Indiana Senate Budget proposal as of April 8, 2021.
The Hoosier State is flush with cash thanks to the American Rescue Plan enacted last month by the Democratic-controlled Congress and Democratic President Joe Biden.
But the Republican-controlled Indiana Senate is determined not to use the one-time federal funds to pay for, or create, ongoing state expenses, which resulted in Senate Republicans unveiling a state budget proposal Thursday that is oddly free-spending and parsimonious at the same time.
The two-year state spending plan crafted by state Sen. Ryan Mishler, R-Bremen, chairman of the Senate Appropriations Committee, allocates approximately $1 billion of the $3 billion Indiana is due to receive through the American Rescue Plan.
Of particular interest to Northwest Indiana is $1.2 million that will go toward evaluating the feasibility of turning Gary's Buffington Harbor on Lake Michigan into an intermodal facility, given its links to nearby water, rail, highway and air transportation, along with the availability of the site following the April 18 closure of the Majestic Star Casino.
The Senate GOP budget also directs American Rescue Plan funds to broadband internet expansion ($250 million), regional business development ($150 million), mental health services ($100 million), water and wastewater system improvements ($100 million), career training programs ($75 million), health improvement grants ($50 million), and state and local police body cameras ($25 million), among other projects.
Mishler said he expects more, but not all, of the federal funds will be designated for additional state needs prior to April 21 as the Republican-controlled House and Senate work to finalize a compromise budget proposal to send to Republican Gov. Eric Holcomb to be signed into law.
"Hey, I only had a couple weeks. I can't spend $3 billion in two weeks," Mishler said. "But I don't think we should spend it all because we still don't know what's ahead."
Notably, no Republican representing Indiana in Congress voted in favor of the American Rescue Plan, including U.S. Sens. Todd Young and Mike Braun. Northwest Indiana U.S. Rep. Frank J. Mrvan, D-Highland, said he proudly voted yes on the proposal.
On the state-supported side of the ledger, funding for most state agencies and Indiana colleges and universities generally is due to return to pre-pandemic levels, with most new state spending focused on students in kindergarten through 12th grade.
In particular, the Senate Republican budget increases K-12 tuition support by a total of $408 million during the two-year budget period, a $92 million (or 1.2%) increase in 2022, and a $316 million (or 4.2%) increase in 2023.
Mishler said he expects the updated state revenue forecast set to be released April 15 will show Indiana is due to collect more tax revenue in 2023 compared to 2022, which is why there is a greater school funding boost in the second year of the budget.
Senate Republicans also appear to have listened to the numerous outraged school district leaders and Hoosier teachers and opted to scale back the private school voucher expansion and education savings account program recommended by the House.
Mishler instead put some of that money toward a $196 million increase for special education over the two-year period, $150 million to remediate student learning loss due to the COVID-19 pandemic, and boosting support for English language learners by $5 million a year.
Other noteworthy spending items in the Senate version of House Bill 1001 include $70 million for capital improvements at the Indiana Law Enforcement Academy, a 1% cost-of-living adjustment for retired public employees, $400 million to pre-pay teacher pension obligations, $110 million to pay down state debt, and the creation of a $350 million capital reserve account that can be used, among other things, to improve the Westville Correctional Facility in LaPorte County.
The Senate budget also eliminates the 50-cents per pack cigarette tax increase approved by the House, though it adds new taxes on vaping liquids and supplies.
Mishler said even with all the spending, Indiana still will have a budget reserve topping $2 billion at the June 30, 2023 end of the budget period.
State Sen. Eddie Melton, D-Gary, said it's clear Senate Republicans could have done more to increase public school funding and teacher pay in their budget proposal.
"We will continue to work and continue to fight for a more fair and equitable school funding formula," Melton said.
State Sen. Karen Tallian, D-Ogden Dunes, said GOP lawmakers also should take another look at hiking the cigarette tax by at least $1 per pack, as recommended by the Indiana Chamber of Commerce and numerous public health organizations to reduce Indiana's above average smoking rate.
All 50 senators will have the opportunity to propose amendments to the budget Monday, prior to a Senate vote scheduled for Tuesday on advancing the spending plan closer to becoming law.
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