STATEHOUSE DISPATCH: Will costs and priorities merge or crash?

March 19, 2007

In our first column of the session, introducing you to the assorted variables that would influence the policy outcomes of 2007, we cautioned you that the next few months would be focused upon money and priorities.

Lawmakers and Republican Gov. Mitch Daniels had a number of pet initiatives they wanted to see enacted and funded. But, after ensuring that programs and entities that had been shortchanged in the past biennium would be compensated and after bumping up education spending a bit, it really didn't look as if there would be a lot left.

Things haven't changed much since January. In fact, the budget belt might have even been pulled a tad tighter.

Revenue for the first three months under the most recent (December) state fiscal forecast is trailing the forecast by almost $24 million through February, and off $44.9 million from budget plan targets. Since the beginning of the fiscal year in July, revenue is up 3.8 percent, but that lags growth projections that had topped 4 percent. So money is once again a scarce commodity.

Daniels and many legislators would like to fund a new health insurance program for uninsured and underinsured Hoosiers without placing an additional burden on taxpayers or mandate upon business. They would also like to implement full-day kindergarten and offer real property-tax relief that wouldn't entirely mean shifting more of the tax load onto the business community.

To fund these big-ticket items, new money will be required, and the governor identified some sources. To fund his health insurance initiative, he wanted a hike in cigarette taxes. To boost college scholarships and university research, he proposed leasing the Hoosier Lottery. The cigarette tax didn't light a fire among House of Representatives members, and while the lottery lease passed the Senate, it failed to win a convincing majority, and is likely to die in the House. House Democrats couldn't find 51 votes for a property-tax relief plan that relied largely on restructuring some taxes, and the jury remains out on how to fund full-day kindergarten.

Currently, only one measure that would potentially add some significant bucks to the state bottom line remains alive with at least arguably even odds: the so-called "slots at the track" bill.

This legislation would charge the two pari-mutuel horse-racing tracks $100 million each for a license to legalize 2,500 slot machines each (a number that is likely to be trimmed in the process), and taxslot receipts at a flat 37.5 percent.

The House bill about to be considered in the Senate Tax & Finance Policy Committee simply directs the dollars into the state General Fund, but Rep. Trent Van Haaften, D-Mount Vernon, the bill's author, made it clear on the House floor that he was just using that designation as a place-saver for negotiations between the House, Senate and governor in coming weeks.

Largely absent from the House debate on the slots bill was a serious discussion about the public-policy aspects of this gambling expansion, and almost as noticeable was the lack of serious debate about where the proceeds should go (a half-hearted attempt to use it for propertytax relief was easily turned back as legislators sought to preserve their options).

Now legislation proceeds down two parallel tracks. On one of them, lawmakers and the governor wrangle over priorities without much discussion of cost, while riding on the other track is a funding vehicle that is little concerned about policy.

At the end of the line, legislators hope the trains will arrive concurrently, neither overly laden with unrelated freight that could slow things down or cause a derailment. By session's end, there might be just enough cash to pay for a pared-down priority list, and much of the wrangling between now and then will center on what policies should be paid for, and whether the proposed funding mechanisms are appropriate.

What the respective conductors must be vigilant for: the return of debate over hotbutton social issues that could trip the switch that sends the respective parties on a collision course.

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