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.
