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Differing priorities show in initial stages of budget proposals, House version ready for floor action

22 Feb 2017 3:50 PM | Sarah Smith (Administrator)

The budget debate has begun in Indiana. House Republicans presented their version of the Fiscal Year 2018 and FY 2019 budgets last week following nearly two months of presentations by the governor’s office and various state agencies. An amended bill passed the Ways and Means Committee 14-9. House Bill 1001 now waits for action on the House floor.

The Indiana Fiscal Policy Institute is issuing a series of reports tracking the development of fiscal issues during the General Assembly; the first two reports cover budget priorities for different versions of the bill. John Stafford, IFPI Senior Fellow and interim director of the Community Research Institute at Indiana University Purdue University Fort Wayne, is authoring these reports. 

The governor’s original budget request focused on five major areas: a strong economy and job growth, a 20-year roads and bridges plan, developing a skilled workforce, attacking the drug epidemic and delivering great state government services. The 20-year roads and bridges plan works in conjunction with HB 1002, which has been referred to the Senate after a 61-36 vote in the House.

Transportation and infrastructure funding is a major point of contention in the budget process. IFPI’s first report in the series addresses shifting sales tax on gasoline from the General Fund, using anticipated new revenues for road funding, and freezing the budget elsewhere. The policy proposal discussed in the report was made by an influential group outside the Legislature. The IFPI report concludes that the proposal is not fiscally sound, especially with the governor’s desire for maintaining the state’s surplus and promoting a balanced budget.

The amount of funding necessary to meet the 20-year roads and bridges plan is projected to range from $900 million to $1.2 billion annually. To adequately fund work at such levels, only additional increases to Medicaid and the Teacher’s Retirement obligations are feasible. Any other increases would require drawing on state reserves or cutting funding from other areas. Regardless, gaps are created by this proposal which cannot be remedied without reductions elsewhere.

A second IFPI report focuses on the recent House-proposed budget and reflects on spending priority differences between the House and Senate. History shows major differences between proposed legislation and approved budgets. A continuation of this pattern should be expected, as evidenced by the changes already seen in the House version of the budget compared with the governor’s budget proposal. The following table outlines those differences.

 

2017 Budget Deliberations for FY 2018 & FY 2019

 

Governor’s Version

House Version

K-12 Tuition Support

$7,087B/$7,227B

$7,011B/$7,130B

Teacher’s Performance Grants

$40M

0

Higher Education

Capital Cash

$67M

$204M

Regional Cities Grants

$4M

0

Surplus Funds—Cash

$84.6M/$197.5M

$115M/$252M

Source: Legislative Services Agency Fiscal Notes; IFPI Report No. 2


The budget will continue to develop and change over the next two months. Updates will be available once the Senate hears testimony and introduces amendments.

Indiana Fiscal Policy Institute

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Indianapolis, IN 46206
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