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Senate calls for tax cuts, savings in state budget

– The Indiana Senate passed a budget Tuesday night that focuses as much on the future as it does on current government spending.

The 38-12 vote sets up a final negotiation on the state’s biennial spending plan among House Republicans, Senate Republicans and GOP Gov. Mike Pence. The 2013 session ends April 29.

All northeast Indiana senators voted for the bill.

“This budget is what I call an opportunity budget. This is an opportunity for Indiana to move forward,” said Sen. Luke Kenley, R-Noblesville. “We are now prepared and in the right fiscal position to go forward and solve some of the problems of the past and really to plan for the future.”

He especially focused on saving for health care and road costs.

Kenley also said the bill contains an aggressive tax cut agenda that includes an immediate repeal of the state inheritance tax and a 3 percent cut in the individual income tax. Those two moves would provide about $300 million in tax relief annually to Hoosiers.

Pence sought a 10 percent reduction in the income tax while House Republicans had no income tax cut.

“There’s no job creation in this budget bill,” said Sen. Mark Stoops, D-Bloomington. “It’s a failed budget.”

Kenley, though, said the tax relief plan will result in new jobs.

But Sen. Karen Tallian, D-Portage, said: “We don’t believe as a matter of principle that tax cuts equal jobs. And we also think until we are ready to fully restore all the K-12 dollars cut in the past four years we don’t agree with the tax cut.”

The budget would give $331 million in new education spending, including a 2 percent increase in operating dollars to schools in the first year and 1 percent increase in the second year.

Tallian also criticized the increasing amount of money expected to be spent on the state’s voucher program. It is estimated up to 15,000 students will receive a voucher to attend a private school using state tax dollars, costing $63 million.

Democrats seek a cap on the program.

Overall, the Senate budget would spend $29.5 billion over the two years and has reserves at the end of fiscal year 2015 of $1.5 billion.

The bill also establishes separate health care and transportation accounts to start saving for significant road projects and a possible expansion of state-provided health care insurance to more of Indiana’s poor.

The health care account includes $600 million in money that would otherwise be spent on the state’s Healthy Indiana Plan insurance program, which is set to expire this year without a federal extension.

The budget also sets aside $400 million into a road funding account to be used for major projects. This account could also be used as a bonding revenue stream.

In addition, Kenley said the budget would send an additional $112 million a year to INDOT and $101 million a year to local roads.

Local units will receive the increased distribution only if they have a local wheel/excise tax. Only 47 counties currently impose this tax, including Allen County.

nkelly@jg.net

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