INDIANAPOLIS — The tension that’s been building in recent months between new Gov. Mike Penceand majority Indiana House Republicans finally spilled into public view on Friday.
The House’s leaders unveiled their proposal for a new two-year, $30 billion state budget — and it didn’t include the individual income tax rate reduction from 3.4 percent to 3.06 percent that the governor has placed at the top of his legislative agenda. House leaders instead pumped the $520 million or so it would cost Indiana each year into spending on schools and roads.
That led Pence to lash out. He said he is “very disappointed” in the budget and that “Hoosiers deserve better.”
It was a window into the tug-of-war for political power that happens between new governors and legislative leaders — in this case, House Speaker Brian Bosma, the Indianapolis Republican whose role allows him to stop just about anything he doesn’t like from becoming law.
You’ll see more of that in the coming months, as lawmakers decide how to craft a new state spending plan, and how much influence their own party’s newly-elected governor ought to have in the process.
As this battle plays out in the coming weeks and months, here are three things you should know:
1. April’s revenue forecast is key.
Projections on how the economy will perform and how much tax revenue Indiana will take in over the next two years are the most important tools lawmakers use when they’re building new spending plans.
In April, just before this year’s legislative session concludes at the end of the month, a new revenue forecast will be completed.
If it shows Indiana doing better than lawmakers currently expect, Pence’s tax cut all of a sudden becomes far more likely. If it shows the economy remaining stagnant or turning slightly downward, the governor probably won’t get what he wants.
2. A Medicaid expansion looks much less likely.
None of the budget proposals offered so far include any money for Indiana to expand its Medicaid program to cover the 400,000 Hoosiers who could qualify under the federal health care law.
Pence’s administration is asking the U.S. Department of Health and Human Services for permission to use the health savings account-based “Healthy Indiana Plan” as a vehicle for the expansion — and if federal officials say yes, then the Pence administration would give such an option serious consideration.
Still, any additional revenue looks like it’d first be used for Pence’s tax cut — in part because the only lawmakers truly advocating a Medicaid expansion are Democrats, and in Indiana they currently have no political power.
3. Get to know Luke Kenley.
The Noblesville Republican is the Senate Appropriations Committee chairman, which means he’s the upper chamber’s top budget writer.
In recent years, Kenley — who’s conservative, but knows that a final product ought to be neither a total win nor a total loss for all sides involved — also became the key voice between governor’s offices and the Indiana House — whether the House was controlled by Democrats or Republicans.
Pence’s administration and the House have both laid down their initial markers. In all likelihood, Indiana’s next budget will look like something in between those two proposals. Kenley’s voice will be the most important in determining how to meld them. Kenley is suspicious of the federal health care law. He’s no huge fan of Pence’s tax cut proposal. He sees more value in bolstering items like pension funding because he takes a longer view of Indiana’s budgeting process than most.
As you read about Indiana’s budget in the coming weeks, take special note of Kenley’s comments — they’re often good predictors of what will ultimately result.