The Republican-controlled Indiana House on Monday passed a $36.3 billion two-year budget mostly along party lines.

The budget, which would take effect in July and still needs Senate approval, would make a handful of one-time investments in small businesses, regional projects, student learning loss, health initiatives, broadband and police training, and it would significantly increase funding for the private school voucher program.

House Bill 1001, authored by Rep. Tim Brown, R-Crawfordsville, includes $150 million for a learning loss grant program, $30 million for a small business grant program, $50 million for a health grant program and $150 million for the regional collaboration program that Gov. Eric Holcomb pitched during his State of the State address this year.

It also includes $70 million to pay for upgrades at the Indiana Law Enforcement Academy in Plainfield and $250 million to expand broadband internet access through the Next Level Broadband Grant Program.

The House passed the spending plan 65-30 on Monday evening. Two Republicans—Rep. John Jacob of Indianapolis and Rep. Curt Nisly of Milford—voted against it.

For K-12 funding, the budget increases the allocation by 1.25% during the first year and 2.5% in the second year, for a total of $378 million in new dollars over the biennium. But more than one-third of that increase would be dedicated to expanding the state’s school voucher program, which uses public dollars to pay private school tuition. That program’s cost would go from about $174 million this school year to $256 million in two years.

Republicans have repeatedly said they fund children, not schools, and have touted their proposal as giving parents more choices about how to educate their children. Democrats and other opponents have argued that it further drains funding from traditional school districts while they are struggling to find ways to boost the state’s lagging teacher pay.

The budget does not address any of the recommendations from the governor’s Teacher Compensation Commission’s report, which recently concluded that $600 million would be needed to address the pay shortfall for Indiana educators.

For higher education, the budget restores a 7% cut Holcomb ordered for colleges and universities in fiscal year 2021 to adjust for revenue shortfalls caused by the pandemic. Then it holds university funding flat in fiscal year 2022 and increases it by 2% in fiscal year 2023. No capital projects are included in the budget currently.

The budget plan is projected to leave the state with a surplus of $130 million in fiscal 2022 and $227 million in fiscal year 2023. Reserves would be at 11.9% of spending in fiscal year 2022 and 11.7% in fiscal year 2023, which means the state would have about $2 billion set aside.

The budget also includes a cigarette tax increase, but it’s only a fraction of the amount advocates had sought.

The cigarette tax would increase from $1 to $1.50 and a 10% retail tax would be imposed on e-cigarettes and e-liquids. A different bill considered this year would have increased the cigarette tax to $2. Advocates for the tax increase argued that $2 didn’t go far enough and have pushed to raise it to $3.

State lawmakers have not increased the cigarette tax since 2007.

Brown said he’s proud Indiana is in such a strong fiscal position despite the COVID-19 pandemic.

“We’ve come through a lot,” Brown said. “A year ago I didn’t think we would be in this place.”

Last week, House Republicans rejected nearly two dozen amendments to the budget proposed by Democrats, including one that would have established a work share program within Indiana’s unemployment system, one that would have increased funding for food banks and another that would have dedicated $500,000 in grant funding for minority- and women-owned businesses.

The House Ways and Means Committee’s ranking minority member, Rep. Greg Porter, D-Indianapolis, said there are parts of the budget he supports, such as the $150 million for a regional collaboration program. But he said the plan still doesn’t provide enough funding for the state’s human infrastructure.

“We could do a lot better,” Porter said.

Rep. Ed DeLaney, D-Indianapolis, criticized Republicans for crafting a budget without any vision or support to fix some of the state’s problems, such as teacher pay and the overall health of Hoosiers.

“You’ve got the supermajority,” DeLaney said. “Do something with it, other than pat yourself on the back.”

The budget moves to the Senate for further amendments.

The Associated Press contributed to this report.

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