With House Democrats back in the flow—if not in the fold—of the regular legislative process, attention turns from how to salvage the session to the more typical concerns about drafting a budget under the ordinary variables and competitive tensions that overarch every biennial attempt to cobble together a two-year spending plan.

Cuts became more painful in the past several years as the national recession drew the fiscal noose tighter on Indiana government income. Two years ago, the situation appeared so dire that even Democrats signed on to a minimal bottom line and raised few objections to how the governor sought to allocate scarce cash.

Of course, that fiscal 2010-2011 budget was artificially aided by federal stimulus cash, moderating cuts in education spending, and certain other programs.

That is not the case in the budget now being crafted, but adult decision-making has prevailed, and the coloring will again remain largely within the lines set out by Republican Gov. Mitch Daniels after the bipartisan December fiscal forecast.

An updated revenue forecast is due mid-month, and should shape the final set of parameters within which dollars will be designated to priorities and programs. Chris Ruhl, chief of the Office of Management and Budget, told viewers of Indiana Public Broadcasting’s “Indiana Lawmakers” that he expects the forecast will augur marginal improvement in revenue.

Given that revenue is running at least a shade ahead of the December forecast, and that there are positive signs in the economy, the downside risk seems lower than in recent years. As a result, Ruhl is “cautiously optimistic” that we will be entering a period of steady growth (despite observing that the impact of high oil prices, the growing federal debt and housing matters suggest Hoosiers are not quite out of the woods yet).

You will need to watch the interaction between Democrats and Republicans on the school funding formula, between Republicans in the House and Senate on some individual priorities, and between the governor and the Legislature on some big-ticket items.

All of this is normal budget jockeying.

While Democrats likely will be just as wedded to the bottom line as Republicans, they will fight to increase funding to urban schools from the House Republican budget proposal. They will also seek to ensure that health-related programs for those most dependent upon government are not trimmed in greater proportion to overall cuts.

Republicans in the House and Senate may have some different ideas about a few big-picture issues, including a corporate tax cut sought by Senate Republicans that seems to have raised the eyebrows of Rep. Jeff Espich, R-Uniondale, chairman of the House Committee on Ways and Means.

Espich also has sought to scale back and redirect the subsidy to the Indiana equine industry from slot machines at the state’s two racinos. But reneging on that commitment doesn’t sit well with his counterpart across the rotunda, Sen. Luke Kenley, R-Noblesville, chairman of the Senate Committee on Appropriations. Tuition support programs, including one for families of disabled veterans and for 21st Century Scholars, also are matters of inter-chamber contention.

Lawmakers were not happy with the governor’s proposal to raid the Public Deposit Insurance Fund to the tune of some $200 million, and while the House budget keeps PDIF dollars intact, you may ultimately see a fraction of the fund (perhaps as much as $50 million) tapped to help fulfill budget needs. Expect haggling at the margins over the cost of some expensive health care outlays (particularly Medicaid and the Healthy Indiana Program).

There has been puffery from some quarters about tightening state laws governing collection of sales tax by online retailers as a matter of fairness to brick-and-mortar Hoosier retailers and the need to replenish state coffers. Other exigencies and prior commitments likely will cause Indiana to forgo $200 million to as much as $400 million annually in such revenue for now—but this is likely to become a revenue centerpiece in the 2013 budget session.

If House Republican leaders have their druthers, the budget will be the final bill voted on this session, allowing it to be the vehicle, if necessary, for the school vouchers/scholarships legislation and even redistricting. Watch it up to the deadline.•

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