Governor travels bumpy road to income tax cut

Henry County Highway Superintendent Joe Wiley is tired of getting calls from residents whose tires are flat and cars are muddied from his crumbling roads.

Wiley has ground 30 miles of road into gravel in the last three years on the theory that it's better to have a dirty car than a ride busted by innumerable potholes. He says many more paved roads in this eastern Indiana locale could be returned to the earth if he doesn't get more funding in the state budget Indiana lawmakers are debating.

"My little world of 802 miles of road is a handful. It's embarrassing. It's frustrating. And I don't have a solution. … I mean, there needs to be more money spent on roads," he said.

It's those broken roads that have formed the single largest pothole in freshman Gov. Mike Pence's legislative "roadmap," a first-year agenda centered around a $500 million cut in the state's personal income tax. The cut would put about $156 in the pockets of a taxpayer earning $46,000, but its political ramifications could be much greater.

Pence needs a victory on a signature item of his campaign to establish himself as a strong executive and build his resume for a potential 2016 White House run. Governors being eyed for higher office are often judged on their performance in their respective statehouses and their ability to overcome opposition from both parties; Republican Gov. Scott Walker in Wisconsin survived a bloody fight with union members and teachers, while Democratic Gov. Martin O'Malley of Maryland walked away from his seventh annual dance with the Legislature this year having raised the gas tax to pay for a multibillion-dollar transportation plan and repealed the state's death penalty.

For community officials like Wiley, passage of Pence's tax cut could represent a further erosion of funding to local governments, which was cut dramatically under former Gov. Mitch Daniels as he steered the state through the recession and built a surplus of $500 million.

Indiana lawmakers would instead like to see much of that surplus go back into the roads, and many community officials agree.

Pence has consistently said he believes his budget, which would pay out roughly $347 million for roads at the end of the next two-year budget, offers plenty for transportation.

"Making sure that we have roads and bridges that both are maintained and developed and that we are finishing what we started in this state so that we have the best infrastructure, combined with the best location in America, is something our administration strongly supports," he said. "I hope as people saw our budget, they saw a strong commitment to infrastructure."

His efforts to bring lawmakers around to his way of thinking, though, have been much bumpier than the roads he traveled in a red pickup truck for many campaign commercials.

Lawmakers tossed cold water on Pence's proposal even before he won election, saying the state had already committed to other tax cuts and that they weren't certain the still-fragile economy could support more. Instead, they said, the state needed to restore some of the cuts to education and transportation made under Daniels.

Pence began the session by digging in his heels, saying he would have his full income tax cut or nothing.

Local officials like Wiley and others have been able to bend the ears of state lawmakers with whom they have longstanding relationships. Pence, who spent the last 12 years in Congress, tried to work around that with an unorthodox, outside-the Statehouse lobbying strategy.

Of the 76 work days he's been in office, he's spent more than three dozen outside the Capitol, campaigning for his tax cut from Evansville to Gary. National Tea Party group Americans for Prosperity also chimed in with ads dubbing Indiana House Republicans spendthrifts because their budget spent $1 billion more than Pence's.

The efforts angered lawmakers. Tension that had been building between Pence and Republican House Speaker Brian Bosma since last summer finally boiled over at a Marion County Republican fundraiser last month.

Pence has since softened his stance, and lawmakers are now eyeing a mix of tax cuts in addition to more road funding in the two-year budget they're working on. There are still questions about whether that road money will be in the budget immediately, as lawmakers prefer, or at the end of the cycle.

Rep. Eric Turner, R-Cicero, acknowledged Pence and his staff have had a learning curve as they learn the ways of the General Assembly.

"We had already started by the time he took office, so it's probably taken the full General Assembly [session] for his staff to get acclimated to how the General Assembly works, and the give and take and all that," Turner said.

The only curve Brown County Highway Superintendent Claude "Smokey" Presseau cares about is the one on the roads that are at risk of being returned to gravel.

The popular tourist spot about an hour southeast of Indianapolis maintains 185 miles of gravel road and 185 miles of paved roads. Presseau said that balance could easily shift if he doesn't get more money.

Presseau and Wiley, the Henry County superintendent, say they've had to cut staff in recent years as funding dropped and the costs of oil, used in asphalt mixes, and health care have skyrocketed.

An October 2012 report from Purdue University's Local Technical Assistance Program showed state highway dollars sent to counties dropped from $250 million in the 2005 budget to $219 million by 2010.

Presseau, who didn't get any money in his budget last year for repaving, thinks there are priorities bigger than Pence's tax cut proposal.

"What's that going to mean for me? I'm going to get a check for what, $250 bucks? $28.50?" he asked. "Let's say I'm going to get $100. What am I going to do with that $100? If its $50, what am I going to do with it? I'll have that spent, and you ask me one month from now what I spent it on, and I'll have no idea."