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Chicago Tribune
24-04-2025
- Business
- Chicago Tribune
Indiana updated budget proposal includes $2 increase to cigarette tax
Republican leaders in the Senate and House and Gov. Mike Braun reached a decision on a final budget, which includes raising the cigarette tax by $2 a pack to help address a $2.4 billion deficit. Last week, legislators received a forecast that projected a $2 billion shortfall for the next budget cycle and an additional $400 million less available in the current budget cycle. After the forecast, budget architects Sen. Ryan Mishler, R-Mishawaka, and Rep. Jeff Thompson said 'everything is on the table' when it comes to budget cuts. Thompson, R-Lizton, said increasing 'sin taxes' — cigarette, alcohol and gaming — could be considered. In the updated budget report released Wednesday evening, it increases the cigarette tax by $2 per pack, which will bump up the overall cigarette tax to just under $3 per pack. The budget also increases the tax on closed system cartridges or pre-filled e-cigarettes, open system or refillable electronic cigarettes, moist snuff, alternative tobacco products and cigars. In regards to the cigar tax, the tax can't exceed $3 per cigar. Senate Democrats, who proposed amendments to the state budget to increase the cigarette tax by $2 a pack, said the increase would generate nearly $800 million in additional revenue. Approximately 61% of the tax revenues will go into the state general funds and approximately 39% will go toward Medicaid obligations. The updated budget included cuts to public health programs, higher education and economic development while total reserves decreased by three percentage points to 10%, according to the Indiana Capital Chronicle. Legislators don't get a pay increase, under the updated budget, and it requires a caseload study for the Indiana Department of Child Services as opposed to ending caps. The updated budget also reduced the 'Freedom and Opportunity' budget item that funds dropout prevention and other K-12 programming and the eligibility for On My Way Pre-K and subsidized child care, according to the Indiana Capital Chronicle. In Northwest Indiana, the updated budget terminates the compact of the Chicago-Gary Regional Airport Authority. 'Government is doing exactly what Hoosier families have to do. We're living within our means and tightening our belts. This budget reduces government spending while funding our most critical priorities and providing continued income tax relief for Hoosiers,' said House Speaker Todd Huston, R-Fishers, in a statement. The Indiana Senate Democrats released a statement after the updated budget was released stating that the state's $2.4 billion shortfall 'is the direct result of economic fallout tied to Washington's tariffs and trade instability that began in January.' The updated budget maintains the 2% increase in public school funding while expanding to universal vouchers in the second year of the budget, according to the statement, while public health is funded at $40 million while Braun promised $100 million for public health under the 'Make Indiana Healthy Again' plan. 'We all agree — we must balance the budget,' according to the statement. 'But we can't balance it on the backs of school kids, working families and aging parents and grandparents while the politically connected continue to benefit.' Indiana Senate Democrats offered three options for increasing revenue: Generating sustainable revenue, like regulating and taxing marijuana; controlling government spending, like reining in inflated administrative costs like six-figure cabinet salaries; and enacting no-cost reforms, like fully restoring public health funding and establishing a summer commission on tariff impacts. 'This is a defining moment for Indiana,' the caucus said. 'We can play politics with talking points – or we can face the truth and build a budget that actually works for the Hoosiers who sent us here.' The legislature is expected to vote on the budget Thursday. As of press time, the legislature had not discussed the budget.
