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House passes $31.4B budget with cigarette tax hike

February 27, 2017

The Indiana House on Monday voted to pass a $31.4 billion, two-year state budget, which includes a $1 per pack tax hike on cigarettes but likely will undergo much modification after it heads to the Indiana Senate for debate.

The budget passed the House, 68-29, along party lines. House Ways and Means Chairman Tim Brown called it an “honest appraisal of the money we have and the spending priorities we have going forward.”

The two-year spending plan would leave the state with a structural budget surplus of $115 million in 2018 and $252 million in 2019.

Raising the cigarette tax would help pay for Medicaid spending and smoking-cessation programs, freeing up about $287 million to help patch a hole in the budget created by a separate infrastructure plan also promoted by House Republicans. That plan would shift revenue from a sales tax on gasoline purchases to pay for roads, creating a roughly $300 million hole in the budget.

Brown called the first year of the budget “very, very tight”—referencing a budget forecast that shows revenues for the current fiscal year are down about $300 million.

The House budget plan funds the state's fledgling preschool program at $20 million per year. It also includes modest funding increases for K-12 education—2.8 percent, or $273 million over two years—and higher education, where funding will increase $23 million, or 1.7 percent, over two years.

But Democrats who voted against the budget said the spending plan was reflective of misguided priorities.

“What are your priorities?” asked Rep. Ed Delaney, D-Indianapolis, before reading a list of 25 school districts across the state that stood to lose money. “This bill is without any vision. This is an ‘everything-is-just-fine' budget. It leads us nowhere with the possible exception that we’ll pave some roads.”

House Minority Leader Scott Pelath, D-Michigan City, said the cigarette tax increase showed that the House was interested in “taking more money from certain consumers’ pocket books.”

However, Rep. Matt Lehman, R-Berne, defended the priorities of Republicans as showing that they have “concern for others.” He pointed out budget items like allocating $5 million to fund a so-called drug czar out of the governor’s office who hopes to confront the state’s opioid epidemic, $185 million for investments in local corrections programs, and $5 million for a Nurse-Family Partnership program.

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