Tax relief likely in new Indiana budget, but specifics need to be sorted out
Posted: 04/03/2013 at 6:30 pm
By: Tim Vandenack
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What form it takes, though, remains a point of debate, according to members of Elkhart County’s legislative delegation to Indianapolis. Indiana Gov. Pence has proposed a 10 percent cut in the income tax rate, from 3.4 percent to 3.04 percent, while the Indiana House budget proposal calls for quicker elimination of the state’s estate tax than currently outlined.
“I’m looking for tax relief for Hoosiers,” said Indiana Rep. Tim Wesco, R-Osceola. “What form tax relief takes is the question.”
Pence’s income tax cut plan has generated opposition from some, and Rep. Tim Neese, R-Elkhart, doesn’t see it flying, at least not as the Republican governor has proposed. Neese, among others, would like to see more funds earmarked for education and road improvements; if you cut the income tax rate too sharply, that potentially becomes difficult.
As is, the House budget plan calls for $300 million more in funding for education over the coming two-year budget cycle and $400 million to $500 million more for roads, according to Rep. Wes Culver, R-Goshen.
“I would anticipate (any income tax cut) would be less than that,” Neese said. “It’s unlikely that it’ll be 10 percent.”
Though Pence’s 10 percent cut plan has generated a lukewarm response from some, it’s hardly dead, Wesco thinks. That it wasn’t contained in the House budget plan stemmed in part from uncertainty about the revenue forecast for the year for Indiana, to be released later this month.
“There’s still room for discussion,” Wesco said.
Indeed, Rep. David Ober, R-Albion, whose district just barely enters Elkhart County in Benton Township, likes Pence’s plan. With an expected surplus in state revenue, Pence thinks a tax reduction is in order, and according to administration estimates, the 10 percent cut, phased in over two years, would eventually save Hoosier taxpayers around $500 million a year.
“I think that the governor’s proposal is a smart one,” Ober said. “It’s a half billion dollar reinvestment in our economy, which is desperately needed right now.”
Even so, the new state budget could contain a more measured income tax cut, coupled with a reduction in the estate tax, Ober thinks. Or it could contain one of the tax cuts, but not the other, or something completely new.
Culver would like to see any excess funds used to pay down the state’s debt to the feds for unemployment payments and other obligations. “I’m just saying use that money to either pay down the debt or give back to the taxpayers. But not new programs,” Culver said.
Things may get clearer by the end of the day Thursday, April 4, when the Indiana Senate’s Appropriations Committee is expected to finish crafting the Senate budget proposal. That plan would then likely go before the full Senate for formal consideration next week. Reps from the Senate, the House and Pence’s office would then be tasked with hashing out some sort of compromise.
Release later this month of the state’s revenue forecast, too, should help sort things out.
The two-year budget for 2014 and 2015 will likely total around $30 billion, according to Neese.
The three senators representing Elkhart County, Carlin Yoder, Joe Zakas and Ryan Mishler — all Republicans — declined comment on the tax cut question given pending budget discussions in the Senate Appropriations Committee.