News From Terre Haute, Indiana

Local & Bistate

Discussion

Welcome to our online comments feature. We welcome your thoughts and your opinions, including unpopular ones. We ask only that you keep the conversation civil and clean. We reserve the right to remove comments that are obscene, racist or abusive and statements that are false or unverifiable as well as posts that are attacking other users. Repeat offenders will be blocked. You may flag objectionable comments for review by a moderator.
comments powered by Disqus
February 18, 2013

STATE OF THE STATEHOUSE: What to do with that $2 billion sitting around

Maureen Hayden CNHI

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. Typical middle-income Indiana residents would see their 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, because their state 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 one of four 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 that 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 that GOP House leaders rolled out this month 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 the politics are likely not so entertaining for many Hoosiers, living in a state with an unemployment rate higher than the national average, and who are still hoping for something good to jolt the economy.



Maureen Hayden covers the Statehouse for CNHI, the Tribune-Star’s parent company. She can be reached at maureen.hayden@indianamediagroup.com.

 

Text Only | Photo Reprints
Local & Bistate
Latest News
Community Calendar
Loading…
Events by eviesays.com
TribStar.com Poll
AP Video
Raw: Trucker Bumps I-5 Bridge Before Collapse Mayor: Person Killed in San Antonio Flooding Raw: Train Derails After Overpass Collapse Raw: Apple 1 Computer Sells for More Than $650k Raw: French Soldier Stabbed in Throat Near Paris Raw: Rescues From San Antonio Flooding High Wire Spectacle Thrills Crowd in Austria Suspect in Killing of Officer Found Dead in Cell Raw: Texas Deputy Shot by Colo. Suspect Honored Major Detours Following Wash. Bridge Collapse American Held in Grisly Czech Murders Raw: Jersey Shore Reopens for Summer Raw: Gay Rights Activists March in Ukraine Bus Fire Kills 16 Children, Teacher in Pakistan Hagel Urges Cadets to End Scourge of Sex Assault Raw Video: Washington State Bridge Collapse Today in History May 25 UK-bound Pakistan Plane Diverted, 2 Men Arrested New Wheelchair Lift Promises More Access Officials: Tsarnaev Friend Linked to Slaying
NDN Video
Massive Flooding in San Antonio Area; Rescue Efforts Underway Hope For The Boy Who Can't Smile Raw: Apple 1 Computer Sells for More Than $650k Young protestor goes viral on Youtube High Wire Spectacle Thrills Crowd in Austria Toronto Mayor says he's not a crack head Maine island offers lighthouse getaway Suspect in Killing of Officer Found Dead in Cell Should We Prepare for Quakes? Lynn Kindergarten Class Rescues Ducklings Congressional gold medal awarded to civil rights heroes Charles Ramsey visits Kentucky Unique Display Greets Guests At Revel Casino Cape Cod Train Service Worries Residents BASE jumper rides snowmobile off cliff to honor dead friend Bridge Collapse Survivor: 'Rough Day' SHOCKING: School Guard Throws Girl Down Stairs Star Wars X-Wing Star Fighter Made of Legos Actress Amanda Bynes Arrested in New York Singer Psy Has An Imposter
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.
  • -

     

    March 12, 2010

activity
Real Estate News