Second-half deadlines are whizzing by as the final month of the legislative session marches toward Sine Die (adjournment). This week we saw drastic changes to numerous bills in committee and a few failed attempts to insert language into a new home. Most notably, the Senate GOP revealed their version of the state’s biennial budget bill. Some striking differences were made from the House GOP version – to the tune of nearly $1 billion. What stayed, what was stricken from the original version, and what remains? Let’s dive in…
Senate Budget Removes CHOICE Expansion, Passes On Cigarette Tax Increase
In this week’s $43.3B spending plan, Senate Republicans prioritized a healthy reserve while investing in the state’s mental health response systems and several one-time expenditures. One major difference between the two GOP budgets is the lack of private school vouchers vouchers formerly proposed in the House version of HB 1001. The House version included an expansion of school choice vouchers to Hoosier families who make up to 400% of the federal poverty rate, or around $220K a year. The Senate kept the eligibility capped as is, with Hoosier families making less than 300% of free and reduced lunch, equal to about $154,000 annually for a family of four. Overall, K-12 education is set to see an increase in support of $1.1 billion over the biennium.
The Senate GOP budget also removes a provision to accelerate the individual income tax rate cuts enacted in 2022 to lower the rate to 2.9% by 2026 instead of 2029 and did not include a proposed cigarette tax increase.
On the health front – the budget amendment includes $225M for public health, which is only 2/3rds of the Governor’s request and less than half of what the Governor’s Public Health Commission recommended. At least $35 million have been dedicated by the Senate GOP to boost ongoing community mental health initiatives and formalize the 988 crisis response system. This is the fiscal component of SB 1.
Other budget highlights include:
- A separate, $160 million annual line item to eliminate K-12 student textbook fees.
- An elimination of standalone Career and Technical Education (CTE) grants.
- University operating fund increases of 4% in fiscal year 2024 and 6% in fiscal year 2025 and a new, separate funding formula for Ivy Tech Community College.
- $75 million over the biennium for a residential housing infrastructure assistance revolving fund.
- $500 million for Regional Economic Acceleration & Development Initiative (READI) grants in the fiscal year 2023, the same as in the House budget.
- $600 million to create a “deal closing fund” for the Indiana Economic Development Corporation (IEDC) — a $100 million increase from the House budget.
- $1.25 billion in the fiscal year 2023 to finish four ongoing capital projects across the state.
- $1 billion pay down of pension obligations.
For additional information, please visit the budget proposal website or slide presentation.
Property Tax Relief Bill Sees Major Changes in Senate
In a sweeping amendment, major changes were made to HB 1499, a bill originally authored to enact temporary property tax caps and limit local levy increases. During Tuesday’s Senate Tax and Fiscal Policy meeting, a 34-page amendment was offered that strips that language and inserts three new food and beverage taxes. An additional amendment to change the state’s deduction for Hoosiers 65 and older by tying it to the cost of living adjustments for Social Security benefits was approved. Expect robust debate on local food and beverage tax disputes between the City of Bloomington and Monroe County.
Controversial Library Amendment Out (For The Time Being)
Last week we saw SB 12, a bill that would prevent school teachers and librarians from using educational value as a defense for providing certain books to school students, make its way into the debate surrounding SB 380. The original language of SB 380 pertained to high school graduation waiver rates. After hours of testimony on the amendment language, the bill was held last week, and this week passed without the controversial language. Committee members have signaled that this debate is not over, and they are looking for another home for the library language in conference committee.
Tech Parks One Step Closer To Tax Revenue Increase
A bill allowing Indiana tech parks to capture a larger share of tax revenue is poised to become law after the Senate voted unanimously Monday to advance the legislation to the Governor’s office. SB 271 increases the revenue apportionment for tech parks, which are currently allowed to capture up to $100,000 a year in additional state and local income tax revenue after they reached their $5 million cap. To date, the state has certified 26 parks statewide, although only 22 remain active. Of those,18 have hit the $5 million cap, according to an analysis by the Legislative Services Agency.
Healthcare Omnibus Bill Makes Its Way To Senate Floor
HB 1004, a cumulative healthcare bill including fines for hospitals and tax for doctors who are unaffiliated with large healthcare systems, had its first hearing in Senate Public Health and was passed out of Appropriations this week. The bill also includes a tax credit for health reimbursement arrangements (HRAs) and a credit to physician-owned healthcare facilities. Expect to see lawmakers and public health stakeholders continue to debate the policy approach to this bill throughout the remainder of session. In addition, look for this to be a home for HB 1003, which did not make it through committee this week for lack of a hearing in Senate Appropriations.
Mental Health Legislation Advances Out Of Ways And Means
This year’s priority mental health bill, which would transform the 988 Crisis Hotline into the 988 Crisis Response Centers and address funding and sustainability plans for Certified Community Behavioral Health Clinics, has passed out of Ways and Means. This week we also saw the first glimpse of SB 1’s funding component in the Senate GOP budget. The bill was engrossed to second reading by the end of the week and awaits third reading approval from the House.
Governor’s Bill Watch Updates
As of the time of this report, 14 bills have been sent to the Governor, all of which he has signed. As a reminder, the Governor reviews all legislation and has seven days to sign or veto the bill. If he does not sign it, it automatically becomes law on the eighth day after receipt. A veto override consists of a simple majority – 51 votes in the House and 26 votes in the Senate. You can view the Governor’s Bill Watch here.
Up Next Week We’ll start next week with third reading deadlines in the House and second and third reading deadlines in the Senate and then shift gears into conference committees which have already started to be scheduled as early as this upcoming Monday. As a refresher, conference committees are the final round of negotiations on any piece of legislation where the original bill author dissents to changes made in the opposite house. In that case, legislators representing each chamber caucus are assigned to the bill to hammer out the final language before it goes back to each chamber floor for a final up-or-down vote. To add to the chaos, conference committees require only one-hour notice and only require one public hearing. Any language that passed one chamber is eligible for conference committee in a germane bill. This is the most hectic time of year when bill language may revive itself or die abruptly all the way up to April 29th. Abiding by our first-in, last-out strategy – Torchbearer Public Affairs will be your eyes and ears at the Statehouse, advocating and communicating for your needs.