Yahoo
24-04-2025
- Business
- Yahoo
Senate, House reach final budget compromise
Sen. Ryan Mishler, R-Mishawaka, details the final budget compromise while Gov. Mike Braun listens on April 23, 2025. (Whitney Downard/Indiana Capital Chronicle) Republican lawmakers in the Senate and the House appear to have reached a final budget compromise, as detailed in a late Wednesday afternoon press conference with Gov. Mike Braun. A dismal forecast last week projecting a $2 billion shortfall — with an additional $400 million less available in the current budget cycle — hampered Republican spending plans. Under the updated proposal, public health programs, economic development and higher education got bigger cuts and total reserves dropped about three percentage points from the Senate budget to just above 10%. Legislators also increased taxes on multiple forms of tobacco — not just cigarettes — in the final budget compromise. 'We're reducing government spending while funding our most critical priorities and providing tax relief for Hoosiers,' said House Speaker Todd Huston, pointing to continuing income tax cuts. 'We're in a good position to weather some potentially lean times because of our commitment to financial responsibility.' Senate Pro Tem Rodric Bray said that, similar to projected local government budget decreases under a property tax measure already signed into law, state government will also operate under a slim budget. 'We have asked local governments … to spend within their means and tighten their belts,' said the Martinsville Republican. 'We're doing exactly the same thing here.' Long-sought universal school choice vouchers will become reality in the second budget year at a cost of roughly $93 million. Currently, Indiana's vouchers are available to Hoosier earning 400% of the amount required for a student to qualify for the free or reduced-price lunch program, or roughly $220,000. An estimated 3.5% of families don't qualify under the current eligibility guidelines. Without the voucher expansion, K-12 will get $861 million dollars over the next two years, or a 2% increase annually when excluding curricular materials. Braun tied projected final woes to national economic uncertainty of the previous four years, though much of the market volatility has occurred since President Donald Trump took office in January. 'Sooner or later, those chickens come home to roost,' he said. Braun said he was 'the loudest voice' on the federal deficit during his term in Congress, which overlapped with Trump's first term and President Joe Biden. Cigarette taxes will increase by $2 to just under $3 a carton, with proportional increases for other forms of tobacco. Sen. Ryan Mishler, R-Mishawaka, said those funds will offset increases to Medicaid. Such growth will bring in nearly $800 million in cigarette taxes alone with another $50 million for other forms of tobacco. Tax increases are one of the most effective ways to curb cigarette use, which does contribute to the state's overall poor health metrics and Medicaid expenses. Extra budget provisions: A caseload study for the Indiana Department of Child Services rather than a repeal of caps Creates a delinquent tax amnesty program for Hoosiers who have an unpaid tax liability that was due before January 1, 2023 Granting the Indiana Department of Administration 'sole' policy control over the Statehouse's meditation room Resolving conflicting language over the Indiana Historical Society's state lease No salary increases for General Assembly members for the two-year budget cycle Penalizes certain delayed payments from Managed Care Organizations Reduced 'Freedom and Opportunity' education line item that can be used to fund dropout prevention and other K12 programming Reduces eligibility for On My Way Pre-K and subsidized child care Requires higher education institutions to review department promotions and tenure policies relating to productivity Bray called it 'a really good policy' to discourage smoking, even if the expected tax revenue decreases over time. 'That's a good thing, because we think it means we have fewer smokers,' Bray said. Additionally, three agencies — the Department of Correction, the Department of Child Services and the Family and Social Services Administration — will have a combined augmentation fund pool of $300 million to cover unexpected expenses. Outside of K-12 funding, which makes up 47% of the budget, those three agencies get the largest amount of state dollars. 'It just gives flexibility during challenging times,' said Mishler, noting that the fund will be distributed at the governor's discretion. The Indiana Economic Development Corp. had its budget reduced between 25-30%, coming on the heels of news from Indiana Legislative Insight that the governor's office was considering a major audit of the quasi-public agency. Most agencies and departments — including the offices of statewide elected officials and the Commission for Higher Education — also saw a 5% reduction in their appropriation. But a two-year-old program to supplement local public health departments took a 60% cut, with funding falling from $100 million each year to $40 million. Bray noted that much of those funds distributed to counties and some municipalities hadn't been spent, or roughly 45% of the dollars sent out last year. 