Senate Republicans were a little more conciliatory. While they boosted funding for roads and schools beyond what Pence proposed in his budget plan, they also included a drop in the income tax rate from the current 3.4 percent to 3.3 percent.
Pence wants to lower Indiana’s 3.4 percent individual income tax rate to 3.06 percent.
“It is a nod to Gov. Pence, but also something we agreed with him on – that this does make sense,” Long said of Pence’s call for reducing taxes.
The Senate budget bill speeds up the elimination of the inheritance tax, killing it retroactively to Jan. 1, 2013. The tax, which brings in about $150 million a year, is currently being phased out, to end in 2022.
The Senate budget bill also lowers a financial institutions tax, which would reduce revenues to state and local governments by about $36 million each year. It also continues to step down the corporate income tax rate to 6.5 percent from 8.5 percent.
Altogether, the Senate plan reduces tax revenues by about $500 million a year – about the same amount that the Pence tax cut plan would result in.
Like the House-approved spending plan, the Senate budget bill includes $331 million in additional funds for elementary and high school education over the next two years. The Pence budget plan proposed only a $137 million increase for education, with half of that money to go to high-performing schools.
The Senate spending plan also increases road funding. It puts $200 million a year in a new “Major Moves 2020” transportation fund to pay for additional lanes on Interstate 70 and Interstate 65 crossing the state. It also adds $112 million for state road and bridge construction, plus another $101 million in new funds for local roads.
But the local road repair money is conditional under the Senate plan: Only counties that have, or agree to impose, an excise surtax and a wheel tax will be eligible to get the additional money.