Final Takeaways on New State Budget

Great, we have a state budget for the next two years, but what’s to make of it?

Foremost, the budget sticks to Gov. Daniels’ request to maintain a $1 billion surplus in the state’s reserve funds.   According to Indiana Chamber tax lobbyist Bill Waltz, this prudent amount is significant and important for the state to stay on track financially.

“With the revenue stream being so incredibly uncertain in the coming months and the federal stimulus dollars that are built into the two-year budget going away in 2012, it is critical that we not just cross our fingers and simply hope for the revenue stream to return.  Because if the economy fails to rebound or falters only slightly longer than the revenue projections, we will be in a hole at the end of the budget cycle.

“And then the only way to avoid a tax increase of some kind would be to utilize the surplus balance as that final bridge out of the troubled economy. In other words, it is at that time – not now or next year – that we (the state of Indiana) may want to use those funds,” he explains.

Waltz also believes the budget strikes a good balance between “spending desires and reasonable fiscal constraint on many issues (not just in the education area).”

A number of positive provisions that fell by the wayside via the regular session budget collapse had better fortune this time around.  Among them, the bulk of what was House Bill 1447, an all-inclusive piece of tax legislation, and a multi-million-dollar financial rescue for Indianapolis’ Capital Improvement Board (CIB).

The CIB situation simply had to be dealt with, Waltz says.

“Many from outside the Central Indiana area are reluctant to acknowledge the economic contribution that the CIB facilities (the convention center, Lucas Oil Stadium, Conseco Fieldhouse and Victory Field) make to the state’s economic vitality and coffers. Indiana, not Indianapolis, could not afford to see these operations and the tax revenue that their attractions bring be put in jeopardy,” he asserts.

Indiana Chamber education lobbyist Derek Redelman believes the budget bill also produced one of the best sets of education reform in the state’s history.

Heading that list of accomplishments is the new K-12 school funding formula that gives greater focus to students, rather than school districts, than any previous budget of the last couple decades. 

“The bill also included a scholarship tax credit that will generate private donations to help low- and moderate-income families to attend the schools of their choice – while also saving money for the state.  It also eliminated a longstanding statute that had prohibited schools from using the results of state tests to evaluate teachers,” Redelman notes.

“This budget avoided caps and other controls on charter schools, despite a session-long full-court press by Indianapolis Public Schools, House Democrats, teacher unions, school administrators and other charter school opponents.  Plus, it will allow virtual charter schools to finally get started, after a two-year moratorium created by the 2007 state budget.” 

Correction: The budget passed the Republican-controlled Senate 34-16.  A total of 30 of the 33 Republicans voted for the bill and were joined by four Democrats (Hume, Young, Arnold and Mrvan). Republican no votes were from Leising, Delph and Becker.

Senate Passes Budget; Governor Urges Vote Now

The Indiana Senate definitely plays nicer than the House. Instead of zingers flying fast and furious, there was predominately a civil tone to today’s activity.  I lost track of how many times a variation of the word “respect” was used by both parties. Quite frankly, it made for some very boring talks. 

Still, when it came time for the Senate to vote on its version of the budget bill (SS 1001), the outcome was predictable – much like the House action last week – and had a distinct partisan flair to it. 

The Senate passed SS 1001 33-17; the catch being that one Democrat – Sen. Frank Mrvan of Hammond – voted for it, while Republican Vaneta Becker of Evansville voted no. 

The so-called budget contingency plan (SS 1) – in case an actual budget fails to pass by June 30 – moved from the Senate on a 32-18 vote (Republican Jean Leising of Oldenburg opposed it).

During today’s proceedings, Senate Pro Tem David Long (R-Fort Wayne) said his goal was to have the Senate vote on a finalized budget by no later than June 29. Of course, in order to do that, the House must play nice. Think they can?

The latest: Gov. Daniels issued a plea to the House Democrats to avoid a conference committee and to take a vote on the Senate version of SS 1001. The statement from the governor:

“The Senate compromise, while significantly different from either of my two proposals, protects taxpayers within the limits I’ve requested and I would sign it.  I know there are many House Democrats who would prefer a budget that keeps Indiana in the black to one that takes us into bankruptcy, and we invite them to join this compromise now and bring the special session to a successful close. Mr. Speaker, please just free your followers to vote their conscience and let’s go home.”