'I think they're still trying to build up and roll out their programs,' said Bray, emphasizing a desire to continue funding the program into the future. Details of the final budget compromise were revealed to Democrats at the same press conference and leaders of the respective caucuses said more time would be needed to analyze the full document. 'As this budget is digested over the next 24 hours, we're going to have much more to consider. We've got to weigh just how public education and the needs of our children are being met. We have to weigh if Medicaid needs … and the elderly, the working Hoosiers, (and) everyday people, if those are being met,' said Sen. David Niezgodski, of South Bend. Sen. Andrea Hunley, a former principal, criticized the voucher expansion for benefitting the 'wealthiest families in the state,' noting that impoverished families wouldn't see as much promised relief under the earlier property tax plan. 'Families with home values that are assessed at under $150,000 actually are going to see an increase in their property tax bills,' the Indianapolis Democrat said. 'Then at the same time, we're going to be giving greater breaks to our wealthiest families … it's just not a prudent time to look at voucher expansion.' Hunley also questioned the commitment to reducing Medicaid expenses when Republicans cut public health funding. 'We know that everyone's got to make sacrifices this session but, again, it's going to be on the back of the Hoosiers that need the support the most,' Hunley said. Rep. Greg Porter pointed to an event last week with Trump cabinet official Robert F. Kennedy Jr. and Dr. Mehmet Oz, who leads the Centers for Medicare and Medicaid Services. Both appeared alongside Braun to announce a flurry of health-related executive orders. '… now we're down to $40 million (annually). Is that making Indiana healthy again?' Porter asked, borrowing a phrase coined by the trio. 'I think it's making us extremely vulnerable when it comes to health care.' Though Porter praised the inclusion of the cigarette tax increase and the IEDC scrutiny, the Indianapolis Democrat said he didn't support the spending plan until he learned more about K-12 funding and other provisions. 'I don't think it's a budget, at this point, that we can completely embrace.' SUBSCRIBE: GET THE MORNING HEADLINES DELIVERED TO YOUR INBOX
Yahoo
22-04-2025
- Business
- Yahoo
Hoosiers make last-ditch appeal before budget conference committee
Vera McConnell, a 16-year-old central Indiana Girl Scout, testifies before a budget conference committee on April 21, 2025. (Whitney Downard/Indiana Capital Chronicle) A Monday budget conference committee revealed little new information about ongoing negotiations between Republican caucuses, though a bicameral, bipartisan group heard roughly half an hour of public testimony. Sen. Ryan Mishler, the chief budget architect for Senate Republicans, squashed any requests for increased funding prior to public input, saying the grim Wednesday budget forecast that projected $2 billion less in spending 'speaks for itself.' 'We have some tough decisions to make,' said the Mishawaka Republican. 'Please don't ask for more because the question at this point will be, 'Who do you want us to take it from?'' Aside from that early remark, Republicans largely took a back seat for the rest of the hour-long meeting — neither offering comment nor asking many questions. Sen. Fady Qaddoura, D-Indianapolis, condemned the GOP members for not commenting on private negotiations during Monday's meeting. As both chambers have a Republican supermajority, Democrats are often excluded from such discussions. 'I was extremely disappointed today that would have been — or should have been — a public process to discuss the budget publicly and the solutions … did not occur. We are a public institution serving 6.9 million Hoosiers across the state and the budget process should have been much more transparent,' said Qaddoura. Rep. Greg Porter, also a Democrat from Indianapolis, likened it to being given a seat at the 'kids table.' 'We know they had a lot of conversations this past weekend. So we have had conversations also and we have brought a solution to our situation,' Porter said, pointing to increases on so-called sin taxes and reducing school choice voucher spending. In a comment to reporters, Rep. Jeff Thompson — who leads budget negotiations for House Republicans — said that Monday's meeting was the last opportunity for public comment. A smattering of public advocates took the opportunity to make a last-minute appeal before lawmakers, including 16-year-old central Indiana Girl Scout Vera McConnell. McConnell, who has appeared before budget writers before during this session, made repealing the state sales tax on menstrual products — also known as the Pink Tax — the goal of her Gold Award, one of Girls Scouts' highest honors. 'Women and girls have paid the pink tax, through both good and bad economic times, and it's no longer a fiscal issue. Rather, it's a fairness issue,' McConnell said Monday. 