Indiana News

Sequester Lurks in Background of State Budget Process

Cuts in federal funds could force state to rethink spending plans

2/20/2013

What happens in the fight over the federal budget could throw a wrench into the writing of the state budget.

Listen:

Congressional Republicans say they're willing to let across-the-board spending cuts take effect if there's no agreement by next Friday on a better way to reduce the deficit. Those cuts could include matching funds the states receive to help pay for highways and Medicaid.

Indiana House Ways and Means Chairman Tim Brown (R-Crawfordsville) notes the picture is even murkier if Congress does strike a deal, because no one knows what would get cut instead. There's also a potential indirect impact -- many economists predict a recession if the sequester takes effect.

Brown says the multiple question marks reinforce his determination to spend less than the state takes in, and leave a big enough reserve to weather another downturn. The budget approved by Brown's committee leaves a reserve of 11-point-nine-percent of spending, with an additional two-percent set aside specifically to prop up school funding if needed.

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