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Pence submits lean budget built around tax cut

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Indiana Gov. Mike Pence submitted an austere first budget Tuesday, with slight increases for areas like education and a large reserve set aside to cover his proposed cut in the personal income tax.

Pence's $29 billion, two-year spending plan increases state funding by about $200 million each year, or roughly 1.4 percent, while building the state's cash reserves. It also plans for a $790 million cut in the state's personal income tax, which has received a chilly reception from Republican lawmakers so far.

"Gov. Pence's budget is a jobs budget that focuses on fiscal discipline, providing permanent tax relief for Hoosier workers, small businesses and family farms, and funding our priorities in education, transportation and health care," Pence's budget director, Chris Atkins, told members of the State Budget Committee on Tuesday.

The budget pays for some of the proposals Pence floated during his campaign for governor, including $64 million in grants for schools that perform well on a trio of state metrics including the A-F grading system established by former Republican Superintendent Tony Bennett. It increases K-12 spending and higher education aid by 1 percent each year, and continues to fund the state's full-day kindergarten program.

Pence also proposes shifting excess state reserves used to pay down pension liabilities to create a new transportation investment fund.

The Pence budget also includes more funding for targeted areas, including $35 million more for the embattled Department of Child Services to hire more caseworkers and other staff, $18 million for adult workforce development programs, and an additional $6 million each for teacher performance grants and a dropout prevention program called Jobs For America's Graduates.

On the whole, it would increase state spending from an estimated $14.2 billion in this fiscal year to $14.4 billion in fiscal year 2014. It then would increase to $14.6 billion in fiscal year 2015.

Now the General Assembly will take its turn at the budget, and leaders in the Republican-dominated Legislature have indicated their priorities could be far different from the new governor's.

House Speaker Brian Bosma, R-Indianapolis, cast doubt on the proposed tax cut throughout the end of last year and other leaders, including Senate President Pro Tem David Long, R-Fort Wayne, have said a final answer may have to wait until after the state sees new economic forecasts in April.

"We're going to have a good discussion the next four months," said Senate Appropriations Chairman Luke Kenley, R-Noblesville. "There's a couple of things we don't know yet, (like) how we're going to deal with this Medicaid issue, and it kind of dwarfs everything else if we can't get a good answer to that."

Indiana's Medicaid actuary, Milliman Inc., has estimated the state will have to pay an additional $600 million over the next seven years to cover the cost of uninsured residents who qualify for Medicaid. The jump in enrollment, the firm says, has nothing to do with any change in Medicaid, but instead is due to an assumed "woodwork effect" in which low-income residents who qualify for Medicaid but are not enrolled seek federal coverage as the individual mandate takes effect next year.

Lawmakers will also be eyeing new funding for transportation, as the money from the 75-year lease of the Indiana Toll Road dries up, and could ditch the tax cut in favor of more spending on K-12 education and higher education. They also will ponder expanding the state's Medicaid program under the federal health care law, something Pence did not include in his plan.

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  • 1% plenty
    Given the DECADES of wasted funds by IPS and other large, woefully under-performing, union controlled school districts 1% is more than enough. Frankly funding should be reduced to the bare minimum then let the achievers EARN better funding. Throwing money at a problem NEVER works.
  • 1% yearly increase for education not enough
    A 1% yearly increase in funding for education is not enough with inflation. Since inflation is generally around 2.5% a 1% increase is really a 1.5. decrease in funding each year, forcing our universities to offset costs to tuition increases.

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  1. So, Pence wants the federal government to ignore the 2008 law that allows children from these countries to argue for asylum in front of a judge. How did this guy become governor? And how is that we'll soon be subjected to repeatedly seeing him on TV being taken seriously as a presidential candidate? Am I in Bizzaro-U.S.A.?

  2. "And the most rigorous studies of one-year preschool programs have shown short-term benefits that fade out in a few years or no benefits at all." So we are going down a path that seems to have proven not to work very well. Right intention, wrong approach?

  3. Well for Dunkin Donuts it might say that even a highly popular outlet can't make a poorly sited location work. That little strip has seen near constant churn for years.

  4. Years ago, the Pharmaceutical and Medical Device companies shifted their research investment away from Medical Institutions to focus more on private research centers, primarily because of medical institution inefficiencies in initiating clinical studies and their inability/commitment to enroll the needed number of patients in these studies. The protracted timelines of the medical institutions were prompting significant delays in the availability of new drug and medical device entities for patients and relatedly, higher R and D expenditures to the commercial industry because of these delays. While the above stated IU Health "ratio is about $2.50 in federal funding for every $1 in industry funding", the available funding is REVERSED as commercial R and D (primarily Phase I-IV clinical work)runs $2.50 to $1 for available federal funding ($76.8B to $30.9B in 2011). The above article significatly understated the available R and D funding from industry......see the Pharma and Medical Device industry websites. Clearly, if medical institutions like IU Health wish to attract more commercial studies, they will need to become more competitive with private clinical sites in their ability to be more efficient and in their commitment to meet study enrollment goals on time. Lastly, to the reference to the above Washington Post article headlined “As drug industry’s influence over research grows, so does the potential for bias", lacks some credibility as both FDA and Institutional Institutional Review Boards must approve the high proportion of these studies before studies are started. This means that both study safety and science must be approved by both entities.

  5. ChIeF and all the other critics – better is better no matter what. Get over it; they are doing better despite you ?

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