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Senate Republicans on Thursday unveiled their two-year spending plan for the state, calling for record increases in education funding but declining to increase eligibility for Indiana’s school voucher program—a priority of House Republicans.
The Senate Appropriations Committee voted 10-2 to advance House Bill 1001, the state budget, to the Senate floor, with only one of three Democrats, Sen. David Niezgodski of South Bend, voting in favor, although he expressed reservations.
The bill heads to the full Senate where it can be voted on as early as next week. If it passes that chamber, it will go back to the House, where members can concur with the Senate’s changes or go into conference committee to hash out their differences.
Some of the Senate’s proposals were largely in lockstep with the House, including increasing state funding for public health by $75 million in 2024 and $150 million in 2025, still well short of the $240 million annual increase recommended by the governor’s public health commission last summer.
The governor and both chambers are in agreement on allocating $500 million to the Regional Economic Acceleration and Development Initiative, or READI, program, which dedicates funds to economic development projects across the state.
The $43.3 billion budget also funds the Indiana Economic Development Corp.’s site-acquisition fund at $150 million and offers $600 million over the biennium for a deal-closing fund. The House proposed $500 million for a deal-closing fund.
No voucher expansions
The most glaring contrast between the House and Senate proposals was the way in which they intend to expand funding to charter schools.
Most notably, the Senate did not propose increasing financial eligibility for the school voucher program. Under the current system, a family of four making up to $154,000 is eligible for the program, but the House wants to expand eligibility to $220,000.
However, the Senate budget allows charter schools to receive incremental increases in property taxes, a proposal that did not sit well with Democrats on the committee.
“I’m concerned that if we continue going down that path … a school is going to struggle in communities where assessed values are extremely low, and a child’s future might be destined by the ZIP code of where they live,” said Sen. Fady Qaddoura, D-Indianapolis.
Sen. Ryan Mishler, R-Mishawaka, who chairs the Senate Appropriations Committee, said by offering only the incremental increase in property tax revenue year-over-year, traditional public schools will largely be protected.
It’s unclear if Mishler directly influenced the Senate’s decision not to expand the voucher program.
The powerful senator from northern Indiana published a strongly worded letter in February threatening to hold up any new revenue for voucher schools after his experience with a private Catholic school in his district where his son is enrolled as a senior.
The letter described “mistreatment and bullying” of students by a staff member, saying the school mishandled the issue.
“I would advise families looking at voucher schools to be aware that they are on their own at this point and time. They should strongly consider an alternative to the blemished and blatantly flawed procedures of accountability when choosing a school for their child,” Mishler wrote.
The Senate budget also honors Gov. Holcomb’s request to fully fund textbook and other curriculum fees at a cost of $160 million, but unlike the House budget, school districts would not be asked to foot the bill.
Income taxes
While the House budget called for more rapid decreases in income taxes, the Senate keeps rate reductions on the same time frame established by the legislature in the 2022 session.
The current income tax rate of 3.15% will drop to 2.9% by 2029, but House Republicans want to reach that percentage by 2026.
Many Republicans want to eliminate the state income tax altogether, which would leave a projected $8 billion hole in the budget.
A Senate bill that would establish a commission to consider changes to Indiana’s tax structure, including phasing out the state income tax by the end of the decade, already passed the Senate and is expected to be approved by the House.
That panel will also consider making adjustments to the property tax structure and accelerating the timeline for paying down the remaining $8.8 billion owed to the state’s pension fund for teachers who retired before 1996.
Democrats proposed several amendments to the budget, including increasing financial eligibility for child care, pre-K programs, a $1.50 tax on tobacco products and eliminating sales taxes on feminine hygiene products. All were voted down on party lines.
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