Pence seeks tax cut; Gregg equal pay for women

Republican gubernatorial candidate Mike Pence proposed a fiscal plan Tuesday that would cut income taxes while locking in tight spending levels set by Gov. Mitch Daniels and state lawmakers during the recession.

Pence estimates the measure would cost the state roughly $533 million a year and eat up much of an assumed cash surplus over the next two years. Pence added that the additional money from the surplus should be banked in the state's savings.

"I think the next governor of Indiana has to say no to government and yes to taxpayers," Pence said Tuesday, after detailing his proposal in a speech to the Indianapolis Chamber of Commerce.

Tax cuts have long been talked about in the governor's race. Democrat John Gregg's first detailed proposal, released in April, called for eliminating the state's sales tax on gasoline, which is levied in addition to the state's gas tax. Gregg later called for eliminating the corporate income tax on businesses physically headquartered in Indiana.

"We've been talking about tax cuts for months so we're happy to see the congressman has joined us," Gregg said on a conference call with reporters Tuesday.

Earlier in the day, Gregg said he would promote equal pay for women by honoring businesses that pay equally with a designation from the state, create new opportunities for those businesses and establish a hotline to report suspected pay discrimination.

Libertarian candidate Rupert Boneham plans to release his tax plan "in the coming weeks," said campaign manager Evan McMahon.

"Rupert's plan will do more than save the average Hoosier worker $2-4 a week, Pence's plan won't even get you a weekly $5 foot-long (sandwich) for lunch," McMahon said.

Any of the candidates' proposals to cut taxes next year would build off of the state's cash reserves, estimated at $2.2 billion, and an expected surplus of roughly $500 million a year. The state already returns a certain portion of cash reserves to taxpayers and to the state teacher pension fund to pay down unfunded liabilities, but Pence's plan would overtake both those measures.

Conservative governors in Oklahoma and Kansas have struggled to push more income tax cut through their statehouses. Oklahoma Gov. Mary Fallin attempted without success to eliminate the state's income tax, while Kansas Gov. Sam Brownback won a rollback of the income tax but could not find the votes to approve the series of tax maneuvers he said would pay for the cut.

Additional pressure will be on Indiana lawmakers to restore education cuts made during the recession to the next biennial budget and find new ways to pay for transportation projects as money from Daniels' leasing of the Indiana Toll Road dwindles.

"Clearly, we've got a problem of funding our transportation maintenance budget. And Indiana being the crossroads of America, that's pretty critical thing to keep funded," said Senate budget leader Luke Kenley, R-Noblesville.

Kenley questioned the Pence campaign's estimate that the state will continue to see a budget surplus over the next few years. He noted that surpluses and deficits are fleeting and can disappear depending on how the economy performs.

The Pence campaign built its estimates assuming Indiana's tax collections improve by 2.5 percent each year, while they assume spending would increase by 1.5 percent annually.

State budget leaders are scheduled in December to get a set of new economic forecasts, which will be the starting point for writing Indiana's next budget.