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Forecast of slower state revenue growth could mean cuts from new Indiana budget plan

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INDIANAPOLIS — Indiana's budget writers are set to look for ways to trim the new state spending plan after updated projections on Thursday showed slower than expected growth in tax collections.

The new revenue forecast given to lawmakers lowers expected state revenue by about $213 million over the next two years. State revenue is still expected to increase by 2.4 percent in the budget's first year and 3.4 percent during the second year, but that's less than the growth that had been projected while legislators have been working on budget proposals since January.

The revenue dip, while less than 1 percent from previous projections, means lawmakers will have less money to work with as they negotiate a final spending plan ahead of the General Assembly's April 29 adjournment deadline.

Both the House and Senate have approved budget proposals with school funding increases of about 2.3 percent a year, which leaders from both chambers said they intended to protect.

"I think as we look at our priorities we're going to look at K-12 as maintaining it as much as we can," said House Ways and Means Committee Chairman Tim Brown, R-Crawfordsville.

Republican Senate President Pro Tem David Long said that regardless of where spending cuts were made, the focus will be on having a balanced budget and helping schools.

"We'll be funding K-12 education — and then everything else," Long said.

Gov. Mike Pence, who included smaller education funding increases in his January budget proposal, said the new revenue projections showed that spending restraint is needed.

"Today's revenue forecast shows that caution was well-founded and will be needed as we complete our work on the budget," Pence said in a statement.

The House and Senate spending plans each spend about $31.5 billion over the next two years, with a projected state surplus of nearly $1.9 billion at the end of that time.

That surplus amount comes to about 12 percent of state spending, which is at the top of what Brown said was his aim of maintaining 10-12 percent in state reserves.

Brown said he believed lawmakers could work out priorities with the governor.

"We'll make those align," he said. "We're not that far off in our spending priorities."

Sen. Karen Tallian of Portage, the top Democrat on the Senate Appropriations Committee, said the forecast figures showing Indiana trailing the nation in wage growth showed that the state wasn't doing enough to bring in good-paying jobs.

"When we don't have wage growth, we don't have sales tax growth," Tallian said. "That is clearly our biggest problem."

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