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Lawmakers: How about 5 percent cut? Pence: I’ll take it

Updated: May 29, 2013 7:04AM



INDIANAPOLIS — Republican lawmakers and Gov. Mike Pence have reached an agreement on the state budget bill, which will cut income taxes by 5 percent over three years.

The cuts, totaling about $1.1 billion, include retroactively repealing the inheritance tax starting Jan. 1, 2013, and the previously approved corporate income tax reductions and new deductions on financial institutions.

The income tax rate goes from the current 3.4 percent to 3.3 percent in 2015, then down to 3.23 percent in 2017.

House Speaker Brian Bosma touted the budget as having a balance of cuts that effect all kinds of tax breaks, while also providing for additional commitments like education and transportation infrastructure.

Pence stated Thursday that he sees the income tax cut a “great victory” for Indiana taxpayers.

“The combination of a 5 percent individual income tax cut, inheritance tax repeal and additional tax relief for businesses,” Pence said, “is the right tax relief at the right time and will give a much needed boost to working families, small businesses and family farms.”

Bosma said leaders from both the House, the Senate and the Pence administration agreed to the new budget.

He added they hope for a budget hopes for a surplus of $2 billion by the end of two years. That’s projecting a growth rate of 2.2 percent. The budget also will require less spending than projected income for each year. The amount could fluctuate based on the state’s economy.

In education, public school funding for kindgergarten to grade 12 will increase by 2 percent in 2014 and another 1 percent the next year totaling about $315 million. The budget also will provide $34 million to fund teacher performance, $20 million over two years for new school safety matching grants and $2 million over the biennium.

In health care, $250 million will be transferred to a Medicaid contingency account, to cover possible costs of implementing any potential expansion. It also authorizes the governor to negotiate with the federal government for block grant funding.

Funds for the Indiana Career Council will be $750,000 over the two years and $6 million for the Indiana works council, two efforts to connect workers with proper training for employment.

A new program will help adults to complete a high school degree, rather than a GED, with a total of $44.5 million, as well as $25 million for skills enhancement.

In transportation, 1 percent of current sales tax will be reallocated to the motor vehicle highway fund, and state police and BMV funding will come through the state general fund.

Funds for local roads will be 47 percent from the motor vehicle highway fund, totaling about $200 million over two years, and will not be tied to whether a county passes a wheel tax. The remaining 5 percent will go to state highway projects.

$200 million over two years will be placed into a new Major Moves fund to pay for future projects such as completing Interstate 69 and expanding Interstate 65 and Interstate 70.

$50,000 is allocated to the feasibility study for the trauma center and teaching hospital in Northwest Indiana.

Sen. Luke Kenley, R-Nobelsville, head of the Senate Appropriations Committee, said he was pleased with the state agreeing to concepts that set aside funds for future transportation needs and potential costs for health care.

“We’re really glad to see that both the House and the governor have bought into our two-pronged transportation approach,” Kenley said, “and we also have a strong health care protection program. We’re real pleased with that development.”

The budget will not be voted on for a day after the budget is released to the public.



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