INDIANAPOLIS — Gov. Mike Penceis at odds with Indiana House Republican leaders who opted not to include the top item on his first-year legislative agenda in their new state budget proposal.
The governor said Friday he is “very disappointed” that the two-year, $30 billion spending plan drops his plan to lower the individual income tax from 3.4 percent to 3.06 percent in favor of extra cash for schools and roads.
“By leaving income tax relief out this early in the process, this House budget proposal does not contain the kind of balanced approach that will create jobs and opportunities for Hoosiers. With so many hurting in this economy, Hoosiers deserve better,” Pence said.
House Ways and Means Chairman Tim Brown, R-Crawfordsville, unveiled the GOP’s budget proposal in a briefing with reporters Friday morning.
His plan would boost funding for K-12 public education — an area that accounts for more than half of Indiana’s spending — by 2 percent in its first year and another 1 percent in its second year, lifting the statewide total from $6.5 billion annually now to $6.7 billion.
“We know that we need an educated workforce,” Brown said.
It would also boost transportation funding by a total of $250 million per year. It would divert 20 percent of the sales tax charged on gasoline purchases into transportation, and also send more of Indiana’s 18-cents-a-gallon gasoline tax revenue to the Indiana Department of Transportation and into municipal infrastructure budgets, rather than diverting some of that money to pay for state police and license branches.
The biggest debate moving forward, though, will be over Pence’s tax cut — one that would save average single Hoosiers around $100 per year, and would cost the state more than $500 million per year.
House Speaker Brian Bosma, R-Indianapolis, said Thursday that the House GOP is still open to considering Pence’s proposal.
“We’ll have to have that discussion come April,” Brown said. That’s when lawmakers get an updated forecast of how much tax revenue Indiana will take in over the next two years. That will tell them how much they can plan to spend.
The intraparty tension has built in recent months as legislative leaders have resisted the new governor’s top legislative goal.
They’ve said they prefer to address some issues that lingered prior to Pence taking office — including raising education funding up to its levels prior to the 2010 cuts that the economic downturn led former Gov. Mitch Daniels to make, and speeding up the phase-out of Indiana’s inheritance tax.
Pence, though, argued in his State of the State address last month and again in a statement on Friday that the income tax cut ought to be this year’s top priority.
“I am very disappointed in the House budget proposal. Despite having the largest budget surplus in history, this House budget increases spending without giving hardworking Hoosiers one cent of new tax relief,” he said.
“As our administration’s budget clearly showed, we can afford to do both. Indiana can fund our priorities including increases for roads and schools and reduce the personal income tax. Since we can reduce taxes on every Hoosier, we should.”
House Minority Leader Scott Pelath, D-Michigan City, said Friday that Democrats will try to force an up-or-down vote on Pence’s income tax cut.
“We have not heard a lot of bold ideas either from the governor’s office or from the two supermajorities. This is the one bold idea that’s been brought forth. I think to ignore it is a mistake,” Pelath said of Pence’s plan.
“He has had an idea. He campaigned on it, he got elected on it, the people of Indiana have spoken – and we need to give that consideration.”