Gov. Mike Pence and Indiana’s Republican legislative leaders have reached a budget deal that increases spending on roads and schools while giving the governor a piece of the income tax cut he has arduously sought this session.
House and Senate leaders unveiled a budget plan Thursday that cuts the personal income tax 5 percent over the next four years and eliminates the inheritance tax. It spends roughly $330 million more on education over the next two years, increasing 2 percent in the first year of the budget and 1 percent in the second. It also increases spending on state and local roads by $400 million and invests another $400 million for major highway expansions over the biennium.
House Speaker Brian Bosma, R-Indianapolis, said his priorities had always been that the state’s budget be strong enough to avoid big spending cuts or the need for tax increases in the future.
“We believe this blend is the right blend, it’s at the right amount, it’s at the right time to be sustainable for the future,” Bosma said.
After months of taking a hard-line stance seeking a 10 percent tax cut, the budget deal marks a stark compromise for Pence and his supporters. The new plan gives him half the cut he was seeking and takes twice as long to take effect, but is also supplemented with other tax cuts he had not sought.
But Pence, Bosma and Senate President Pro Tem David Long, R-Fort Wayne, quickly rallied around their compromise plan Thursday.
“The combination of a 5 percent individual income tax cut, inheritance tax repeal and additional tax relief for businesses is the right tax relief at the right time and will give a much needed boost to working families, small businesses and family farms,” Pence said in a statement.
Democrats have criticized the overall push from Republicans to cut more taxes while not restoring all of the education spending cut in previous budgets. But Republicans greatly outnumber Democrats in both the House and Senate.