While the Indiana General Assembly began its work on January 7, new Gov. Mike Pence had to wait a week for his January 14 inauguration. He quickly went to work, however, with significant positive actions on his first two days on the job.
A series of executive orders that Pence signed following his official ascension into office included a moratorium on new rules and regulations (with obvious emergency exceptions) that were not proposed before January 14, as well as a cost-benefit analysis of existing administrative rules. Priority will be given to review of those rules with the most negative effect on job creation and economic development.
Candidate Pence promised this action leading up to the election. While federal regulatory challenges are often at the forefront today, this step will help ensure that state government is not unnecessarily limiting job and economic growth.
On day two, the Pence team delivered a two-year, $29 billion spending plan to the State Budget Committee. The first six pages of this extensive document provide an overview of the key elements.
This is a very good starting point for legislators. It is a fiscally sound proposal, with a focus on meeting key state priorities and providing the 10% individual income tax relief (which also encompasses 90% of Hoosier businesses) that Pence proposed in his campaign. As we’ve indicated previously, lawmakers have questioned whether the income tax cut should take precedence over other budget desires. That will be worked out in the legislative process and could be determined by the updated revenue forecast that will be presented in early April.
A few highlights:
- A 1% increase in each of the next two years for K-12 and higher education. The second year for K-12 would have that 1% be divided among the state’s highest performing schools. Combined, the education funding totals 65% of the budget.
- While the administration did not include money to specifically expand the Medicaid program as outlined under federal health care reform, it does significantly increase funding for health insurance for the poor – from $1.65 billion this year to $2.1 billion in 2015.
- The budget calls for a change in projected excess revenues. After 12.5% of annual spending is set aside in reserves, the remainder would be divided between the automatic income tax credits that were enacted during the Daniels administration and a new fund to help maintain roads, bridges and other infrastructure critical to economic growth.
- Spending is kept in line in this proposal. A structural surplus is maintained and reserves are allocated effectively, with the infrastructure fund a good start to the larger question of financing future transportation needs. The Chamber will be working with the governor’s team and legislators to help ensure that as many pro-job, pro-economy priorities as possible are achieved in a responsible manner.