House Republicans focus on child services, education in two-year, $34.6B budget

Indiana House Republicans have revealed their $34.6 billion two-year budget proposal, which largely aligns with Gov. Eric Holcomb’s priorities but boosts spending on K-12 schools slightly more.

The budget, which covers the biennium beginning that begins July 1, includes the additional $286 million per year requested by the Indiana Department of Child Services, covers increases in Medicaid costs, and hikes K-12 spending by 2.1 percent in fiscal year 2020 and 2.2 percent in 2021, which is slightly higher than the 2 percent annual increase suggested by Holcomb.

The increase in K-12 funding accounts for an additional $150 million in fiscal year 2020 and another $160 million in fiscal year 2021.

It also includes Holcomb’s request to spend $150 million in surplus funds to pay off a teacher pension liability that schools have been gradually paying down. The one-time payment is expected to save schools $70 million per year.

None of the extra money is required to go to teacher paychecks, although that's what Holcomb and House Republicans are recommending.

The budget would have a surplus of about $63 million—or 11.6 percent—in fiscal year 2020 and $55 million—or 11.2 percent in fiscal year 2021.

House Speaker Brian Bosma has said he believes reserves should stay between 10 percent and 12 percent.

“Indiana ranks among the top states in the nation for its fiscal stability and that’s a result of years of strong leadership,” Bosma said in a prepared statement. “We plan to continue this trajectory with our conservative budget proposal that structurally balanced and protects our coveted AAA credit rating while still funding our state’s critical priorities.”

One noticeable departure from Holcomb’s budget is that House Republicans chose to maintain a $30 million line item for teacher appreciation grants. Holcomb had recommended redirecting the money—$10 million to increase funding available for a tax credit for teachers who spend their own money to purchase school supplies and $20 million more for basic school funding, on top of the proposed 2 percent increase for K-12.

The GOP budget proposal also includes $20 million per year for local water infrastructure improvements, which House Republicans say could be used to leverage up to $2.1 billion in capital funding. A bill outlining the program passed the House on Monday.

On workforce development funding, House Republicans followed Holcomb’s lead and doubled funding for Workforce Ready Grants from $2 million per year to $4 million per year and doubled funding for the Next Level Employer Training Grants from $10 million per year to $20 million per year.

The Workforce Ready programs provide financial aid to adults in 18-credit-hour technical certificate programs for high-demand industries at Ivy Tech Community College and Vincennes University or in an industry-specific certificate program that meets certain requirements.

The Next Level Employer Training Grants give companies up to $5,000 per employee (with a total maximum award of $50,000) to train new workers. About 400 companies received grants in 2018, training 6,440 employees.

One thing that isn’t in the budget, nor was it in Holcomb’s proposal, 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.

While the budget does factor in a small increase in revenue from the proposed tax on the liquid in e-cigarettes, it does not account for an increase in the tobacco cigarette tax. 

The budget does not include a proposed increase in funding for the Capital Improvement Board of Managers in Indianapolis or an increase in gambling revenue proposed in separate legislation. Both of those bills are working through the Indiana Senate and could be added into the budget once it goes to that chamber.

The House Ways and Means Committee is scheduled to discuss the budget at an 8:30 a.m. meeting on Tuesday.