House, Senate remain at odds over tax, vaccine legislation at session’s halfway point

At the halfway point in this year’s legislative session, Republican leaders in the House and Senate continue to be at odds over the highest-profile issues of the session, including restrictions on employer vaccine mandates and tax cuts for businesses and individuals.

Both of those issues are on majority House Republicans’ agenda for 2022, but neither are top priorities for Republicans who control the Senate.

There’s also a difference in opinion on a controversial education proposal that would regulate how teachers can talk about race and so-called “divisive issues” in the classroom. The Senate killed its version of the legislation, which has sparked fierce debate among parents and teachers, while the House passed its bill, sending it to the Senate for consideration.

With the session roughly halfway over, bills passed in the House are moving to the Senate, and bills passed in the Senate are moving to the House. The chambers have until March 14 to work out their differences and send bills to the governor to be signed, vetoed or pass into law without his signature.

Here’s a breakdown of key remaining issues:

Vaccine mandates and the public health emergency

Legislation: House Bill 1001 (passed the House 57-35); Senate Bill 3 (passed the Senate 34-11).

The House moved quickly to pass House Bill 1001 in the first weeks of session. The bill would, most notably, restrict employers who require the COVID-19 vaccine by requiring them to grant medical or religious exemptions for anyone who requests them, no questions asked. That provision is coupled with language to put in place administrative actions needed to end the state’s public health emergency.

Meanwhile, the Senate approved a bill that which mirrors the part of HB 1001 meant to put an end to the governor’s state of emergency, but it leaves out the vaccine mandate language.

Senate President Pro Tem Rodric Bray, R-Martinsville, had said he wanted a “clean” emergency order bill, without the controversial vaccine mandate language that he said made it a “heavier bill.”

Three bills introduced in the Senate would have restricted or banned employer vaccine mandates, but none received a hearing in committee.

Business leaders have been strong opponents of the vaccine mandate restrictions language in HB 1001, saying the legislation goes too far in meddling in an employers’ decisions about vaccines in the place. In contrast, SB 3—without the vaccine language—passed with no opposition from business or health care leaders.

After HB 1001 passed the House, Bray said his caucus is interested in addressing medical and religious exemptions in vaccine mandates, but that members want to have further discussions about finding the right balance between letting people make their own decisions about their health and allowing businesses to decide what’s best for their workplaces.

“We’ll have some pretty robust conversations, I think, about that, and whether we can thread the needle and make sure that that’s the right fit,” Bray said.

To cut taxes, or not to cut taxes

Legislation: House Bill 1002 (passed the House 68-25); Senate Bill 378 (died in committee)

House Republicans’ $1 billion tax cuts package sailed through its chamber, but it faces uncertainty in the Senate, where prominent GOP leaders have been far more cautious about reducing the state’s revenue for the future.

House Bill 1002 would cut four taxes–individual income, business personal property, sales and the utility receipts tax.

It would reduce the individual income tax rate from 3.23% to 3% by 2026. And it would eliminate the minimum property tax that businesses pay on new equipment purchased after Jan. 1, 2022. That tax is referred to as the 30% depreciation floor.

In addition, the bill would let businesses apply for a state income tax credit equal to the amount of taxes they paid on existing business personal property where the 30% floor still applies, starting in 2025.

House Republican leaders have said the burgeoning state surplus gave them cause to cut taxes, while Senate GOP leaders have still leaned to urging caution amid concerns that inflation could slow consumer spending and sales tax collections.

The Senate considered a bill that would have reduced the depreciation floor, but it was killed in the Senate Tax and Fiscal Policy Committee before a vote was taken.

The cut was projected to have a $140 million local impact, and the committee’s chair, Sen. Travis Holdman, R-Markle, said he found it hard to vote for any tax cut that would have a negative impact on local governments.

Those same reservations make him hesitant to consider any version of the business property tax cut contained in HB 1002, he said.

Bray said the Senate will take up the House bill, but he said he did not know where his caucus will end up on it. What complicates the discussion, he said, is that lawmakers are in a non-budget session. They won’t consider a two-year spending plan again until 2023.

“It’s difficult to do permanent tax cuts when you don’t have a comprehensive budget to work through,” Bray said. “The impact that it has, I mean … the billion dollars or so, it’s substantial.”

