FEIGENBAUM: Budget issues will drive almost every legislative debate

January 12, 2013

Now that you are no longer distracted by an Indianapolis Colts playoff drive (sigh), it’s time to get up to speed on the key issues the Indiana General Assembly will confront over the next four months.

Last week, we outlined the box within which the issues will be shaped, and now we’ll tell you a bit more about the policy that the people and politics will affect.

Obviously, the overarching agenda item will be the biennial budget, and there will be pushing and shoving over the amount available to play with above the fiscal year 2012-2013 bottom line.

However, lawmakers won’t be certain of that amount (believed now to be about $1.2 billion) until after the mid-April fiscal forecast. That’s when legislators will make the final decisions about what the state can afford and whether a tax decrease is in the cards.

If a tax decrease is in the final discussion, legislators will determine whether it will take the form preferred by incoming Gov. Mike Pence’s administration (a cut in the individual income tax rate) or by legislative leaders (a quicker phaseout of the inheritance tax or deeper cuts in the corporate income tax).

Beyond construction of the budget itself, assorted issues will have significant budgetary impact.

At the top of the high-dollar list are transportation and education-funding issues. The education battles likely will involve more funding for K-12 and higher education, added money for full-day kindergarten and pre-school programs, cash for career and vocational-program enhancements, and teacher raises.

Coming off a major investment in road-building projects funded in large part by Indiana Toll Road lease revenue, the appetite of Hoosiers for additional spending has merely been whetted.

With projects to our north (Fort to Port and Hoosier Heartland Corridor) and south (I-69 from Evansville to Crane) completed or nearly so, central Indiana is looking greedily at additional upgrades for U.S. 31, completion of I-69 to Indianapolis, and more I-69 improvements from Interstate 465 through Fishers.

Five-year-old plans for an 80-mile Indiana Commerce Connector toll road as a partial outer beltway around much of the “doughnut” are getting new attention, even as the tolled Illiana Expressway concept moves closer to reality in Lake County.

As Major Moves funding dries up, lawmakers are mulling how to continue the spate of highway construction, maintain new and aging infrastructure, and better fund local road needs.

Ideas being floated include adding a license plate fee, raising the gas tax, shifting allocations of the gas tax within the budget; and taxing vehicles on mileage.

Tied into the road-building discussion is the central Indiana mass transit initiative. That effort has strong support from key government, business and community leaders, who see improved mass transit as an economic development and quality-of-life imperative.

Keeping this proposal on the tracks will require some degree of buy-in from rural legislators and the Lake County delegation.

You also will see efforts to shore up gambling tax revenue and employment levels at Indiana’s casinos and racinos, in light of new competition in Ohio, Michigan and Kentucky. But it will be difficult to settle upon a meaningful package that does not advantage some cities, communities, counties and casino companies at the expense of others.

Brick-and-mortar retailers will push to accelerate on-line sales tax collection—as a matter of equity and as a means to finance tax cuts or bolster the budget.

Health care and insurance issues also will be a subject of discussion, as full implementation of President Obama’s health care reform law forces the state to make expensive decisions with long-term implications.

Criminal sentencing reforms will return to the forefront. While the issue became an agenda item largely because of fiscal pressures, lawmakers recently learned the prison population seems to have finally leveled off, so they have an excuse of sorts to avoid change.

Next, we’ll look at non-budget issues.•


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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