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<h2 class="wp-block-heading" id="h-the-gist">The Gist</h2>



Indiana Senate Republicans released their plan for the two-year, $43.3 billion budget Thursday, rejecting <a href="https://stateaffairs.com/indiana/politics/house-republicans-propose-school-choice-expansion-quicker-tax-cuts-in-budget/" target="_blank" rel="noreferrer noopener">two proposals from House Republicans</a> to expand the state’s school choice program and speed up income tax cuts. Senate Republicans also did not include money in their budget proposal for trauma care system improvements.



The two caucuses are, however, on the same page when it comes to how much to spend on right-sizing the state’s public health system, though neither wants to fund it at the level Gov. Eric Holcomb requested. 



Senate Democrats on the Senate Appropriations Committee preferred the Senate’s proposal over what passed the House, but they  still have some concerns.



Here’s how the Senate budget plan differs from the House’s proposal, and how it would impact you.&nbsp;



<h3 class="wp-block-heading" id="h-k-12-education-spending-and-school-choice">K-12 education spending and school choice&nbsp;</h3>



Senate Republicans want to pump an additional $2.5 billion into state education over the biennium, but that wouldn’t mean an expansion of the state’s school choice voucher program to more Hoosiers. The upper chamber wants to stick with the status quo when it comes to determining who is eligible for the vouchers.







Senate Republicans rejected House Republicans’ plans to expand the program to families making 400% of the income required to qualify for free or reduced-price lunches. Under the House Republican budget plan, if your family of four makes about $220,000 per year or less, you would qualify for a school choice voucher.



“I can never sit here and say never, because [House Republicans] are pretty adamant about it,” said Sen. Ryan Mishler, the Senate’s chief budget architect. “So we&#8217;ll just have to talk about that in the next few weeks.”



Currently, families making up to 300% of the amount required to qualify for free or reduced-price lunches can obtain a school choice voucher. That would continue under the Senate Republican plan. 



Mishler, a Mishawaka Republican, said his caucus decided to spend the extra dollars that would have been used to expand vouchers elsewhere.



Both chambers will likely compromise and land somewhere in the middle. Of course, Democrats would prefer to spend less money on school choice programs altogether and instead divert more funding toward public education.



While traditional public schools would receive more funding under the Senate Republican plan, they could lose some future property tax dollars. The Senate plan allows charter schools to receive some of those dollars moving forward, reducing charter school reliance on state grants over time.&nbsp;



Democrats shared concerns about the proposal during the Senate Appropriations committee meeting Thursday, because they worried it would hurt traditional schools in their communities. 



“We know many of our school corporations are in impoverished areas, still struggling with assessed value, still struggling with a variety of funding issues,” said Gary Democrat Sen. Eddie Melton, the ranking minority member on the committee. “So that&#8217;s something to keep an eye on.”



<h3 class="wp-block-heading" id="h-free-textbooks">Free textbooks&nbsp;&nbsp;</h3>



It’s all but a done deal: You likely will no longer have to pay for your child’s K-12 textbooks or other curriculum material.&nbsp;



House and Senate Republicans are on board with Holcomb’s plans to provide free textbooks for all K-12 students. Now the question is: Who will pay for it?



While Senate Republicans want to backfill the costs with state money, the House didn’t have a specific line item in its budget to do so.&nbsp; Instead, the burden would fall to schools.&nbsp;



<h3 class="wp-block-heading" id="h-free-pre-k-for-more-hoosiers">Free pre-K for more Hoosiers&nbsp;</h3>



More families would be eligible for free pre-K education under the Senate’s plan, versus the House.&nbsp;



Eligibility for On My Way Pre-K would expand from families making 127% of the federal poverty level income to those making 150%. The state is not putting more money into the program; the current funding isn’t being used up by the eligibility requirements already in place.&nbsp;



Democrats unsuccessfully tried proposing an amendment to expand eligibility to 400%. 



“I  don’t think that it goes far enough to truly provide that opportunity for our kids for economic freedom,” said Sen. Fady Qaddoura, D-Indianapolis, “so that they can grow up in a society where they can earn, they can succeed and they can take care of their kids and hopefully end the generational cycle of poverty.”



<h3 class="wp-block-heading" id="h-mental-health-funding">Mental health funding&nbsp;</h3>



As expected, the Senate budget contains additional funding for mental health programs to the tune of $35 million over two years — a slight increase of the amount initially contained in Senate Republicans’ <a href="https://stateaffairs.com/indiana/social-services/indiana-mental-health-reform-cost/" target="_blank" rel="noreferrer noopener">keystone mental health legislation, Senate Bill 1</a>.&nbsp;



That number, though, still falls well short of the $130.6 million needed each year to fully fund a mental health crisis system, according to state estimates. Lawmakers envision that system as one solution to Indiana’s growing struggles with suicide and addiction.&nbsp;



Senate and House Republicans are still discussing ways to fill the funding gap — and how much of the gap to fill — for this budget.&nbsp;



One option is an increased cigarette tax to pay for the programs, which is what the Indiana Chamber of Commerce has suggested, but has historically been rejected by Senate Republicans. Another is a cell phone surcharge, similar to how 911 is funded.&nbsp;



