TERRE HAUTE —
For average Hoosiers uninterested in political point-scoring, the budget crafted by the Indiana Legislature inspires only muted, if any, fanfare.
The extra $114 will help. Every dollar counts in a household living on $48,393 a year — the median household income in Indiana. (In Terre Haute, that figure is $31,838 per household.) The $114 roughly represents the amount an average family will get from the 5-percent cut in the state’s individual income tax built into the General Assembly’s budget deal reached last week in Indianapolis. It might cover the cost to replace a blown-out tire on their car, for instance. (Towing not included.)
The paycheck-to-paycheck population — the majority of Hoosiers — could find other positive developments in the budget process. The lawmakers compromised — a rare legislative art these days — to reach the agreement. Of course, that compromise came within the ranks of the super-majority party, the Republicans, between GOP members of the House, Senate and Gov. Mike Pence, so their differences weren’t mountainous. (Negotiating with the more divergent minority Democrats is unnecessary, given that party’s minimal presence.) Still, a healthy give-and-take occurred. Pence’s victorious 2012 election campaign featured a vow to cut the individual income tax by 10 percent. Thank goodness, Statehouse Republican leaders saw that as unsustainable and unwise, and instead made their priority a restoration of recession-era cuts in education funding and upgrading the neglected Indiana highways and roads.
In the end, lawmakers gave Pence half of his tax-cut demand, still a political plus if he runs in the 2016 GOP presidential primaries. Legislators paired that cut with others in the budget, by continuing a phase-out of corporate and inheritance taxes. The tax reductions total $1.1 billion over four years.
The governor told The Associated Press the cuts were “the right tax relief at the right time and will give a much-needed boost to working families, small businesses and family farms.” The individual income tax cut will drop from 3.4 percent in 2015 to 3.23 percent in 2017. A Hoosier with a $50,000 salary would save $85, the Fort Wayne Journal Gazette reported. “I don’t see that as being a huge stimulator of the economy,” Senate Minority Leader Tim Lanane, D-Anderson, told the Indianapolis Star. “My initial reaction is the bulk of the tax relief is going to corporations and, I suppose, the well-to-do.”
The size of the tax cuts dictated the amount of funding for schools, highways, vocational training, and child services. The Legislature wound up committing to a 2-percent increase in K-12 education in 2014 and 1 percent in 2015. Transportation funding increased by $215 million a year, along with a $400-million savings account for future road needs. Another $35 million will add caseworkers for child services.
The boosts in each area are much needed; more was possible.
Another upside of the deliberation on this budget was the enlightenment factor. Republican leaders opposing Pence’s 10-percent tax cut found themselves in the unfamiliar position of being targeted in attack ads by a right-wing super PAC, Americans for Prosperity, fueled by the billionaire Koch brothers. The conservative lawmakers got painted as “big spenders” and complained the ads “distorted” their actual records. Sounds familiar. “Overall [the AFP ad campaign] didn’t help,” Rep. Tim Brown, the House Ways and Means Committee chairman told CNHI’s Maureen Hayden. “It made some people dig in on both sides.” Again, sounds familiar.
The end result is a budget that makes proper steps in the right direction but falls short of the “great victory” declared by those in power.