Column: Indiana's budget 'problems' not that bad

Abdul Hakim-Shabazz
First Posted: February 23, 2013 - 9:50 pm
Last Updated: February 23, 2013 - 9:50 pm

I think it’s interesting that the political class in the great Hoosier state is all abuzz over the “budget battle” between Gov. Mike Pence and Indiana House Republicans over the fact that the House R’s did not include Pence’s 10 percent income tax in their initial budget.

Of course, it’s news when the governor and House lawmakers disagree, but there are couple things to keep in perspective.

First, anyone who has been paying attention knows that the House leadership has not been crazy about the income tax idea. Second if this is Indiana’s biggest problem, we’re in pretty good shape.

Allow me to map out a few things. I recently took a look at both Pence’s and the House R’s budget plans. Here’s what they look like side-by-side:

Overall spending

Pence — Approximately $29.2 billion over the biennium
HRs — Approximately $30.076 billion over the biennium

Reserves

Pence — Capped at 12.5 percent for the biennium
HRs — $1.9 billion (12.6 percent in fiscal year 2014), $2.1 billion (13.9 percent in FY 2015)

Tax cuts

Pence — 10 percent cut in income taxes
HRs — Speed up phaseout of inheritance tax to Jan. 1, 2018, instead of Jan. 1, 2022.

Education

Pence — 2 percent potential increase — automatic 1 percent increase in first year, Year 2 increase based on performance
HRs — 3.3 percent total increase ($344 million total) — 2 percent increase in first year, 1 percent increase in Year 2. Also an additional $16.7 million to reward performance
Both fund full-day kindergarten.

Roads

Pence — One-time $347 million increase, from surplus funds that would have gone to post-1996 teacher pensions.
HRs — $250 million permanent increase by shifting dollars from state sales tax on gasoline.

Department of Child Services

Pence — $35 million more for caseworkers, supervisors and child protection hotline.
HRs — $40 million increase.

So let me see if I get this: We’re spending more money on schools and roads. Child services is getting more money. We’re keeping a budget surplus of at least 12 percent, and the big issue is whether we should cut income taxes to stimulate the economy or speed up the phase out of the inheritance tax?

I don’t know if you’ve looked at the budget problems that have been hitting other states lately, but I’ll take Indiana’s budget problems any day.

I’ll take budget surpluses over massive debt any day. I’ll take more dollars for schools and roads over less any day of the week.

And if you can do all that and cut taxes at the exact time?! Once again, what am I missing here? I can assure you that if you drove a couple hours in any direction on I-65, I-69, I-74 or I-70, I will bet you a Davidoff cigar and martini that the elected officials you spoke would gladly trade places with Indiana right now.

I don’t worry about early legislative squabbles, especially over what taxes to cut, because I can assure it beats the alternative discussion that is likely taking place in other states.

Abdul Hakim-Shabazz is an attorney and the editor and publisher of IndyPoltics.Org. He can be reached at abdul@indypolitics.org.

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