'We should not profit from the necessary bodily functions of people. The time is now.' We have some tough decisions to make. – Sen. Ryan Mishler, R-Mishawaka The average woman will spend roughly $18,000 over her lifetime on feminine hygiene products like pads and tampons — which are taxed as luxuries and not as a medical necessity. These dollars contribute $5.6 million in sales taxes to state coffers, or 0.01% of the budget. House Republicans struck the tax in their version of the budget but Senate Republicans reversed course — much to the chagrin of their Democratic counterparts, who tried to amend it back into the budget last week but failed on a largely party-line vote. McConnell's effort will have a difficult time getting over the finish line following last week's budget forecast. Other testimony used that news to try to push forward a long-sought tax increase on cigarettes. According to the American Lung Association, only a dozen states tax cigarettes at a lower rate than Indiana, which has the lowest tax of its surrounding states at $0.995 per pack. That is nearly half the national rate of $1.93. Tiffany Nichols, the Indiana director of advocacy for the American Lung Association, pushed for a $2 increase, which could bring in an estimated $800 million in tax revenue. However, that number doesn't include smokeless tobacco products, cigars or vapes — all of which are taxed at a lower rate. CONTACT US Nichols urged lawmakers to bring taxes for those in line with cigarette cartons. 'We know from decades of research that increasing tobacco taxes is one of the most effective ways to reduce use,' said Nichols. 'We must close this loophole. Creating barriers across all tobacco products ensures a consistent public health message: all tobacco products are harmful.' Increasing such a tax would, ideally, only generate a temporary bump in revenues as tobacco use goes down. However, reducing Hoosier tobacco use would lower the state's overall health costs — especially for Medicaid, which is the fastest-growing line item. The House has passed such an increase a handful of times but never gotten the Senate onboard. Previously, legislative leaders said all options are on the table with the exception of marijuana legalization and an expansion of gaming taxes. Raising so-called sin taxes — which can include alcohol in addition to cigarettes and gaming — was at the heart of Democrat suggestions for addressing the $2 billion budget shortfall. 'We don't seem to want to tax sin in the way we used to,' lamented Rep. Ed DeLaney, D-Indianapolis. SUPPORT: YOU MAKE OUR WORK POSSIBLE
Chicago Tribune
17-04-2025
- Business
- Chicago Tribune
‘Sin tax' increases considered as Indiana faces $2 billion revenue forecast shortfall
Indiana's revenue forecast projected a $2 billion shortfall for the next budget cycle, according to new data presented at the State Budget Committee meeting Wednesday. The current budget cycle for the 2025 fiscal year is also short by an estimated $400 million, but the state can rely on reserves to cover the shortfall. After the meeting, budget architects Sen. Ryan Mishler, R-Mishawaka, and Rep. Jeff Thompson, R-Lizton, said 'everything is on the table' when it comes to budget cuts, according to the Indiana Capital Chronicle. Thompson said increasing 'sin taxes' — on cigarettes, alcohol and gaming — could be considered. The Indiana Chamber of Commerce President and CEO Vanessa Green Sinders issued a statement after the forecast calling on the legislature to approve a $2 per pack increase in the cigarette tax. 'We urge lawmakers to put the increase in the state budget – both for the positive impact on the health of Hoosiers who smoke and the additional revenue,' Green Sinders said in the statement. 'Indiana proudly has built one of the country's most competitive business climates. But we also must be willing to identify, discuss and act on difficult matters surrounding the health of Hoosiers — like the adult smoking rate — so we can continue to prosper as citizens and as an economy.' As House Bill 1001, the two-year state budget, was discussed in the Senate Monday, Senate Democrats proposed 60 amendments. A number of the amendments addressed the cigarette tax, including a $2 per pack raise on the cigarette tax proposed by Sen. Shelli Yoder, D-Bloomington. Mishler said Monday the legislature needs 'to keep all options open,' but called for the Senate to defeat the amendment, which it did in a voice vote. Sen. Fady Qaddoura, D-Indianapolis, proposed an amendment to increase the cigarette tax by $1 in 2026 and by $2 in 2027. Qaddoura said the state would see an additional $211 million in revenue in 2026 and more than $300 million in 2027. The amendment would designate the more than $500 million generated to fund Medicaid, Qaddoura said. The amendment failed in a voice vote. Qaddoura proposed an amendment to raise alcohol taxes that would, within two years, bring in an additional $128 million in revenue. He also proposed an amendment to increase the gaming tax that would, within two years, bring in an additional $125 million in revenue. All of the amendments failed. In total, Qaddoura said his three amendments would've brought in approximately $600 million in 2026 and approximately $750 million in 2027. Lake County Councilman Randy Niemeyer, R-Cedar Lake, said he was concerned about raising the cigarette tax because it seems that fewer people are smoking. Raising sin taxes would impact low-income and middle class families, he said. To address the budget shortfall, Niemeyer said said the state legislature should look at state departments and agencies to see where cuts could be made, similar to the Department of Government Efficiency at the federal level. 