AFP touts Pence tax cut proposal in TV spot

A conservative group is launching television and radio advertisements aimed at pressuring reticent Indiana Republican legislative leaders into writing Gov. Mike Pence’s proposed income tax cut into the state’s next two-year budget.

The Indiana chapter of Americans for Prosperity, a tea party-fueled organization funded by the Koch brothers, will launch a “six-figure” advertising buy in Indiana and accompany it with emails, phone calls and door-to-door efforts.

Its goal is the same as Pence’s: To lower Indiana’s individual income tax rate from 3.4 percent to 3.06 percent, a move that would save taxpayers – and lower state revenue – by about $520 million annually.

The group’s new campaign will send a message to Republicans who dominate both chambers of the Indiana General Assembly after winning supermajorities in November’s election, said Tim Phillips, Americans for Prosperity’s national president.

“This is meant to encourage them – to show them that there are folks that have their back,” Phillips said.

“A lot of Indiana families, and I think the nation really, is watching to see what they’re going to do with this power. Are they going to kind of float along with the comfortable status quo, or is it going to be a genuinely bold attempt to get this economy moving again?”

Legislative leaders have balked at the tax cut because they prefer to boost education and transportation funding. The House did not include it in the budget the chamber passed, and key senators have said they are hesitant, as well.

Senate Appropriations Committee Chairman Luke Kenley, the Noblesville Republican who is his chamber’s top budget-writer, said Indiana is already in the process of stepping down the state’s corporate income tax and phasing out its inheritance tax.

Pence’s proposed income tax cut “sort of cuts across our present plan, and I think the trick is going to be, how do we meld these plans together and still fund the things that we think are priorities?” Kenley said.

“Obviously we want to fund schools, we want to fund roads, we want to fund higher education, and even a conservative Republican would say these are the kind of investments in the future that you have to make. So we have to reach that right balance.”

Both Kenley and House Speaker Brian Bosma, R-Indianapolis, said Thursday that a key moment will come on April 17, when an updated forecast of how many tax dollars Indiana will take in over the next two years is released.

That forecast will trigger an intense period as the legislature speeds toward the April 29 end of its 2013 session. Lawmakers say the rosier Indiana’s revenue picture looks, the more likely Pence is to get the top item on his first-year legislative agenda.

The Americans for Prosperity ad is a one-minute spot styled after one that former Gov. Mitch Daniels once ran.

It starts with powerful music and green-and-white headlines that tout the state’s economy and its surplus. Then, it abruptly switches to foreboding music and red-and-white headlines that point to House Republicans’ decision to exclude Pence’s tax cut from their budget.

Bosma said Thursday that lawmakers have cut 10 different taxes over the last decade, and are sending $360 million back to Hoosier income tax filers as credits during this year’s tax-filing season.

The House Republican budget sped up the pace at which Indiana would phase out its inheritance tax. Under current law, that tax would be gone by 2022. The House’s budget would eliminate it by 2018.

“There’s going to be a tax cut by the time we’re out of here, I’m confident about that,” Bosma said. “The question is which tax, how much, and when. My pledge is, we’re going to do the right tax in the right way in the right time.”

Pence’s budget proposal included a 1 percent bump in education funding during its first year, and more to divvy up through performance-based measure in his spending plan’s second year.

House Republicans, meanwhile, boosted education funding by 2 percent in their budget’s first year and another 1 percent in its second year. Bosma said they aimed to raise K-12 education funding to its 2009 levels, prior to a cut Daniels ordered as the state grappled with the economic downturn.

After setting aside 12.5 percent of what the state spends in a year in reserves, Pence’s budget also would have sent half the remaining surplus – if revenues meet projections, that’d be about $347 million after closing out the current budget period and next one in two years – for transportation.

House Republicans, though, said municipal officials are desperate for more guaranteed transportation dollars. Their budget included $250 million per year in extra transportation funding, and that money would not be subject to economic upticks or downturns.

“You can’t be the ‘Crossroads of America,’” Bosma said, “if you have a crumbling infrastructure.”

House sends $30 billion budget to Senate

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.

Ways and Means budget vote on Tuesday

The Indiana House Ways and Means Committee will vote on Republicans’ two-year, $30 billion budget on Tuesday, the committee’s chairman, GOP Rep. Tim Brown of Crawfordsville, said Monday morning.

He presented the budget to the committee Monday. It includes K-12 education spending increases of 2 percent in its first year and 1 percent in its second year — plus an extra $250 million annually for transportation.

