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Republican fiscal leaders in the Indiana House released a state budget plan late Friday that funds many of Gov. Mike Braun’s agenda items—including additional funding for private school vouchers—but doesn’t include several state tax cuts the new governor proposed.
The House GOP budget plan allocates $46.7 billion over two years, with K-12 education and Medicaid taking the largest slices of the pie, as expected. Growing Medicaid costs mean lawmakers have less money available for spending on other services than they’d hoped before the session began.
Braun lauded House Republicans for proposing “a strong budget that joins me in calling for universal school choice, increasing support for public safety and investing in rural Indiana and our workforce.”
The Republican plan is expected to be amended into House Bill 1001 at a 9 a.m. House Ways and Means Committee meeting on Monday. As introduced by Ways and Means Chairman Jeff Thompson, R-Lizton, that bill contained Braun’s first budget proposal, which included large investments in school vouchers and public safety and aimed to reign in spending by other government agencies.
Thompson said the plan from Republicans—who hold a supermajority in the House—reflects many of the governor’s priorities, with “some tweaks, of course.”
The House Ways and Means Committee is expected to approve the amended bill Monday, which will send it to the full House for possible amendments and a vote.
Democrats in the House said Friday that they intend to offer their own budget proposal on Tuesday. However, Democrats don’t have enough votes in the House to push ideas into House Bill 1001 without signficant Republican support—something that is highly unlikely.
If approved, the House GOP plan will move to the Republican-controlled Senate for consideration.
The House and Senate must come to agreement on the budget by the end of April or face a special session to do so.
Here are five takeaways from the House Republican plan.
Key economic development funding not renewed
The Indiana Economic Development Corp., the state’s job creation agency, would see a $2.2 million drop in funding along with a reshuffling of its funds and grants programs under the House Republican plan.
The largest spending cut is in an account used to incentivize and secure economic development deals. The state’s 2024-2025 biennial budget provided the IEDC with a $500 million deal-closing fund that could be used for incentives or infrastructure for key business deals. Neither Braun’s nor the House’s budget includes money for that fund.
“In terms of the large amounts that they have to buy land and those kind of things, that’s all been eliminated,” Thompson said. “We don’t have the funds to do that.”
The House Republican plan reinstates funding that Braun slashed in his budget for the 21st Century Research & Technology Fund and for Manufacturing Readiness Grants. It also brought back funding for another economic development fund, to incentivize direct flights and for the Industrial Development Grant Program.
The House budget would provide Braun’s soon-to-be-created Office of Entrepreneurship and Innovation with $1.75 million per year. A Braun-backed bill to establish that office focused on small businesses passed the House Tuesday.
The House plan provides $5 million annually to local sports and tourism leaders to spend through the Indiana Sports & Tourism Bid Fund. The money is used to persuade organizations to host their large events in Indiana. Braun’s budget had cut that funding to $1.5 million per year.
The Indiana Destination Development Corp., a tourism-related agency that Braun has moved under the commerce secretary, would have its funding cut from $20 million per year to $5.6 million under the House Republican plan. That’s the same amount Braun had proposed for the agency.
Boost for schools
House Republicans proposed to boost funding for K-12 education by $540 million over two years, an increase of 4.1% over 2025 schools funding. That’s the same funding proposed by Braun.
The increase incorporates Braun’s pledge to remove income limits from the state’s private school voucher program. The program is nearly universal now, allowing the children of parents who make less than $220,000 to qualify for vouchers. But Braun wants to make vouchers available to higher-income families as well.
House Republicans also made adjustments to Braun’s spending proposals for two student scholarship programs.
The Education Scholarship Account program, which supports education-related and tuition expenses for students who need special education services, would receive $15 million a year under the House Republican plan. That’s an increase of $5 million per year over the current budget but it’s less than the $25 million per year Braun had proposed.
The House plan also maintains funding for Career Scholarship Accounts program—a program created last year to help high school students offset expenses for apprenticeships and other work-based learning—at $15 million per year. Braun had proposed cutting the allocation to $11 million per year.
The House budget allocates $86 million per year to what’s called the “Freedom and Opportunity in Education.” That’s mroe than triple the $25.3 million per year that Braun had proposed. A House budget presentation said the money would be used by the state’s secretary of education to expand the flexibility and resources for innovative academic improvement initiatives.
Braun state tax cuts scrapped
House fiscal leaders dropped several of Braun’s proposed state tax cuts, including his plans to implement new income tax exemptions, remove the state income tax on tips, create tax holidays and reduce the tax on retirement income.
Thompson said Hoosiers will already see income tax relief under a previously passed law that is reducing the income tax rate over time. The tax rate in 2025 is 3% and is slated to decrease to 2.95% in 2026 and to 2.9% in 2027. A bill that recently passed the Senate would continue to decrease that tax through 2032.
Thompson said lawmakers are discussing “how would you do taxes in general” and he said “property taxes are a big discussion, and so it’s an ongoing discussion with the Senate.”
Last week, House Speaker Todd Huston hinted that the House might not endorse all of Braun’s proposed tax breaks when he said the House was going to be more cautious when crafting its budget.
The Braun administration had proposed enacting $265 million in state tax relief in 2026 and $431 million in 2027.
No new buildings for universities
The House Republican budget does not include money for new university buildings but does fund deferred maintenance projects at the schools.
“There are a lot of dollars for maintenance,” Thompson said, noting that schools need to focus on existing buildings. “We’ve put a lot of dollars into taking care of those facilities.”
Indiana University would receive $44 million over the biennium for maintenance, Purdue University would receive $37.2 million and Ivy Tech Community College would receive $9 million.
The allotments are far below each university’s request for project funding.
The State Budget Committee in November and the House Ways And Means Committee in January heard from the leaders of the state’s public universities about what they want to see funded in the budget.
Several schools asked for a long wish list of capital projects, but university officials ultimately listed pricy repair and rehabilitation projects as their top priorities. Two university presidents—Indiana University’s Pamela Whitten and Ivy Tech’s Sue Ellspermann—pushed lawmakers in November to allow funding for more capital projects.
Child care waitlist would remain
Waitlists for state child care programs would remain under the House budget.
Braun proposed a $362 million additional investment in child care services—focused on the Child Care Development Fund—to eliminate the waiting list for services. But House Republicans instead included $155 million to ensure families that currently receive services through the Child Care Development Fund program would continue to do so. That’s not enough to provide services to those on the waiting list.
Late last year, the Family and Social Services Administration announced waitlists for the Child Care Development Fund and On My Way Pre-K, which provide vouchers for low-income families to access child care and preschool. The programs serve about 80,000 kids, but the number of applications are growing annually, according to The Indianapolis Star.
House Republicans also chose not to adopt Braun’s plan to provide $2 million per year for a local child care assistance program.
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