One week remains in the Indiana Legislative session and a $2,000,000,000 shortfall will need to be cured in the next week.
Clinton County Chamber of Commerce hosted its fourth and final legislative breakfast for the year at Wesley Manor to a packed house in the Event Center.
Highlights of the public meeting with State Reps Mark Genda (R-District 41), Heath VanNatter (R-District 38) and State Senator Brian Buchanan (R-District 7):
- The 2 Billion dollar shortfall in the budget will force the House and Senate in the next week to work together to cure this funding gap. The unprecedented gap is caused primarily by very rapid growth in State Medicaid funding. Pre-covid, 350,000 Hoosiers were on Medicaid. Now Indiana is paying for 700,000 Hoosiers on Medicaid. For the first time in memory, K-12 Education spending is below 50% at 47% because Medicaid spending has increased to 18% of the Indiana General Fund Appropriations. This increase is forcing the Legislature to look at possible work requirements for able-bodied Hoosiers on Medicaid. There has been a 5 Billion Dollar growth in State Medicaid Spending in 4 years. Seniors, minors and disabled Hoosiers will not see a work requirement, but Senate Bill #2 does include able bodied adult working age Hoosiers to have eligibility checks and ‘look for work’ requirements to receive Medicaid. Senate Bill #2 is on its way to Governor Mike Braun’s desk.
- Mark Genda expressed frustration in the dead end for three of his bills, all dying in committee. No IEDC oversight, No Sales Tax on Hygiene and incontinence products is uncertain and Genda’s chemical cremation bill also seams dead at this time. Genda was able to pass a popular third party jail counsellor bill on a bi-partisan basis that will protect privacy rights of Jail Counselors, Nurses and other individuals not currently protected. Genda also expressed frustration with the “unfunded mandate” from the Governor of lowering property taxes and delivering a 300 credit to tax payers without direction or guidance on how that was to happen, particularly in a cash shortfall environment made worse by skyrocketing State Medicaid costs.
- Genda pointed out that rural representatives are small in number and this creates a difficult track to get traction on issues that specifically affect rural districts in Indiana, such as IEDC reform.
- Some audience members have seen as high as 59% increase in property taxes in a 4 year period and do not see any substantive changes that will correct this trend.
- The new property tax bill is 368 pages long, 275 of which are spent repealing current tax code. The property tax overhaul bill will create enduring “silos” of funding that will be accountable at the local level. Changes to the tax rate locally will have to be voted on locally and those funding changes up or down will be pushed through to the property tax payer. This essentially makes the size of the property tax bill more transparent and controllable with local votes and local elected officials being accountable for enduring increases (and decreases). Unlike State Income Taxes, all Indiana property taxes remain local and are spent locally. Buchanan predicted this will probably result in no reduction in property taxes but will slow property tax increases and give local representatives more accountable say in what property tax bills will be, putting property taxes on the ballot every 2-4 years by the election of local county and city representatives.
- One audience member got a laugh when he said the Governor and some representatives remind him of a “Drunken Chinaman with an Abacus”
- School choice has a strong tailwind in Indiana and school choice will define funding for school districts public and private throughout the state. Dollars will follow the student. This “funding follows the student” trend will continue in the foreseeable future. In Clinton and Carroll Counties, this is not so much a tug of war between public and private schools as it is in larger metropolitan areas, but will create a tug of war for funding between Clinton County school districts. This is already the case but legislative trends will solidify this reality. WILO often hosts area school superintendents and your elected representatives on Party Line to answer your questions and clarify how this environment affects each district.
- Local jurisdictions will have the ability to consolidate school districts to create efficiencies and reduce inter-district competition, but these decisions will be made locally by elected officials and NOT at the state level, according to Genda and Buchanan.
- After the meeting, Chamber CEO Shan Sheridan referenced a Chamber study years ago that recommended Clinton County school districts pool resources for transportation, insurance coverage and food service. This suggestion went nowhere years ago. It remains to be seen if efficiency ideas like this might decrease costs while maintaining needed service levels.
- Because of the 2 billion dollar budgetary shortfall, needed revenue sources, “Everything is on the table”. This includes increase taxes for cigarettes, alcohol, scratch off games, and more. “Everything is on the table” was repeated by Genda and Buchanan as the legislature looks for ways to cure the shortfall.
- In fiscal year 2024 Indiana closed with a $2.9 Billion dollar surplus in reserves. This included a $421 million annual operating surplus and $2.5 billion in combined general fund reserves. This surplus was the lowest since the pandemic and is lower primarily due to unbudgeted Medicaid spending.
- In a few years, Indiana is on track to have the lowest State Income Taxes in the country among states that still have an income tax.
With only one week left in the legislative session, the Indiana State House is destined to be a busy place as substantive changes determine the fiscal realities for Indiana for the next two years and beyond.
