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Pence offers penny-pinching spending plan

INDIANAPOLIS – Gov. Mike Pence’s fiscal chief unveiled a bare-bones state budget with few surprises Tuesday to the legislature’s chief negotiators.

The two-year, $29 billion spending plan is highlighted by slight increases for education and an income tax cut phased in during a two-year period that will cost the state $521 million in tax revenue.

The Indiana House will have first crack at the proposal.

The budget would provide about a 1 percent annual increase for K-12 schools. On top of that, high-performing schools could receive additional performance-based grants.

In all, there would be about $190 million in new dollars available for K-12 schools from July 1 through June 2015.

The state’s public colleges and universities would be in line for a 1 percent annual increase in funding as well.

Overall, the budget would spend about 1.4 percent more during the biennium – lower than the state’s revenue growth and inflation.

The initial tax cut would kick in starting July 1, eventually dropping the individual income tax rate to about 3 percent.

The largest increases in the budget – several hundred million a year – go to the state’s Medicaid budget, the joint federal-state program providing health care for Indiana’s poor.

One key change in Pence’s proposal could increase funding for roads and bridges on both the state and local level.

Currently when state coffers hit a certain level, half of the excess surplus revenue goes to taxpayers via an income-tax refund and the other half goes to stabilize the state’s pension obligations.

Pence, instead, would direct the latter half to a new infrastructure fund. That amount could reach $347 million during the next two years.

nkelly@jg.net

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