By John Ketzenberger in the Indianapolis
Star:
Although the economy hasn’t yet walked off the fiscal
cliff, there is little optimism that hoped-for growth will mean significantly
more tax revenue for lawmakers in the final throes of crafting Indiana’s next
two-year budget.
On Tuesday, committees charged with assessing the state’s
economy and projecting the tax take as a result will report to the State Budget
Committee. This information will join the three budget proposals on the table
as fodder for the General Assembly’s fiscal leaders’ final deliberations.
Since bottoming to $12.2 billion a year at the height of
the recession, Indiana’s tax revenue has recovered enough for lawmakers to
consider apportioning about $29 billion in fiscal years 2014-15. The last
revenue forecast, in December, estimated Indiana’s tax revenue would increase
2.1 percent the first fiscal year and 2.9 percent the next.
That would produce enough tax revenue to bring spending
on primary education back to the level of the budget for fiscal years 2010-11.
It would afford full funding of the state’s fast-growing Medicaid program and
allow modest increases to build and maintain roads.
Each budget proposal includes these major planks and
significant new decreases in taxes, which show up on the state’s balance sheet
as less revenue. Each proposal — from Gov. Mike Pence and those approved by the
House and Senate — takes a different approach, however, and reflect subtle
philosophical differences among the Republicans who hold the reins of power
this cycle.
…
The Pence budget’s central feature is the 10-percent
reduction in the state’s low 3.4 percent personal income tax, which would cost
the state about $770 million over the biennium, according to estimates by the
governor’s staff. Aside from education and roads, the Pence budget keeps a
tight rein on state spending.
The House budget spends more across the board, but
maintains the largest surplus because it doesn’t forgo much tax revenue. After
cutting taxes on property, corporate income and inheritance in the last decade,
the House voted to accelerate the inheritance tax phase-out by four years. As a
result the House plan gives up less than $10 million in tax revenue during the
biennium.
The Senate proposal is the most aggressive in key areas.
It reduces personal income taxes by 3 percent, retroactively eliminates the
inheritance tax and reduces the financial institutions tax. In addition to
money for a potential Medicaid expansion, the Senate also appropriated $400
million in Major Moves and about $213 million more into the state and local
road funding formula.
…
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