<h3 class="wp-block-heading" id="h-agreement-on-public-health-spending">Agreement on public health spending&nbsp;</h3>



Senate and House Republicans are on the same page when it comes to the dollar amount for public health initiatives in your community, but neither includes as much funding as the governor asked for.&nbsp;



Holcomb requested $315 million in his budget, while the House and Senate both appropriated $225 million. That number doesn’t include the added money for emergency preparedness initiatives.&nbsp;



Before the pandemic, Indiana spent only $55 per capita on public health funding, compared to the U.S. average of $91, according to a report from the Governor’s Public Health Commission. That led&nbsp; to <a href="https://stateaffairs.com/indiana/healthcare/completely-dysfunctional-how-public-health-funding-disparities-are-causing-dangerous-inequities-in-care/" target="_blank" rel="noreferrer noopener">disparities</a> in what some local health departments offered its residents.&nbsp;



Most of the new money would go toward grants dedicated to local health departments. Those departments that opt in to receive the extra funding could use it for things like tobacco cessation programs, testing for HIV or education about trauma prevention.



One key difference between the Senate and House’s health spending is that the Senate’s proposal doesn’t contain a separate line item to better <a href="https://stateaffairs.com/indiana/healthcare/indianas-trauma-care-system-falls-short-rural-counties/" target="_blank" rel="noreferrer noopener">Indiana’s trauma care system.</a>



<h3 class="wp-block-heading" id="h-tax-cuts">Tax cuts&nbsp;</h3>



Senate Republicans also aren’t itching to speed up income tax cuts for Hoosiers.&nbsp;



Last legislative session, lawmakers enacted a series of tax cuts that would take effect every year through 2029, moving the tax rate down from 3.23% to 2.9% over time. The Senate budget proposal would keep that plan intact.&nbsp;



House Republicans, however, want to speed up that timeline and remove some guardrails that prevented the tax cuts from going into effect unless state revenue growth reached 2%.&nbsp; If the House’s plan is implemented, someone making $50,000 per year would save an additional $325 over five years.&nbsp;



But both plans would give Hoosiers the same 2.9% income tax rate starting in 2029. 



Mishler said he would rather pay down the unfunded liability on the pre-1996 teacher retirement fund in order to free up money in future years, rather than move forward with incremental tax cuts.&nbsp;



“It gives us flexibility to do something more transformational,” he said.



<h2 class="wp-block-heading" id="h-what-else-is-in-the-senate-s-plan">What else is in the Senate’s plan</h2>



The Senate proposal also contains additional money for pay raises for state employees, trails, attracting direct flights, economic development initiatives and employer child care expenditure credits. 



Senate Republicans also kept language added into the budget on the House side prohibiting state money from being used for Indiana University’s Kinsey Institute, which conducts research on sexuality, gender and reproduction.



<h2 class="wp-block-heading" id="h-what-s-next-for-the-budget">What’s next for the budget</h2>



Senate Appropriations voted the amended budget bill out of committee Thursday by a 10-2 vote, after rejecting multiple amendments from Democrats. Democrats on the committee were split on their bill votes.&nbsp;



Once it passes the full chamber, Senate and House Republican budget writers will have to work through the differences in their two versions and vote on the bill one last time.&nbsp; Holcomb is all but guaranteed to sign the final version.&nbsp;



The biggest unknown at this point is what the updated state revenue forecast will show when it’s released later this month. If the forecast is dimmer than expected, lawmakers could be forced to make cuts somewhere in the proposed budget. 



That’s why Mishler said he set aside a large amount of money for reserves, 13.8% in the first year and 14.7% in the second, in order to act as a cushion.&nbsp;



“I’m happy with it,” Mishler said of his proposal. “It’s balanced.”



Contact Kaitlin Lange on Twitter <a href="https://twitter.com/kaitlin_lange" target="_blank" rel="noreferrer noopener">@kaitlin_lange</a> or at <a href="mailto:kaitlin@stateaffairs.com" target="_blank" rel="noreferrer noopener">kaitlin@stateaffairs.com</a>.&nbsp;



Contact Ryan Martin on <a href="https://twitter.com/ryanmartin" target="_blank" rel="noreferrer noopener">Twitter</a>, <a href="http://www.facebook.com/ryanmartin87" target="_blank" rel="noreferrer noopener">Facebook</a>, <a href="https://www.instagram.com/by_ryanmartin/" target="_blank" rel="noreferrer noopener">Instagram</a>, <a href="https://www.linkedin.com/in/byryanmartin/" target="_blank" rel="noreferrer noopener">LinkedIn</a>, or at <a href="mailto:ryan@stateaffairs.com" target="_blank" rel="noreferrer noopener">ryan@stateaffairs.com</a>.



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Header image: Senate President Pro Tempore Rodric Bray, R-Martinsville, answers questions at a press conference following the 2023 State of the State Address on Jan. 10, 2023, at the Indiana Statehouse. (Credit: Ronni Moore)

Indiana budget proposal: Where Senate Republicans stand on school vouchers, mental health and free textbooks

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Indiana budget proposal: Where Senate Republicans stand on school vouchers, mental health and free textbooks

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