House Speaker Todd Huston, R-Fishers, said he is confident the relationship he has with Bray and other Senate GOP leaders will help them work through their differences on the tax cuts package.

Education controversies

Legislation: House Bill 1134 (passed the House 60-37); Senate Bill 167 (died in committee).

Two bills regulating school curriculum in response to concerns about critical race theory were filed this session. One made it out of the House, and the other died in the Senate.

The House passed House Bill 1134 that would restrict the teaching of certain concepts around race, gender, and ethnicity, and discourage the teaching of topics that make students feel “discomfort or guilt.”

The Senate had its own version of the legislation but abandoned it without a committee vote after the bill author Sen. Scott Baldwin, R-Noblesville, faced national backlash for a comment that schools could teach Nazism impartially.

Bray said at the time that bill had “no path forward,” casting doubt on the fate of the House’s bill. as well. He said at the halfway point of the session that some members of the Senate Republican caucus have changes they want to make to HB 1134, but he said he does not know what will come of it in the end.

“We didn’t find a way for [SB] 167, and I don’t know that we will on this one either,” Bray said.

What’s still in play?

Mail-in voting: Legislation narrowing mail-in voting rules has moved to the Senate after the House approved it Monday 66-28, along party lines. House Bill 1116 would require voters to affirm, under penalty of perjury, that they wouldn’t be able to vote in person during a 28-day early voting period or Election Day.

Sports bid fund: Senate Bill 245, which would create a “bid fund” to boost Indiana’s event-luring efforts—but not put money into it—has moved to the House after senators unanimously approved it Jan. 25.

Sheriff’s commissary fund: Republican lawmakers backed off a bill that originally sought to prevent the Marion County Sheriff’s Office from spending commissary fund money unless it was appropriated by the Indianapolis City-County Council. The version of Senate Bill 307 that senators passed 35-11 on Jan. 27 would require the sheriff to go to the council on a quarterly basis to present a report on commissary fund purchases. The bill has moved to the House.

Criminal justice package: All five bills in a package aimed at Indiana’s criminal justice system, with a focus on Marion County, have gone to the House, after senators passed them on Jan. 25. Senate Bill 6 and SB 8 make changes to the bail system, SB 7 and SB 10 create pilot programs in Marion County, and SB 9 would introduce more oversight requirements for people on electronic monitoring.

Wind and solar incentives: The Senate passed Senate Bill 411, which would provide set state standards on setbacks, heights and other facets of commercial wind and solar projects and provide incentives to local governments to adopt them. The bill follows last year’s failed attempt to create and mandate statewide standards for such projects. That 2021 bill was met with outcries from county commissioners and some property owners who said the state was overruling local control. SB 411 has been met with little opposition.

Nuclear reactors: Senate Bill 271 passed the Senate on a party-line 39-9 vote. It would allow electric utilities to build small modular nuclear reactors that could generate up to 350 megawatts of electricity, enough to power a small city. Indiana has never had commercial nuclear power and has long relied on coal, but utilities are trying to move away from the use of fossil fuels.

Economic development: A bill that would modify the Indiana Economic Development Corp.’s tax incentive toolkit, create a grant program for remote workers and establish new innovation districts statewide passed the Senate. Senate Bill 361 is a priority of Gov. Eric Holcomb and Secretary of Commerce Brad Chambers, who say a modern, flexible economic development toolkit will help Indiana compete for mega development projects.

What’s out?

Marijuana: Thirteen bills were filed by members both parties this session to legalize, decriminalize, study or set up a structure to regulate marijuana. None got a hearing in committee.

Republican Rep. Cindy Ziemke’s sweeping bill to legalize and regulate medical and recreational cannabis was among those that died. Ziemke told IBJ she was disappointed, but not surprised, the bill didn’t get a hearing in the House Courts and Criminal Code Committee. She said she did not expect the Legislature to tackle marijuana legalization during a short session.

Ziemke is not running for reelection after this session, but she said she hopes lawmakers will bring back her bill in the future when Indiana inevitably has to tackle marijuana legalization.

Sales tax holiday: No temporary sales tax reprieve this year. A bill authored by Sen. Travis Holdman, R-Markle, that would have created a 17-day sales tax holiday on all retail purchases in July did not get a hearing in his committee.

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