A new state budget that omits Gov. Mike Pence’s proposed income tax cut in order to boost education and transportation funding won the Indiana House’s approval late Monday.
The two-year, $30 billion spending plan advanced on a 68-28 vote, with Republicans supporting it and Democrats opposing, after a marathon day of debating bills ahead of the House’s midnight deadline to send bills across the hallway to the Senate.
It boosts overall K-12 education spending by 2 percent in its first year and another 1 percent in its second year, puts more aside for a tuition reserve fund, and pumps an extra $250 million per year in gas and sales tax revenue for state and local transportation funding.
“It’s balanced. It spends less than we bring in, so there’s a structural surplus,” said the House’s chief budget writer, Ways and Means Committee Chairman Tim Brown, R-Crawfordsville.
“It has a long-term commitment to education,” he said. “We’re starting to build back some of those tuition reserves so that for the next economic cycle, we’ll be prepared.”
Rep. Greg Porter of Indianapolis, the top Democrat on the House Ways and Means Committee, complained that the budget did not include enough for education, teacher training and public health.
“We hurt our people here in Indiana,” Porter said. “This is not a jobs bill. This does not help the middle class.”
The House Republican budget does not include the top priority on Pence’s first-year legislative agenda – a reduction in Indiana’s individual income tax rate from 3.4 percent to 3.06 percent, which would reduce state tax collections by about $520 million annually.
That, Pence has said, left him “very disappointed.” He said he’d continue lobbying lawmakers – and when those lawmakers get an updated forecast of the state’s revenues over the coming two years in April, that’s expected to be the make-or-break point for Pence’s tax cut.
The spending plan was the first drafted by Brown, who took the helm of the budget-writing committee this year. It’ll now move into the hands of his counterpart, Senate Appropriations Committee Chairman Luke Kenley, R-Noblesville.
The bill pumps 20 percent of the sales tax revenue collected on gasoline purchases into transportation and also uses more of Indiana’s 18-cents-a-gallon gas tax for that purpose, addressing a need a group of mayors raised this year.
“It will offer sustainable funding within the structural surplus for roads and bridges – jobs now,” Brown said.
That’s a departure from Pence’s budget, which included extra funding for transportation only by including a trigger that would send part of the state’s surplus into an infrastructure fund – a move he estimated would amount to $347 million once the current budget is closed out and his two-year budget proposal is also closed out.
Under the House budget, the Evansville Vanderburgh School Corp., which received $142 million this year, would get an extra $2.1 million in the budget’s first year, and then $1.5 million on top of that in the second year.
The Warrick County School Corp., meanwhile, would get a 2.6 percent bump in the first year, from $57.5 million to $59 million, and then another 1.3 percent increase in the budget’s second year, to $59.8 million.
Gibson County schools would all see slightly smaller annual funding increases, while Posey County schools’ funding would flat-line in the spending plan’s first year and then drop slightly in its second year.
Those amounts are impossible to compare to Pence’s budget, since governors typically leave it to lawmakers to write school funding formulas. Still, Pence would have them divide up $63 million less in overall annual funding.