FEIGENBAUM: Statehouse looks to Pence and his mighty pen

May 4, 2013

Ed FeigenbaumThe 2013 session of the Indiana General Assembly has concluded, but the work is just beginning.

Gov. Mike Pence must decide whether to sign or veto a handful of measures, administrative agencies will promulgate regulations to implement new laws, and lawmakers will begin work related to the 2014 session.

On the session’s final Wednesday night, Gov. Pence agreed to accept a legislatively crafted budget featuring a conglomeration of tax cuts, including a pared-down and phased-in version of his signature proposal: a 10-percent individual income tax rate cut.The final budget deal only slightly trims the individual income tax rate in 2015 and again in 2017. The tax-cut bundle also continues corporate income tax rate reductions, eliminates (instead of phasing out) the inheritance tax, and reduces the financial institutions tax.

The latter two items—neither sought nor advocated by the governor—will mean some $170 million less in revenue annually flowing to the state.

Outside of the budget, new tax deductions for the 13 casinos and racinos and lower tax rates for some of the smaller-grossing casinos will also decrease state revenue.

However, a provision in the budget bill related to racino slot wagering taxes will likely result in the settlement of a problematic tax case and an infusion of cash to state coffers now held in escrow. That should cancel out about half of the first year’s forgone inheritance tax and financial institutions taxes.

Pence praised the final tax package as a major win for Indiana, an assemblage of cuts he says will touch all Hoosiers and be even better for the state than his own proposal.

Democrats—who had sought all-or-nothing tax cuts so as to better position middle-class taxpayers—criticized the final form as all but meaningless to most taxpayers in the first two years of the cut, amounting to about enough cash in their pocket to pay for an extra can of soda every week. Spending the money on targeted programs or approving deeper cuts would have been more impactful, the Democrats said.

But the session is now behind us.

Of course, the final days—and even hours—saw scores of changes to high-profile bills, including the proposed $2.8 billion Leucadia coal gasification plant and controversial state power contract; high-fenced hunting; the Indianapolis Motor Speedway loan bill; and the so-called “ag-gag” bill, which saw more transformations, permutations and lives in the final 10 hours than virtually any other bill in recent memory. There are lots of moving parts for the governor to consider, and lots of legislative language to be vetted outside the chaotic environment of the session’s final hours.

There is no legislation that is so objectionable on its face—or so “in his face”—that Pence would almost certainly take offense and veto it. But there are one or two bills on which he might want to make a personal, political or policy statement (or all three) with a veto.

One bill that stands out: the reorganization of Indianapolis city government. This arose well after the session started; saw limited public input; and proposes far-reaching, lasting changes. Leadership was wary of it. The partisan aspect troubled even many Republicans, and some called it a solution in search of a problem. It appears to be a case of state government dictating home-rule issues to a local government.

A veto here would not cost him within his party, and he can keep open a return of the concept—but with study, public input and perhaps a local referendum.

Legislative leaders will determine the full nature and extent of summer study committees May 23. They’re starting early this year because, as Senate President Pro Tem David Long, R-Fort Wayne, joked in the Senate, “We seem to have created 2,500 summer study committees.”

While some matters were shunted to study to avoid controversial decisions, others are more serious attempts to consider major policy concerns outside the rush—and white-hot spotlight—of the session.

With assorted big-picture studies on the agenda (and the second half of a tax credit study to be completed), lawmakers will enter 2014 with what should be a more impressive agenda than usual in an election year.•


Feigenbaum publishes Indiana Legislative Insight. His column appears weekly while the Indiana General Assembly is in session. He can be reached at edf@ingrouponline.com.


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