The budget proposal speeds up the phase-out of Indiana’s inheritance tax, eliminating it by 2018 rather than 2022. But it does not include Gov. Mike Pence’s proposal to lower Indiana’s income tax rate from 3.4 percent to 3.06 percent.

Pence proposes lean budget that includes tax cut

Gov. Mike Pence is asking state lawmakers to consider a lean budget that includes slight bumps in education spending and more than a half-billion dollars worth of individual income tax cuts.

Chris Atkins, Pence’s budget director, is unveiling the two-year, $29 billion spending plan that the new administration is proposing at a State Budget Committee meeting on Tuesday – Pence’s second day in office.

The document would set into motion a number of Pence’s goals, including the tax cut, efforts to improve the state’s vocational education programs and new financial incentives for schools to achieve high standardized test scores and graduation rates.

“Our budget is honestly balanced, funds our priorities, holds the line on spending, returns excess revenues to hard-working Hoosiers, and builds our reserves,” Pence said in his budget’s executive summary.

“This budget sends a strong message that Indiana’s public servants will use only those resources necessary to keep Indiana moving in the right direction – and not a penny more.”

His proposal increases public K-12 education spending by a total of $190 million. That starts with a boost of 1 percent, or $63 million each year.

In the second year, the spending plan includes another $64 million to divide among the state’s highest-performing schools. That money would be divvied up among schools that achieve As or Bs on the state’s A-through-F school rating system, graduate more than 90 percent of their students and have 90 percent of their third graders pass the I-READ3 exam.

The budget proposal also increases universities’ funding by 1 percent – far short of the 7 percent boost that the Commission for Higher Education had suggested – and sets aside $19 million for universities to repair and improve buildings.

In both cases, those funding increases would not keep up with the 10-year average of 2.5 percent annual inflation.

Overall, 65 percent of the state’s budget is dominated by K-12 education and higher education. Increased spending there and on Medicaid, as well as the tax cut, will eat through most of the state’s new revenues.

Pence’s budget projects that the state will collect $518 million more in taxes than it spends in the next fiscal year, and $759 million more than it spends the year after that.

Most of that would be used to chop Indiana’s individual income tax from 3.4 percent down to 3.06 percent – a central plank of Pence’s campaign. That would cost Indiana about $742 million in revenues over a two-year period.

After 12.5 percent of the state’s annual spending is set aside in reserves, what’s left would be divided evenly between former Gov. Mitch Daniels’ automatic income tax credits and a new state transportation and infrastructure fund.

Pence’s budget estimates that $347 million would be pumped into that infrastructure fund over the course of the two-year budget.

The most dramatic spending increases come in Medicaid. The health insurance program for the poor is receiving $1.65 billion from the state’s general fund this year, but is projected to need $2.1 billion by 2015 in order to keep up with new enrollees’ costs.

Those increases come even though Atkins said Pence’s administration did not include in its budget any money to expand the Medicaid program to include 500,000 more Hoosiers, as envisioned under President Barack Obama’s health care law.

Largely due to those Medicaid funding increases, the state’s overall spending would grow about 1.4 percent under Pence’s spending plan.

Most state agencies, though, would see their funding frozen at current levels – with a few exceptions.

Pence’s budget proposal also boosts the Department of Child Service’s budget by 7 percent – or $35 million – to implement its plan to add more caseworkers and revamp its much-maligned statewide hotline.

It includes $6 million over two years to launch regional workforce councils that he plans to task with developing vocational and technical education curricula for their areas’ high schools.

And it pumps an extra $18 million over two years into improving the adult workforce, $12 million into a high school dropout prevention program, $6 million into grants for high-performing teachers and $3 million into an effort to more closely link universities with Indiana’s life sciences industry.

Only one area – the horse racing industry – would see its funding cut dramatically under Pence’s budget proposal. It would eliminate a subsidy worth more than $40 million and pump that money into Medicaid.

Pence’s budget would also shift $4 million away from a tobacco prevention council and devote that money to Medicaid.

USI asks for extra $5 million

The University of Southern Indiana is asking for an extra $5 million in funding for each of the next two years – and state lawmakers sound willing to listen.

University president Linda Bennett delivered a 40-minute presentation on Thursday to the House Ways and Means Committee, which will take the leading role in drafting Indiana’s next two-year budget.

She told the panel that among Indiana’s four-year universities, USI has the lowest tuition rates and gets the least state funding per student.

