INDIANAPOLIS —One day to go. One major vote left to cast.
Indiana lawmakers plan to vote Friday on a two-year, $28 billion state budget. Their approval would send the spending plan to Gov. Mitch Daniels' desk to be signed into law.
The budget -- a compromise struck Thursday afternoon between majority Republican leadership in both the House and the Senate -- would slightly increase funding for K-12 education, by 0.5 percent in 2012 and 1 percent in 2013.
It includes no tax increases, and if current revenue forecasts hold up, it would leave a $1 billion surplus at the end. After two years of cuts, the budget averts major reductions to most programs.
"There is more gain in this budget for Hoosiers than there is pain," said Rep. Suzanne Crouch, R-Evansville.
As long as both chambers of the General Assembly approve the budget before the clock strikes midnight, it will mean that lawmakers have accomplished their major tasks this year and averted a special session.
According to the two key budget negotiators House Ways and Means Chairman Jeff Espich, R-Uniondale, and Senate Appropriations Committee Chairman Luke Kenley, R-Noblesville the key sticking point was Daniels' plan for an "automatic taxpayer refund."
The governor proposed that once the state's surplus exceeds 10 percent of what Indiana's government spends in one year, the remainder go back to taxpayers. That idea was included in Espich's House-passed spending plan.
But Kenley preferred to divert that money into the state's pension stabilization fund, which will help to pay down the $11 billion in unfunded teacher pensions that will have to be worked into the budget slowly over the next three decades.
Under the deal the two sides reached, money past a 10 percent surplus would be divided 50-50 between the taxpayer refund and the pension stabilization fund.
The entire debate could be academic, since Indiana's tax collections are on track to give the state a surplus of only 7 or 8 percent of a year's spending at the end of the biennium.
Still, the entire budget-writing process was made easier earlier this month when Indiana's Revenue Forecast Technical Committee projected that the state should take in $644 million more over the next two years than their previous forecast, issued in December, had projected.
That gave lawmakers a cushion to avoid major cuts in areas such as mass transit, university spending, Medicaid and horse racing.
Southwestern Indiana lawmakers succeeded in keeping in place some protections that prevent the state from shutting down the Evansville Psychiatric Children's Center.
Under current law, the 28-bed facility is autonomous, and the state can't reduce its staff size. Those protections were put in place in 2002, after then-Gov. Frank O'Bannon attempted to close the center.
The Indiana Family and Social Services Administration sought to eliminate those protections so that it could operate the center just as it does other state-run hospitals. The version of the budget that passed the Senate would have given the agency what it wanted.
However, the final compromise is closer to the version that passed the House. It allows for some changes, but also establishes a commission that would study the center and the need for psychiatric children's care in the area.
Most importantly, the state could not shut down the center without the approval of the Indiana General Assembly at least until 2014.
Crouch said she is "very pleased" with the way the budget deals with the center. She called it a fair compromise because it will allow the Daniels administration to reduce staffing levels and make some money-saving moves.
Democrats complained that the budget does not include their proposal to let the gas tax lapse for several months over the summer to combat $4-a-gallon prices.
They also complained about changes to the education funding formula that shift money away from schools with shrinking enrollment, usually in urban and rural areas, and toward growing, often suburban schools.
Here's a look at how the budget would affect other areas:
- University funding: The University of Southern Indiana will benefit slightly as a result of a performance funding formula. But it and other universities will lose repair and rehabilitation funding.
- Horse racing subsidies: The $60 million in support for the horse racing industry set aside at the same time lawmakers green-lighted "racinos" in Shelbyville and Anderson will stay.
That's a victory for those who told lawmakers they spent millions moving their horse farms into Indiana as a result of those subsidies. Kenley insisted on those subsidies, though Espich said the money could be better spent elsewhere.
- Mass transit: Cuts to Indiana's mass transit funding were avoided, which means the Evansville Metropolitan Transit Service is unlikely to have to cut a route.
- Medicaid and pensions: These two areas are the only ones that will see dramatic funding increases. Lawmakers decided to heed Daniels' call to fully fund the projected costs in these two areas over the next two years. For Medicaid, that means replacing $600 million in lost federal stimulus money, plus some.