'I think they'd be surprised if they did their own form of DOGE, that they'd find quite a lot of room to restructure,' Niemeyer said. 'I think the first step is cut your government before you start taxing people.' DOGE's claims of savings have been difficult to verify as it has taken credit for axing contracts that have already ended and inflated the value of its cuts, according to a Reuters report. Porter County Councilman Jeremy Rivas, D-2nd, said the legislature should legalize marijuana to close the revenue shortfall. All the states around Indiana have legalized marijuana in some form, which has brought in revenues for the states, he said. 'It's high time they legalize marijuana,' Rivas said. 'There's got to be a lot of revenue available or other states wouldn't do it. It seems we're missing out.' Under Senate Bill 1, the property tax relief bill that was signed into law this week, the state has cut funding to local governments by 'arguing that their budgets were excessive,' said Lake County Council president Christine Cid, D-East Chicago. The only way local leaders can offset the impacts of Senate Bill 1 is to consider increasing local income taxes at the county or municipal level, Cid said. 'Ironically, this proposal comes from a party that claims to oppose tax increases,' Cid said. 'I urge the state to take a similar approach and identify savings within its own budget. People are tired of being taxed more and more.'
Yahoo
17-04-2025
- Business
- Yahoo
Indiana faces $2.4 billion budget shortfall according to updated revenue forecast
INDIANAPOLIS— According to Indiana's latest revenue forecast, state lawmakers now have a $2.4 billion budget shortfall on their hands with less than two weeks to go before the legislative session concludes. 'Everything's on the table,' said State Sen. Ryan Mishler (R-Mishawaka), the Senate appropriations chairman. 'I'm not being sarcastic…In the 21 years I've been here, and I was here during the recession in '08 and [the] '09 budget—this one scares me a lot more than that.' 'I talked to the most senior economic guy around this building, and he's never seen anything like this,' said State Rep. Ed DeLaney (D-Indianapolis). Mishler acknowledged Republicans had already started talking about potential cuts in anticipation of the forecast, but added that those cuts will be bigger than what they had expected. 'We're going to have to make tough decisions, we're going to have make some cuts, and if anybody has the audacity to come and ask us for more money, more than likely just take them out,' Mishler said. 'Maybe everything is on the chopping block except I want to say education…With the tariffs and other issues out there in the federal government right now, this really affects our bottom line,' said State Rep. Gregory Porter (D-Indianapolis). 'When the U.S. gets a cold, Indiana's got pneumonia.' Indiana Democrats introduced dozens of budget bill amendments earlier this session that could create/strengthen revenue streams—options some of those lawmakers now hope will be taken into consideration by their colleagues across the aisle. 'We think we can weather this storm to a certain degree,' Porter said. 'We feel as the Democrats on the House side as we go through the budget process…the process is attainable.' One of those proposals includes a cigarette tax increase that could add $800 million to the budget. 'We've been fooling around for years about a cigarette tax. Way overdue,' DeLaney said. 'We have several options—revenue resource options that we can offer in the next eight days to fully fund Medicaid, fully fund public education,' said State Sen. Fady Qaddoura (D-Indianapolis). 'The Senate Democrats will be very proactive in working with our Republican colleagues because, as I said, this is not a Republican versus a Democrat issue. This is a state budget that impacts every Hoosier, and our goal is to get it done before the end of session.' Republican leadership said they're confident a solution will be finalized before the end of session. By law, the General Assembly has until April 29 to wrap up any unfinished business this session. 'We just got to have long nights,' Mishler said. 'I mean, that's what we do, we've done it for years, and we'll be here, and probably be staying here most of the weekend, too.' 'That remains to be seen,' said State Sen. David Niezgodski (D-South Bend) said when asked whether lawmakers could feasibly find a solution in two weeks. 'If we all have collaboration, it is not, the picture is not as bad as it seems or could be.' 'I think we can get something done in a week that's at least an honest start towards solving the problem, and if we don't, shame on us,' DeLaney said. Copyright 2025 Nexstar Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
