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Hoosier lawmakers are headed back to the Statehouse next month for a special legislative session focused on returning a portion of the state’s record-high tax collections to Indiana residents.

However, much more may be on the agenda, especially if the U.S. Supreme Court in coming days authorizes states to further restrict or outright prohibit access to abortion.

Gov. Eric Holcomb on Wednesday issued an official proclamation directing the General Assembly to convene July 6 “in order to consider and address the current adverse economic conditions,” including rising inflation and abnormal price increases.

The Republican chief executive, in accordance with the provisions of the Indiana Constitution, said in his opinion “the public welfare” requires the Legislature to meet, even though state lawmakers previously adjourned for the year March 9.

Holcomb is urging legislators to spend $1 billion from Indiana’s unprecedented $6 billion budget reserve to provide Hoosier taxpayers a refund of $225 each, on top of the $125 per person automatic taxpayer refund already being distributed because the state’s reserves topped $2 billion at the June 30, 2021, end of Indiana’s prior budget year.

Under the plan, Hoosier taxpayers who received an electronic deposit of $125 would get a second deposit of $225, for a total of $350. Hoosiers still waiting for a paper check with their original taxpayer refund instead would be sent a single check for $350, or $700 for married couples, in August — a few weeks before voting begins in the Nov. 8 general election.

“This is the fastest, fairest and most efficient way to return taxpayers' hard-earned money during a time of economic strain,” Holcomb said.

“Indiana’s economy is growing and with more than $1 billion of revenue over current projections, Hoosier taxpayers deserve to have their money responsibly returned. I’m happy to be able to take this first step and look forward to signing this plan into law as soon as possible.”

While the Constitution allows only the governor to call a special legislative session, once state lawmakers have convened all decisions about the length of the session and the subjects eligible for action solely are in their hands.

That means it’s likely the Republican-controlled General Assembly will take up abortion legislation if given the go-ahead by the U.S. Supreme Court, since 100 GOP members of the House and Senate previously urged Holcomb to call an abortion special session for updating Indiana’s abortion restrictions following the high court ruling.

House Speaker Todd Huston, R-Fishers, seemed focused Wednesday only on sending excess state revenue back to the Hoosiers who generated it, primarily through sales tax and individual income tax payments.

"Our goal is to take action to provide inflation relief to Hoosier taxpayers as our state and nation continue to see the price of gas, and everyday goods and services climb to record heights. The state's strong fiscal health positions us to responsibly use the state's reserves to quickly return money back to taxpayers,” Huston said.

Ironically, two prominent economists, Micah Pollak of Indiana University Northwest and Michael Hicks of Ball State University, both have pointed out the state sending two rounds of checks totaling $1.5 billion to Hoosiers will lead to even more inflation because inflation is a result of too much money chasing too few goods.

Hicks said his modeling suggests the state payments will boost inflation for Hoosiers by 1.5%, and lengthen the period of price increases in the state by at least one year.

"Even if my estimates are off by half, this is simply a costly gimmick with no real benefits. A very costly gimmick,” Hicks said.

“By the end of next year, Hoosier schools will have fewer inflation-adjusted dollars per student than they had in 2010. The timing couldn’t possibly be worse for filling teaching jobs, so expect the return of the teacher shortage. This time it will be real.”

Holcomb shrugged off such concerns. He said Monday in Michigan City that inflation is due to federal monetary policy led by Democrats in Washington, D.C. In Indiana, Holcomb claimed responsible Republican leadership has made it possible to return a share of the state’s tax revenue to hardworking Hoosiers.

“That federal stimulus printed out of thin air added to the equation. This is apples and oranges when you consider it’s one state sending back a total of $350 to help pay expenses that are right now,” Holcomb said.

Hoosier Democrats, on the other hand, have pressed since March for a temporary suspension of Indiana’s gasoline tax (33 cents per gallon on July 1) and the state sales tax on gasoline (29.1 cents per gallon on July 1) to provide immediate and ongoing relief to Hoosier motorists.

Democratic President Joe Biden on Wednesday likewise called on Congress to suspend the 18.4 cents per gallon federal gas tax.

“If we suspend the state gas taxes, we’ll triple the savings for Hoosiers,” said House Democratic Leader Phil GiaQuinta, D-Fort Wayne. “It doesn’t hurt that suspending the gas tax keeps all the benefits here, unlike the automatic taxpayer refund. Why send more of our hard-earned money to Washington in the form of taxes on a refund rather than keeping all the savings in Hoosiers’ pockets?”

Democrats in Indiana say the state easily could use a portion of its budget reserve to replace the lost gasoline tax revenue and maintain current funding for road construction projects all while dropping the price at the pump by upwards of 60 cents per gallon.

“Holcomb should join the president by asking the General Assembly to pause the state gas tax that's reached historic highs, because his one-time check is a band-aid to a larger problem,” said Lauren Ganapini, Indiana Democratic Party executive director.
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