Senate Panel Gives Pence Smaller Tax Cut
Indiana Senate Republicans this morning unveiled a budget plan that gives Governor Mike Pence a 3% tax cut, instead of the 10% cut he wanted.
Republican State Senator Luke Kenley says the proposal gives Hoosiers the tax relief the Governor wanted but also provides dollars for schools, infrastructure and keeps money in the bank in case of an economic downturn.
The Pence tax cut was not included in the House version of the budget. Instead lawmakers in that chamber chose to speed up the phase out of the state’s inheritance tax. Under the Senate plan he income tax rate goes from 3.4% to 3.3%. The Governor’s proposal would have taken it to 3.04%.
Kenley says although they are only cutting income taxes by three percent there is nearly $500 million in total tax relief due to cuts in the corporate income tax, next year’s phase out of the inheritance tax and the cut in the financial institutions tax.
The plan also creates reserve funds for future road projects and the medicaid expansion under the Affordable Care Act.
Below is a breakdown of the main points what all three parties are proposing.
Overall spending
- Pence – Approximately $29.2 billion over the biennium
- HRs – Approximately $30.076 billion over the biennium
- SRs – Approximate $29.7 billion over the biennium.
Reserves
- Pence – Capped at 12.5% for the biennium
- HRs – $1.9 Bil (12.6% in FY 2014), $2.1 Bil (13.9% in FY 2015)
- SRs – $1.6 Bil (11.1% in FY 2014), $1.5 Bil (9.8% in FY 2015)
Tax cuts
- Pence – 10% cut in income tax
- HRs – Speed up phase out of inheritance tax to January 1, 2018 instead of January 1, 2022.
- SRs – 3% income tax cut. Inheritance tax repealed January 1, 2013. Continued reductions in corporate income tax and cut in Financial Institutions tax.
Education
- Pence – 2% potential increase, automatic 1% increase in first year, year two increase based on performance
- HRs – 3.3% total increase ($344 million total), 2% increase in first year, 1% increase in year two. Also an additional $16.7 mil to reward performance
- SRs – 3% total increase. 2% in year one, 1% in year 2. $25 million in performance based funding.
- Both House and Governor’s plans fund Full-Day Kindergarten.
Roads
- Pence – One-time $347 million increase, from the surplus that would have gone to non pre-1996 teacher pensions.
- HRs – $250 million permanent increase by shifting dollars from state sales tax on gasoline
- SRs – $203 annual increase in roads. $112 million for the state. $101 million to locals provided they pass a wheel tax.
DCS
- Pence – $35 million more for caseworkers, supervisors and child protection hotline
- HRs – $40 million increase.
- SRs – $30 million increase.
You can see more details on the Senate budget here and here.
