House GOP unveils state budget plan with fewer tax breaks than Braun's plan. How it differs

Yahoo

14-02-2025

Indiana House Republicans unveiled their state budget proposal Friday, one that's mostly in alignment with the proposal floated by new Gov. Mike Braun. Still, it nixes some tax cuts Braun proposed, such as an end to a tax on tips, and dedicates less money for state-funded pre-K.
Under the House proposal, Hoosiers would see some tax cuts, the restrictions removed on private school vouchers, and more investments for work-based learning, all as in Braun's proposal.
House budget writer Jeff Thompson, a Republican representative from Lizton, says he considers this proposal "really close in alignment" with Braun's.
"He's done a wonderful job in setting the framework for opportunity for Hoosiers and keeping a balanced budget, and so we'll continue discussions with him and the Senate," he told reporters Friday. "I think we've done a lot of things that's in his proposed budget. We've made some tweaks, of course, consulting with him, and look forward to working with him in the future."
Recap: Gov. Mike Braun proposes universal school choice, tax relief in first state budget
There remain some large unanswered questions, mostly having to do with Medicaid and the waitlists the cost crisis created ― questions that can't be resolved until lawmakers negotiate the final terms of a Senate Bill 2, the priority bill that could end up reducing Medicaid expenses.
The House budget increases K-12 tuition funding by about 2% each year, for an increase of $560 million over the biennium ― roughly the same as Braun's.
The two proposals contain the same $160 million-per-year allotment for school textbooks, but the House's proposal is to roll that money into the into the foundation of the tuition funding formula itself.
Both proposals also would make school choice universal, meaning any family of any income could use vouchers. Families of four with an annual income of $220,000 currently qualify. The Legislative Services Agency estimates this change would cost the state about $90 million a year, but those estimates are assuming the new users of the vouchers were already attending private school. In other words, the estimates are high-end.
One main difference between the House and Braun's proposals: Braun wanted to spend $362 million to eliminate the waitlist for child care vouchers ― a waitlist the Family and Social Services Administration re-implemented in December for those who qualify for money from the Child Care Development Fund and On My Way Pre-K program. The House proposes only allocating $155 million to keep families already receiving the benefit on the program, but does not eliminate the waitlist.
Braun proposed providing roughly $700 million in tax relief for Hoosiers through a long list of tax credits and tax holidays.
House Republicans are only keeping two of them: a tax credit for capital investments in rural areas, and a tax credit for employers who provide "upskilling" training for their workforce.
Braun's pitches that didn't make the cut include ending the tax on tips, phasing out retirement income taxes and implementing sales tax holidays for back-to-school and outdoor recreation items.
Thompson reiterated negotiations are ongoing on both the tax breaks included in the state budget, as well as property tax relief, which is more likely to impact local governments' bottom lines.
"We're looking at those in terms of how we do new taxes in general," he said. "Property taxes is a big discussion, and it's an ongoing discussion with the Senate, of course. Where we're going to land that, we're not sure at this point."
House Republicans added their own twist to relief for seniors, though: doubling the income tax deduction for low-income seniors from $500 to $1,000.
Already the individual income tax rate will decrease from 2.95% in 2026 to 2.9% in 2027, as was scheduled by lawmakers in a previous session.
One of Braun's main goals was to find 5% in cuts across all state agencies.
The House budget ends up appropriating nearly $900 million more over the biennium than Braun's proposal ― about 2% more ― and most of that is for two big agencies: the Department of Child Services and the Department of Corrections.
For these two agencies, Braun's proposal was based on some out-of-date spending figures, Thompson said.
"We're working with them to find those places," he said, referring to agencies that might not be able to cut 5%. "Other spots, we may well end up cutting more than 5%."
The House Committee on Ways and Means will debate this budget amendment Monday. Senate Republicans will still need to unveil their version of the budget before the end of the legislative session, so this latest proposal is far from a done deal.
Contact IndyStar state government and politics reporter Kayla Dwyer at [e-mail] or follow her on Twitter @kayla_dwyer17.
This article originally appeared on Indianapolis Star: Indiana House Republicans' budget aligns with Gov. Mike Braun, almost