INDIANAPOLIS (AP) — “The fiscal fog is thick” has become a favorite line for
Republican House Speaker Brian Bosma heading into the next session of the
General Assembly, and with good reason.
State tax collections — the lifeblood of the budget and everything from
road-paving to classroom sizes — could remain stagnant as the state
continues to crawl out of the recession.
Pent-up demands from groups and agencies cut over the last four years are
already meeting with intense skepticism from lead budget-writers. And money
from Indiana’s expansive gambling industry, the third-largest source of
money for the state, is dropping amid competition from neighboring states,
which have legalized gambling as a means to patch their own budget holes.
Senate President Pro Tem David Long wryly noted last week that the best tax
dollars are another state’s tax dollars, pointing out that Indiana had
feasted on gambling profits from residents of Michigan, Ohio, Illinois and
Kentucky for two decades now. But that feast is almost at an end.
Now Ohio has built four casinos near the Indiana state line and Illinois is
poised to add one more near Chicago to draw business from northwest Indiana.
That makes it less likely those tax dollars will cross the state line.
Even though lawmakers and governor-elect Mike Pence come into 2013 with a
state flush with cash reserves worth an estimated $2 billion, they’re facing
programs starved for support — including the Department of Child Services,
which told lawmakers it has trouble holding caseworkers because of low
salaries — and a continued economic drag.
Indiana’s university presidents heard the bad news from Senate
Appropriations Chairman Luke Kenley, who said that tax collections could
grow by a paltry 1.5 percent over the next year, leaving lawmakers with
little wiggle room when they write the next biennial budget.
And to the extent anything is available, Gov. Mitch Daniels’ administration
put the kibosh on any state agencies trying to jump up and grab it in a July
27 letter to state agency heads.
Departing budget director Adam Horst’s budget-drafting orders to state
agencies this summer included two significant requirements: Any request to
raise the ceiling on spending must first be approved by his office before
being formally submitted, and cuts ordered by Daniels in the current budget
represent the new “baseline,” or floor.
“It remains the top priority of this administration to continue to protect
Hoosier taxpayers by spending within our means, by addressing our challenges
without borrowing from the future or using other reckless gimmicks, and by
ensuring that Hoosier families and businesses keep as much of their hard
earned income as possible through low taxation,” Horst wrote, outlining how
the department heads would submit the documents that are ultimately
collected into the state budget presented to lawmakers.
Newly appointed House Ways and Means Chairman Tim Brown, a Crawfordsville
physician tapped by Bosma earlier this month for his expertise on health
policy, said he’ll be waiting to see the December revenue estimates laid out
by legislative and state budget staff before worrying one way or another.
The dwindling pool of gambling money is not surprising, however, he said.
Add to this mix cuts in the corporate income tax and a phase-out of the
state’s inheritance tax and apprehension about Pence’s call for a 10 percent
cut in the personal income tax — which comes with a roughly $500 million
price tag — among top Republican lawmakers becomes understandable.
Bosma, who has cautioned that the Pence proposal might not make it through
his chamber, pointed out that Indiana has increasingly relied on the sales
tax to hold the budget aloft. “So that is not a balanced approach and, as
some of our other taxes — gaming, income — take additional hits or proposals
for additional cuts, that throws that even further (out of balance.) So (it
has to be a) balanced approach, it has to be sustainable and conservative,”
Bosma said.
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