As a result, she said, it is “quite frankly is facing very serious challenges in moving ahead” without more financial support than the $42.2 million that the General Assembly sent the university as general operating revenue in 2011 and 2012.

“The spirit is good, but the strain is showing,” Bennett said.

Republicans on the panel said they would like to give Bennett what she asked them for.

“The state has seen a need to increase your funding,” said Rep. Tom Dermody of LaPorte, who chairs the Ways and Means Committee’s higher education subcommittee.

“We are recognizing that an adjustment needs to be made,” Dermody said. “It’s time for an increase.”

Now that the state has weathered the worst of the recession, lawmakers are preparing to draft a new budget with extra cash to spend. Many are pointing to K-12 and higher education as areas that could see increased funding.

Teresa Lubbers, the state’s higher education commissioner, said in a speech Wednesday night that lawmakers should loosen the purse strings for universities.

In 2011 and 2012, lawmakers handed Indiana’s four-year universities an average of $7,562 per full-time student. However, USI got $4,586 per student – the least in the state, and the reason Bennett said it’s time for an “equity adjustment.”

She said USI was Indiana’s only university in that group that could not give faculty members a raise this year, and that without extra money, the university can’t recruit the full-time professors necessary to keep students on campus through graduation.

Bennett said the university hired advisers to help guide students through their courses for two of its four colleges this year, and plans to do the same for the remaining two colleges this fall – if lawmakers provide the funding she requested.

And, she said, USI’s professors carry a teaching load of about 12 credit hours per semester, or four three-hour courses. That, she said, is more than their peers at other universities.

“The combined impact of our lower tuition with the level of funding is that we were the only public university in the state of Indiana that could not offer a permanent salary increase to our employees for this year,” Bennett said.

“You add that to the overload on teaching and the strain, and you really do have a challenge for our institution. I have to say, it concerns us in terms of retention and it concerns us in recruitment.”

USI is also asking for $18 million to upgrade three buildings on campus and another $2.7 million for general repair costs. Those projects have the backing of the Commission for Higher Education.

Firm answers likely won’t come until April, when lawmakers receive an updated projection of how many tax dollars Indiana is likely to collect over the next two years, and then finalize their new budget before adjourning by the month’s end.

Higher ed commissioner wants funding for universities

Indiana Higher Education Commissioner Teresa Lubbers said Wednesday night that state lawmakers should include more cash for public universities in the two-year budget they will write during 2013′s four-month session.

“It is not an overstatement to say that Indiana’s future — the kind of state we will be — has more to do with increasing education attainment than anything else. The payoff is more opportunities, greater job security and higher earnings for Hoosiers — and a stronger economy, workforce and middle class for our state,” she said in her first-ever State of Higher Education address.

She said lawmakers should increase funding for higher education — a move that would reverse the trend after four years of belt-tightening. She said they should also continue pumping money into a funding formula based on metrics such as on-time graduation rates, and create new financial incentives for students to graduate on time and for earning top grades.

She called on public universities to limit tuition increases to the rate of inflation, and for each student to have a plan to graduate on time.

“The question isn’t whether more Hoosiers need higher education, but rather how do we produce a greater return on investment for our students and our state,” Lubbers said. “Right now we have too few students who graduate and even fewer who graduate on time. We are producing too few degrees, especially in high-demand fields. And we have too much student debt, especially for those who exit college with debt and no degree.”

Indiana Chamber of Commerce President Kevin Brinegar said afterward that the state needs to focus on improving the skills of its workforce.

“The state is making progress on the policy front, especially through performance funding and expanding post-secondary opportunities. However, there is much more work to be done, especially on graduation completion, attention to high-demand degrees – especially those in the science, technology, engineering and math (STEM) fields – and cost of education and student debt,” he said in a statement.

“It’s also important that we don’t lose sight of ‘middle skills’ training. Four-year degrees are very important, but some of the greatest demands in the workforce presently are for two-year associate’s degrees and one-year industry recognized certificates. We see high demand from employers and terrific job opportunities for those credentials, especially in the STEM and health care arenas.”

Buck sees income tax bill as ‘fallback’ to Pence’s plan

If Gov.-elect Mike Pence doesn’t get the individual income tax cut he wants, state Sen. Jim Buck, R-Kokomo, believes he’s found a “good fallback option.”

Pence campaigned on the pledge to step Indiana’s income tax down from 3.4 percent to 3.06 percent over a two-year period. However, legislative leaders have bristled, saying they are not sure the state can afford it as Affordable Care Act costs come online and education funding increases are considered.

