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January 9, 2013

BRADNER: Will Pence find budget negotiation too taxing?

(Continued)

INDIANAPOLIS — Political survival

Republicans saw State Superintendent of Public Instruction Tony Bennett defeated in November because of backlash to an education reform agenda that they’d passed for him.

Because of the recession, they’ve been denying schools much in the way of funding increases for four straight years, and they know that loosening up the purse strings a bit might help ease tensions with teachers who don’t earn much in the first place and have been burdened with a number of new obligations in recent years.

House Speaker Brian Bosma, R-Indianapolis, has said he’d like to see teachers get pay raises. That means the state would have to spend more of its budget on education. Since K-12 education already accounts for about 55 percent of all state spending, that’s a key area to watch.

Regionalism

Southwestern Indiana’s delegation knows the state needs money to finish Interstate 69 without tolls, so those lawmakers will take transportation funding issues seriously.

But that’s just one example — every area has something like a public university or a major roadway in need of improvements, and lawmakers from those areas have things they want more than a 10 percent income tax cut. It all takes money.

Power

Outgoing Gov. Mitch Daniels has enjoyed sky-high approval ratings, and with that comes the political capital to force the Legislature to meet his will.

But a fact of life is lawmakers outlast governors.

Republicans in the Legislature are, to some extent, tired of being the second-most important branch of government in Indiana. They agreed to put a number of goals on the back burner through the recession, but that won’t last forever. As a six-term congressman, Pence will understand this better than most.

Pence is calling for the state’s income tax to be stepped down from 3.4 percent to 3.06 percent, and he wants it done over two years. What’s more likely is that for this budget session, lawmakers will give him a smaller income tax cut, and they’ll start it later.

It won’t be a terrible political blow for the new governor. He can rightly note Obama’s health care law will claim a chunk of the state’s new tax revenue, and he can point out that the latest revenue forecast projected growth in tax revenue that is slightly below what his campaign had expected. Still, it won’t be what he’d hoped for during the campaign.

How this issue plays out will be fascinating to watch because it will tell Hoosiers a great deal about the state’s new political dynamics in a post-Daniels era.

— Eric Bradner is the Statehouse reporter for the Evansville Courier & Press.

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