Kokomo Tribune; Kokomo, Indiana

Columns

February 19, 2013

HAYDEN: The fight over Ind. surplus

— INDIANAPOLIS — We Hoosiers like to think of ourselves as special, but when it comes to the current debate in the Indiana Statehouse over the budget, we’re a lot like other states: Grappling with some post-recession questions about how to balance spending and taxes.

The struggle unfolding in the Statehouse has to do with the state’s $2 billion surplus and two distinctly different views about what to do with it.

The stash of cash follows lean years brought on by the 2008 recession, when Indiana — like many other states — saw deep drops in tax revenues and subsequent deep cuts in state spending on education and other public services.

Slowly but steadily, those tax collections have been rising as Indiana and other states get back on their feet.

It’s good news, but here’s the dilemma that it’s led to: Should we restore those lost dollars to schools and other public services or use the surplus to lower taxes and lock in those cuts made under economic duress? States across the nation, from Connecticut to California, have been wrestling with the same issue.

Republican Gov. Mike Pence is committed in large part to the latter. His No. 1 campaign promise last year was to lower the personal income tax rate in Indiana from 3.4 percent to 3.06 percent.

The sound of a tax cut has Pavlovian appeal: It triggers a reflexive positive response. But the reality isn’t that impressive. A typical middle-income Indiana resident would see her state tax obligation drop about $100; the poorest 20 percent of Hoosiers would see a tax cut of $18 or less. The richest 1 percent of Hoosiers might like it, since their taxes would be cut by about $2,200.

Yet a good chunk of those dollars would likely end up not in Hoosier pockets but in the federal Treasury.

Why? Because 1 of 4 Indiana taxpayers claims itemized deductions on their federal tax returns, and can write off the state and local income tax payments they make. By lowering their state tax bill, the Pence tax rate cut would raise their federal tax bill.

The Pence tax rate cut would take more than $770 million out of state revenues over the next two years.  

That’s money the fiscally conservative Republican leaders in the House want to spend making what they call “strategic investments” to bolster the Indiana economy.

The budget plan GOP House leaders rolled out last Friday would direct most of those dollars back to local schools and state universities that took a hit in the budget-cutting years and back to local municipalities for repair of their crumbling roads and bridges.

The Republicans who control the Statehouse are having an interesting intra-party fight and so far, Pence seems to be on the losing side. The Republican budget-makers in the Senate seem as unconvinced of the merits of the Pence tax rate cut plan as their brethren in the House.

The Statehouse politics of it are intriguing, especially since Pence’s possible presidential aspirations are thrown into the mix. But likely not so entertaining for many Hoosiers, living in a state with an unemployment rate higher than the national average, who are still hoping and praying for something good to jolt the economy.

Maureen Hayden covers the Statehouse for CNHI newspapers in Indiana, including the Kokomo Tribune. She can be reached at maureen.hayden@indianamediagroup.com.

1
Text Only | Photo Reprints
Columns
  • MAUREEN HAYDEN: Expiring term heightens urgency of legislator's mission State Rep. Rebecca Kubacki had plans for her return to the General Assembly next January.The two-term Republican from Kosciusko County wanted to exert “full force” to roll back a law that prevents the children of undocumented immigrants from paying i

    July 23, 2014

  • CECIL BOHANON: Spend down surplus? Been there, done that Back in 1998, the state of Indiana had more than $1.3 billion in surplus funds in its general account. This was about 57 days of state spending. The state had total surplus funds of more than $2 billion that was over 24 percent of its annual operatin

    July 23, 2014

  • MAUREEN HAYDEN: Expiring term heightens urgency of legislator's mission State Rep. Rebecca Kubacki had plans for her return to the General Assembly next January.The two-term Republican from Kosciusko County wanted to exert “full force” to roll back a law that prevents the children of undocumented immigrants from paying i

    July 22, 2014

  • TOM LoBIANCO: Indiana Democrats deal with divide on education On the face of it, the battles between Democratic Schools Superintendent Glenda Ritz and supporters and staff of Republican Gov. Mike Pence have been a unifying force for Indiana Democrats. But the scrapping has exposed a deep rift within the party o

    July 22, 2014

  • BRIAN HOWEY: Is Evan Bayh contemplating another gubernatorial run? This could be the saga of “LeBron Bayh.”Like a thunderhead brewing in the distance, you could see this one coming. This was the progression: former state Democratic Chairman Dan Parker announces he will not become a candidate for mayor of Indianapoli

    July 21, 2014

  • DICK WOLFSIE: Please go away already My wife is planning our summer vacation, which we will take in the fall. We took our spring vacation this summer. We got behind in 1984 and still haven't caught up. I don't have much input into the planning of these trips, but Mary Ellen did assign m

    July 21, 2014

  • ED VASICEK: Internet, and future of communication One morning, I was chatting with some retired folks and the subject of paying bills on the Internet came up. One woman said she disposed of her computer years ago and pays her bills by mail. I commented she could get by just fine doing that. The othe

    July 20, 2014

  • FAITH BRAUTIGAM: Learning from others' mistakes through literature If you’ve ever been locked out of somewhere — your home, your car, your workplace — I expect you could tell me all the details of the incident, even if it was years or decades ago. Why? Our brains remember major events, and it’s a big deal to be stra

    July 20, 2014

  • RAY DAY: We need to get tough Last year I said I was going to quit trying to do anything about the shooting off of fireworks in the neighborhoods. But as anyone who knows me can say, I don't give up on things that are of utmost danger. Here it was, a week before the Fourth of Jul

    July 19, 2014

  • LEE HAMILTON: Is this country doomed to ceaseless polarization? We Americans are trapped in a political dilemma. We all like representative democracy, but we don't much like the way it's performing. The reason for this dissatisfaction is clear. Polls in recent years detail a polarized nation, divided both ideolog

    July 18, 2014

Latest news
Featured Ads
Only on our website
AP Video
Judge Ponders Overturning Colo. Gay Marriage Ban Airlines Halt Travel to Israel Amid Violence NYPD Chief Calls for 'use of Force' Retraining VA Nominee McDonald Goes Before Congress Bush: Don't Worry, Sugarland Isn't Breaking Up US Official: Most Migrant Children to Be Removed Police Probing Brooklyn Bridge Flag Switch CDC Head Concerned About a Post-antibiotic Era Raw: First Lady Says `Drink Up' More Water Courts Conflicted Over Healthcare Law Holder Urges Bipartisanship on Immigration Raw: Truck, Train Crash Leads to Fireball US Airlines Cancel Israel Flights Obama Signs Workforce Training Law Crash Victims' Remains Reach Ukraine-held City Diplomatic Push Intensifies to End War in Gaza Cat Fans Lap Up Feline Film Festival Michigan Plant's Goal: Flower and Die Veteran Creates Job During High Unemployment
Parade
Magazine

Click HERE to read all your Parade favorites including Hollywood Wire, Celebrity interviews and photo galleries, Food recipes and cooking tips, Games and lots more.
Obituaries
Poll
Kelly Lafferty's video on Tom Miller