Indiana Gov. Mike Pence is doubling down on his pledge to cut the state’s income tax, despite a call by House Republicans to spend more of the state’s $2 billion surplus on cash-strapped schools, crumbling infrastructure, and services for the needy.
The Republican governor issued a statement saying he was “very disappointed” with a House Republican budget proposal that excludes his plan to lower the individual income tax from 3.4 percent to 3.06 percent, in favor of spending more dollars on education, road repairs, child protection, and worker training.
“Despite having the largest budget surplus in history, this House budget increases spending without giving hardworking Hoosiers one cent of new tax relief,” Pence said.
The budget proposal that prompted Pence’s complaint was unveiled by the chief budget maker in the House: Republican Ways and Means Chairman Tim Brown of Crawfordsville, who said the plan “honors the commitments” made by the General Assembly to restore funding for critical services that had been cut in the past.
The $30 billion, two-year budget plan includes about $1 billion more in spending than Pence’s proposed budget. The GOP House plan would boost spending on K-12 schools by $344 million — about $63 million more per year for schools than what Pence has proposed — to bring it to an all-time high of $6.7 billion.
It adds $500 million for infrastructure by directing more gas-tax revenues to local governments for road and bridge repair. It also adds $40 million a year in new funding for the Department of Child Services, and $33 million over two years for workforce development. It also puts $300 million back into an education reserve fund that was raided after the 2008 recession.
“We’ve talked about strategic restoration,” Brown told reporters during a briefing on the budget plan, in which he emphasized the need to spend more dollars on education, including an added $108 million for higher education. “We want to invest in education because we know an educated society is very important to move forward for jobs.”
But nowhere in the House GOP plan is Pence’s tax cut, which he’s repeatedly called his number one priority since taking office in mid-January. The cut would save about $100 for the average Hoosier, but would drain state revenues by $500 million a year.
That hit to the state coffers is why Pence’s proposal has met with such strong and open resistance from GOP leaders in the House and Senate. They saw what it was like when state revenues plunged during the recession and the dollars to schools, local communities, and services for the needy were slashed. Pence’s cut, if granted, would come on the heels of two tax cuts — a reduction in the corporate tax rate and phase-out of the inheritance tax — already passed by the General Assembly last year.
During the budget briefing with reporters, Brown said it was still early in the budget negotiating process and that he and others remained “open” to considering Pence’s tax cut proposal. But he also said giving Pence his tax cut would mean the spending increases for schools, roads, and other services would have to be “re-prioritized.”
House Speaker Brian Bosma cast doubt on that scenario when he told reporters that the House GOP budget plan directs more money back into schools and other places where it’s needed.
“You’ll see a restoration of funding for some critical programs that we all know first-hand are helping Hoosiers in need,” Bosma said.
In an unexpected twist, House Minority Leader Scott Pelath of Michigan City, called Pence’s proposed tax cut “a bold idea” and said he was certain there are some Democrats who would vote for it — despite their repeated complaints about past funding cuts for schools and other services.
Pelath said Democrats will try to force an up-or-down vote on the Pence tax cut proposal — a potentially embarrassing move since it would force individual GOP legislators to cast a public vote on whether they support the tax cut. Pelath denied it was a partisan political move to embarrass Republicans.
“We have not heard a lot of bold ideas either from the governor’s office or from the two super majorities,” Pelath said. “This is the one bold idea that’s been brought forth. I think to ignore it is a mistake.”
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