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general assembly

Even in an off year, battles on spending rage

– For much of the first half of session, Republican House Ways and Means Chairman Tim Brown had a wrapped box on his desk representing the state budget.

And he would tell his fellow lawmakers he wasn’t opening the budget in a non-session year.

That generally means the state isn’t going to spend additional money other than what lawmakers have already set aside in the biennial spending plan.

But it’s nearly impossible to spend absolutely nothing, even Brown concedes.

“The legislature is about priorities. That’s what we do every year,” he said.

So he and his Senate counterpart – Appropriations Chairman Luke Kenley, R-Noblesville – have to play the bad guys. They are the “no” men, gutting bills to reduce or eliminate any fiscal impact.

“It’s part of the job,” Kenley said. “You have to keep your discipline.”

He noted that this year it has been more important than some other years because state tax collections have been shaky at best, and legislators want to make sure the state doesn’t have to dip into reserves.

“I’ve spent a lot of time talking to the caucus about punting these types of decisions until next year,” Kenley said.

Sen. Jim Banks, R-Columbia City, knows what it’s like to be on the other end of that conversation.

He offered Senate Bill 180 to establish the Veteran Recovery Program and Fund to provide treatment and funding to veterans with traumatic brain injury or post-traumatic stress disorder. It carried a $5 million price tag for a state that spends about $15 billion a year.

That bill is now just a study of the issue for possible future action.

“I respect Sen. Kenley being a watchdog in that regard,” Banks said. “But sometimes it makes me mad especially when it’s an issue that is important to me.”

He hopes the state can fund a pilot program next year after a summer study.

Banks isn’t the only one left waiting. Gov. Mike Pence isn’t getting all of what he wants, either. It appears legislators are punting on a pilot prekindergarten program. And there will be no stipend for teachers who transfer to struggling schools. These and more will be studied instead.

All are new programs. And Brown said he focuses there first – is it an ongoing cost that adds to the structural base of the budget? If so, those have to wait.

But there are other ways to impact the state budget without actually spending money. Lawmakers can reduce future state revenues.

Pence, for instance, has a bill to establish an adoption tax credit. The new credit would be effective in tax year 2015, which means it won’t affect state tax collections until fiscal year 2016. The credit may eventually reduce general fund revenue by up to $400,000 a year.

And then there’s a corporate tax cut Senate Republicans are pushing. It further cuts the business tax from 6.5 percent to 4.9 percent by 2022.

Kenley concedes this would reduce revenue for future legislators – eventually about $80 million, according to the most recent fiscal analysis.

But he believes the cut actually results in increased revenue because of new business activity. So far the statistics bear his belief out. Indiana is collecting more now in corporate tax than when lawmakers initially cut the tax, he said.

There will also either be a one-time additional check or cost-of-living-adjustment for state retirees. This could either impact the budget directly or increase the unfunded liability of the state’s pension funds for the future, depending on how it is structured.

Sen. John Broden, D-South Bend, multiple times has tweeted confusion over Republicans being able to cut taxes but not afford other programs.

“I really prefer consistency,” he said. “They open up the revenue side, which costs the state money, but when we propose a viable spending option it is ruled out of hand.”

Broden noted that they can also be selective on the spending side – for instance, it’s OK to pay for drug-testing welfare recipients but not preschool.

“They are picking and choosing haphazardly,” he said.

Kenley acknowledged it might look that way from the outside.

“It might appear to be an anomaly but it’s a conscious decision of prioritization,” he said. “I even killed my own bill in Senate Education Committee.”