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Indiana budget deal includes Daniels-backed refund

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Indiana lawmakers are set to vote Friday on a new $28 billion state budget that would give slight funding increases to schools without raising taxes, leave the state with more than $1 billion in reserves and give taxpayers refunds if the state takes in more money than it needs.

Senate Appropriations Chairman Sen. Luke Kenley, R-Noblesville, said the budget deal negotiators reached Thursday helps Indiana improve education, maintain fiscal stewardship and create a good business environment.

"We can win the race among our peers in being a state where people want to be," he said.

Gov. Mitch Daniels had pushed for the taxpayer refund. If it passes the GOP-led Legislature, he could claim that as another legislative victory — in addition to a sweeping education overhaul the General Assembly has already passed — as he considers whether to run for president in 2012.

The taxpayer refund was among the few sticking points between the House and Senate version of the budgets. House Republicans supported the governor's idea, but Republican Senate leaders said it was more responsible to use any excess money to pay down unfunded pension liabilities.

The compromise budget proposal announced Thursday would meld the two ideas together. If state reserves contain more than 10 percent of budgeted spending, half the extra money would be used for pension funds and half would be given back to taxpayers.

The budget would increase funding for public schools by 0.5 percent in 2012 and 1 percent in 2013, and increases funding for full-day kindergarten programs by $47 million over the two-year budget.

It also includes some money that can be awarded to outstanding teachers through the state's new merit pay system that Daniels is expected to sign into law soon. And it includes $4,000 "Mitch Daniels Early Graduation Scholarships" for high school students who graduate a year early and go on to higher education.

Sen. John Broden, D-South Bend, said schools are already struggling from recent state budget cuts. He said the budget's new school formula would leave a "large number" of school districts with less money.

Some Democrats want more funding for schools, but Republicans said revenues expected in the latest forecast may not materialize, and that it's better to keep at least $1 billion in budgeted reserves.

House Democrats suggested a suspension of taxes on gasoline for June, July and August, but that provision wasn't included in the budget deal Republican negotiators hashed out.

Rep. Scott Pelath, D-Michigan City, said budget writers "missed opportunities" to help the working class and put money back into consumers' pockets because they wanted to beef up reserves.

"What is magic about the figure $1 billion?" Pelath asked. "I do understand the tough choices we have to make, but in some cases I think we made some of the wrong tough choices."

The budget also clarifies a way lawmakers can be fined if they boycott proceedings, a direct response to the five-week walkout by House Democrats over labor and education issues earlier this session.

Lawmakers face a midnight deadline Friday to pass a new state budget before the session ends.

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  • Budget Deal
    Well, if anyone wants to know if Mitch is running for President - here it is - his first point, "While other states were raising taxes, we gave refunds." In one article, he lauds the fact that there were reserves and that's how Indiana kept going, now he wants to give the reserves away so he can show what a great governor he was as he runs for President. Looks like a Bush tactic to me, rather than raising educational funding so the teachers aren't the one buying supplies, or put the money back into the pension fund so it's solvent, he wants to give the money back - then what, when there's no surplus blame the next governor? Refunds are great, but not when it'll be taken away the next year by raised taxes because there's not enough to pay the bills.
  • TAX CUTS
    No mention in the story of the 25% tax cut for state corporations?

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  1. The $104K to CRC would go toward debts service on $486M of existing debt they already have from other things outside this project. Keystone buys the bonds for 3.8M from CRC, and CRC in turn pays for the parking and site work, and some time later CRC buys them back (with interest) from the projected annual property tax revenue from the entire TIF district (est. $415K / yr. from just this property, plus more from all the other property in the TIF district), which in theory would be about a 10-year term, give-or-take. CRC is basically betting on the future, that property values will increase, driving up the tax revenue to the limit of the annual increase cap on commercial property (I think that's 3%). It should be noted that Keystone can't print money (unlike the Federal Treasury) so commercial property tax can only come from consumers, in this case the apartment renters and consumers of the goods and services offered by the ground floor retailers, and employees in the form of lower non-mandatory compensation items, such as bonuses, benefits, 401K match, etc.

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