GOP-led Indiana House panel OKs new budget proposal

A Republican-controlled Indiana House committee has approved a GOP budget proposal that would keep overall education funding at current levels while making major shifts in the way money is divvied up among individual school districts.

The House Ways and Means Committee voted 15-8 along party lines Friday to advance the new $28 billion, two-year state budget that Republicans said held most spending flat while avoiding tax increases. The budget would keep overall education spending steady, but includes changes to the distribution formula that will hurt some urban and rural schools and help some suburban schools.

"It is tough on some school corporations, there is no doubt about it," said Committee Chairman Rep. Jeff Espich, R-Uniondale.

Democrats said many districts would be devastated by the cuts.

"We've got to figure out a way to mitigate the losses to some of these school corporations," said Rep. Terry Goodin, D-Crothersville.

Democrats plan to propose several changes to the bill next week when the measure is before the entire GOP-led House for consideration.

But Friday, Democrats suggested one change they said was fundamental — eliminating a provision in the budget that allows the governor to withhold funds allocated in the budget during tough economic times.

Democrats said Gov. Mitch Daniels, a Republican, has abused that power by cutting too much from the state budget when there is still some money in reserves. Rep. Scott Pelath, D-Michigan City, said elected officials — not bureaucrats — need to decide how the state spends its money. If the governor can withhold spending the General Assembly has ordered, he said, the budget merely becomes "something that's dropped in a suggestion box."

But Republicans said the provision is key to keeping the state in good financial standing even when the part-time Legislature isn't in session. Daniels has cut millions from the current budget as revenues fell below expectations. Rep. Eric Turner, R-Marion, said if Daniels hadn't made the cuts, lawmakers would be figuring out ways right now to raise taxes.

"I am very thankful and I think the people of Indiana are very thankful that the governor was willing to make those cuts and not have further taxation on Hoosiers," Turner said.

Republicans rejected the Democratic proposal on a party line vote.

The budget approved Friday also:

— Restores a 3 percent cut to higher education proposed in Daniels' version of the budget. But it does not fund any repair projects or authorize any new capital projects for universities.

— Implements limits on tuition increases at Indiana colleges and universities. The limits would be set by the state Commission for Higher Education.

— Restores cuts Daniels wanted to make in optional Medicaid services for adults including dental and podiatry services.

— Temporarily suspends pay raises for state legislators, judges and prosecutors.

— Spends about $60 million more over two years than Daniels' proposal. The House Republican budget leaves about $588 million in reserves at the end of fiscal year 2013. The governor's proposal would leave about $725 million in reserves.