Indiana News

Senate Budget Includes 3% Tax Cut, Increases School Funding


Senate Republicans have unveiled a budget which spends about the same amount as the House version, but gives Governor Pence part of his proposed tax cut.


The Senate plan would trim Indiana's income tax by 3%, instead of the 10% Pence has requested. The new rate of 3.3% is just a hair more than the 3.23% Pence wanted in the first year, en route to a final rate of 3.06%.

The two-year budget spends just $47 million more than the House proposal, and duplicates the House's proposed three-percent funding increase for schools over that span. It allocates less money for roads and streets, but sets aside $400 million with an eye to building a reserve fund for billions of dollars in major highway projects -- not only the completion of the I-69 extension, but a list of possible additional projects including a widening of I-70 and I-65, and a new bypass east of Indianapolis to relieve congestion on 69 and I-465.

A second reserve account of $600 million would serve as a hedge against the still-unknown costs of the federal health care law.

At 10% of spending, the anticipated surplus would fall short of the level which triggers the state's automatic tax refund.

The Senate Appropriations Committee endorsed the budget on a party-line vote. Minority Leader Tim Lanane (D-Anderson) says the proposal still doesn't bring school funding back to where it was before then-Governor Mitch Daniels imposed cuts during the recession.

The full Senate is expected to approve the budget Tuesday or Wednesday, setting up three weeks of negotiating with the House to come up with a final plan.


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