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As a subscriber you can listen to articles at work, in the car, or while you work out. Subscribe NowGov. Eric Holcomb’s $33.8 billion two-year budget proposal includes extra money for priorities such as the Indiana Department of Child Services and K-12 education, and still has a surplus.
The budget, which Office of Management and Budget Director Micah Vincent presented to the State Budget Committee on Thursday morning, includes an additional $286 million per year for DCS, covers increases in Medicaid costs, and hikes K-12 spending by 2 percent each year. The two-year budget covers fiscal year 2020, which begins July 1, and fiscal year 2021.
“I think this is a really good start that reflects the governor’s priorities,” Vincent said.
Key budget-writing Republican lawmakers had previously indicated that the state would barely have enough new revenue to cover its additional expenses in fiscal year 2020 and would overspend in fiscal year 2021, but those numbers didn’t account for the extra revenue the state gained between the forecast in December 2017 and the updated forecast in December 2018.
That means the state’s general fund, essentially its main checking account, will actually have more than $1 billion in new revenue over the course of the two-year period, or biennium.
“That helps tremendously,” Senate Appropriations Chairman Ryan Mishler said.
Also helping the budget is the fact that Medicaid is only expected to cost the state an additional $84 million in fiscal year 2020, rather than the $122 million that was forecast earlier. That’s because the state had appropriated extra dollars for Medicaid that weren’t spent in the last budget.
In addition to the new dollars needed for Medicaid in fiscal year 2020, the state expects to need $123.1 million in extra revenue for Medicaid in fiscal year 2021.
The increase in K-12 funding accounts for an additional $143 million in fiscal year 2020 and another $146 million in fiscal year 2021. But that extra money is not required to go to teacher paychecks.
“That's an increase that goes to school corporations,” Vincent said. “As they work with their teachers, we would be hopeful and expectant that we see increases for teachers through that.”
Sen. Karen Tallian, D-Portage, said she doesn’t think the increase in K-12 is enough, because it’s not even at the rate of inflation, which is slightly above 2 percent.
“By only doing 2 percent, schools are getting behind,” Tallian said.
Republican Rep. Todd Huston, who is co-chairing the House Ways and Means Committee, said the percentage increase and whether it’s enough is something lawmakers will discuss over the next six weeks.
Holcomb is eliminating the teacher appreciation grants, and instead redirecting the $30 million that went into that program—$10 million will go toward an increase in funding available for a tax credit for teachers who spend their own money to purchase school supplies and $20 million will be added to tuition support, on top of the 2 percent increase for K-12.
The budget also includes $14 million per year for school safety.
Overall, the budget proposal calls for spending $16.76 billion in fiscal year 2020 and $17.11 billion in fiscal year 2021. That would generate a surplus of $45.6 million in fiscal year 2020 and $95.8 million in 2021.
The governor is hoping to keep 11 percent in a reserve fund, which would be about $1.8 billion.
One thing that isn’t in the budget is support for the Hoosier State Line, the passenger train that runs four times per week between Chicago and Indianapolis. The route is operated by Amtrak, but the state had provided a $3 million annual subsidy for it.
“It still had a hard time gaining traction in terms of increasing ridership,” Vincent said. “For that to be a continued priority for the state, we’d be looking for a more significant increase in ridership.”
The budget also does not include extra funding for the Indianapolis Capital Improvement Board of Managers, although a bill separate from the budget is expected to be filed that would generate more funding for the agency. The CIB, with support from the city of Indianapolis, is expected to ask for at least an additional $8 million per year to help fund future sports and tourism needs.
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