Local leaders give chilly reaction to Pence’s proposed tax cut

Indiana's local leaders showed little enthusiasm Tuesday for Gov. Mike Pence's tax cut during their annual Statehouse rally, holding back applause as the governor spoke while they sought more money for roads.

Members of the Indiana Association of Cities and Towns applauded Pence's Statehouse speech when he talked about economic development and technology training. But when he turned to the tax cut, only one person clapped.

"That's why I'm advocating we lower the income tax, across the board by 10 percent, for every Hoosier in the city and on the farm, on a permanent basis," Pence said to almost complete silence. He followed by saying. "I know we might have some disagreement on this from some in this organization, apparently not all."

Pence has stretched his campaign for the tax cut from last year's run for governor through this year's session, his first in the governor's office. But he has had little success, so far, winning support from Republican leaders in the Indiana General Assembly.

Local leaders have emerged as the staunchest opponents of the tax cut, saying the money would be better spent on much-needed road repairs.

The state is facing a local road funding gap of more than $200 million per year. House lawmakers rewrote Pence's budget last month to exclude the tax cut and spend $250 million more annually on local roads.

"I know what he position of the association is on our tax cut proposal, but I wanted to make the case that I see permanent income tax relief as a part of a larger strategy for economic development. And I appreciated the respectful hearing today," Pence said after the speech, when asked about the lone person to applaud his tax cut.

The trade group representing Indiana's municipalities has not taken a formal position against the tax cut, said Matt Greller, its executive director, but the last decade has been hard for local leaders, who saw their budgets squeezed by property tax caps and stagnant state aid. Pence's proposal to divert $347 million to a transportation fund by the middle of 2015 is a good start, but not enough, he said.

"I think it's the best step in the right direction that we've seen in the last 10 years," Greller said. "Is it enough? Of course not."