Buck, meanwhile, wants to chop the individual income tax from 3.4 percent to 3 percent over four years – a time frame he said might be more palatable because it leaves extra room for adjustments along the way.

“It’s not meant to reject what the governor-elect is wanting to do. It’s just to provide a viable alternative should that become necessary,” Buck said.

His proposal is Senate Bill 192. He said he has not talked with Pence’s team about it, but that it received a warm reception from some of his fellow Republican senators.

“If not a substitute, it would be something that we could still meet during the legislative process where the governor could get his reduction and the legislature would figure out a way to start down that path similar to what we did with the corporate income tax,” Buck said.

He said he’s been pushing for years to lower Indiana’s income tax rate – a move he sees as essential to keeping the state’s cost of living low and keeping lawmakers from spending more money than necessary.

“I’ve been frustrated over the years that the state seems to be bragging about how much we squirrel away in our pockets, but we’re not doing much to help the ordinary taxpayer squirrel away more in their pockets,” Buck said.

According to a Legislative Services Agency analysis, Buck’s proposal would cost the state about $644 million per year in income tax revenue once it’s fully implemented in 2018.

December tax revenues top target

Indiana took in $22 million more in tax dollars in December than a revenue forecast updated just three weeks ago had projected, according to the latest data released Monday by the State Budget Agency.

Over the month, the state topped the forecast by 1.9 percent, and topped the previous December’s tax collections by 2.1 percent. A good deal of the growth came through sales taxes, which beat the previous year by $20 million.

“Through the first six months of FY 2013, state general fund revenues have increased 3.1 percent, more than double the rate needed to meet the most recent forecast (1.5 percent). Total general fund revenues are now $70 million ahead of the Dec. 17, 2012 forecast,” writes outgoing State Budget Director Adam Horst in his commentary that accompanied the revenue report.

Buck’s tax bill similar to Pence’s plan

State Sen. Jim Buck, R-Kokomo, has filed a bill that would step Indiana’s individual income tax down from 3.4 percent to 3 percent. The tax cut would be phased in over a four-year period, with the rate being lowered by 0.1 percent each year, starting in fiscal year 2014.

It’ll be Senate Bill 192. The bill would cost the state about $644 million in 2018, once it’s fully implemented, according to this analysis by the non-partisan Legislative Service Agency.

Buck’s proposal isn’t identical to a campaign proposal by Republican Gov.-elect Mike Pence, but it’s similar. Pence wants to cut the state’s individual income tax rate from 3.4 percent to 3.06 percent, and he wants to do it over two years.

Zoeller, Miller pitch school safety bill

Two Indiana policymakers are pushing to set aside $10 million total – including up to $50,000 for each district – to place law enforcement officers in more schools.

Indiana Attorney General Greg Zoeller and state Sen. Pete Miller, R-Avon, announced their proposal on Thursday. They said the money would be for grants that would have to be evenly matched on the local level.

The two stressed that their proposal for more “school resource officers,” which more than one out of each four schools in Indiana already have, isn’t a comprehensive effort to stop slayings such as the one that took place in Newtown, Conn. in December – but that it could help.

“I think it’s particularly important that these positions be expanded in light of the shootings in Connecticut,” Zoeller said.

Though the measure they are proposing – Senate Bill 270 – gives schools broad discretion to decide who should serve as safety officers and whether they should work for the schools or for local law enforcement officials, “I think it’s expected that they’ll be law enforcement personnel.”

Gov.-elect Mike Pence has said he plans to launch a quick study of Indiana’s school safety procedures to determine whether other fixes are necessary. Zoeller and Miller said they’d talked to Pence’s team about the measure, but were not asking for his endorsement.

According to a study commissioned by Zoeller’s office in November and December, and wrapped up four days before the Newtown slayings, at least one in four Indiana schools already has such safety officers in place. Teachers, parents and other officials in those schools said they feel their schools are well-equipped to handle safety concerns.

The survey provided mostly anecdotal evidence, but it found that most of those who responded considered the school resource officers effective at promoting “positive citizenship” among students and also deterrents to potential threats on school grounds.

“School safety officers get drugs out of the schools, get weapons,” and more, Zoeller said.

Since the measure caps the amount each district could receive at $50,000, its impact in large urban districts could be muted. Miller, though, said that wasn’t an intentional policy decision. Rather, he said, the proposal is an initial draft and would likely see changes.

“This is not a mandate,” Miller said. “This is something we think is a good idea and we encourage them to embrace it but we’re not forcing it upon anyone.”