claim expertise & interest; cutting the size of government.

    It seems that Governor Pence is leading on an issue with which his fellow red team members are uncomfortable; taking less of other people’s productivity / compensation / money.

    The rear bumper of a local mini van suggests that the answer to 1984 is 1776.

  • pascal

    Would a trade off be to reduce the massive spending on firemen?