Indiana GOP budget plan boosts school vouchers, smoking tax

Nearly one-fifth of a proposed state funding hike for Indiana’s schools would go toward expanding private school voucher and virtual school programs under a budget plan Republican legislators released Thursday.

The plan prepared by Republicans who dominate the Indiana House also includes a 50 cents-per-pack cigarette tax increase and would impose a new state tax on vaping liquids.

The proposal would increase the base funding for K-12 schools by 1.25% during the first year and 2.5% in the second year of the budget that would start in July. That would mean about $378 million more for school funding over the two years, virtually the same as proposed last month by Republican Gov. Eric Holcomb.

But House Republicans would direct $66 million toward raising the family income eligibility for the private school voucher program and about $4 million to boosting per-student payments for those attending online-only charter schools.

The additional money for those programs would mean smaller funding boosts for traditional school districts as they face pressure to improve the state’s lagging teacher pay after a Holcomb-appointed commission found it could cost more than $600 million a year to increase Indiana’s average teacher salary ranking from ninth-highest to third-highest in the Midwest.

House Ways and Means Committee Chairman Tim Brown said school districts would receive more money even with the recession caused by the coronavirus pandemic.

Local school officials will make decisions about teacher pay increases, and the spending plan is aimed at increasing the say parents have in their child’s education, Brown said.

“Parents, by far and away, want to make choices for their kids,” said Brown, a Republican from Crawfordsville. “They want to have options, they want those options spelled out.”

The proposed private school voucher changes would raise income eligibility for a family of four from the current roughly $96,000 a year to about $145,000 in 2022. A legislative report estimates that and other eligibility expansions would add about 18,000 students to the some 37,000 students now in the program.

Rep. Greg Porter, the top Democrat on the Ways and Means Committee, called the Republican school funding plan punitive and shortsighted.

“Republicans brag about increased K-12 spending while siphoning money from the schools educating a majority of students,” Porter said. “Hoosier school districts and educators, who have already been facing the repercussions of the supermajority’s financial apathy, are in dire need of tangible support from the Statehouse, not another legislative session spent fighting for scraps.”

The Republican-controlled Legislature will debate the spending plan throughout its session that is scheduled to last until late April.

The House Republican budget proposal would increase the state’s current 99.5 cents-per-pack cigarette tax that was last more than a decade ago to $1.50 and impose a 10% retail tax on electronic cigarette liquids.

The House health committee last week endorsed a $1-per-pack increase, while health advocates and major business groups had called for a $2 increase to help drive down the state’s 21.1% smoking rate for adults, which was the fourth-highest in the country for 2018, according to the federal Centers for Disease Control and Prevention.

The House has previously backed cigarette tax increases only to see them fail in the Senate.

Brown said the smaller increase was a consensus among House Republicans and would give Indiana a cigarette tax rate closer to those of neighboring states. The estimated $150 million a year from the tax increase would go toward the state’s Medicaid expenses, he said.

Other provisions in the House Republican plan would direct $150 million toward a regional development program proposed by Holcomb, along with $250 million for broadband expansion grants and $30 million toward grants helping small businesses recover from losses during the coronavirus pandemic.

Much of that money is made available by dropping a Holcomb proposal dedicating $400 million toward an early paydown of teacher pension obligations.

“We thought we’d invest in businesses and economic activity in the state, that we wanted businesses to be prepared to come out of this recovery,” Brown said.