[r21] Largest tax cut in Hoosier history (4/27/2013)

Saturday, April 27, 2013

Start Date: 4/27/2013 Start Time: 12:00 AM
End Date: 4/27/2013 End Time: 11:59 PM

STATEHOUSE — House Enrolled Act (HEA) 1001, the biennial budget for the State of Indiana, passed this session with a 70-30 vote and sent to the Governor for his signature to become law. 

State Representative Timothy Wesco (R-Osceola) introduced legislation in January to retroactively eliminate Indiana’s inheritance tax. The language from that bill was amended into HEA 1001.

“I am pleased with the budget we passed,” said Rep. Wesco. “Indiana’s inheritance tax will be completely and retroactive to Jan. 1, 2013. Many Hoosiers find themselves having to sell family farms and businesses because of hefty inheritance taxes imposed on them as a result of the passing of a loved one, and I’m happy that will no longer be an issue.”

Below are highlights included in the state budget bill:

Focuses on Fiscal Integrity
• Reduces taxpayer funded debt by repaying $128M in bonds owed on two state facilities
• Provides cash funding for nearly $225M in state and university capital projects
o Cash funding will save taxpayers nearly $160M (or 41%) versus debt financing
• Maintains strong reserve balances at or above 12.5% of annual operating revenues in both years of the biennium
• Preserves strong structural budget surpluses of over $100M in FY 2014 and $275M in FY2015

Protects Hoosier Taxpayers
• Provides the largest tax cut in Indiana history
o When fully implemented, the tax cut package will reduce taxes by $650M+ per year
o Immediately repeals the death tax (effective January 1, 2013)
o Cuts the individual income tax rate by 5%
 Rate will lower to 3.3% in TY 2015 and 3.23% in TY 2017
• Phases down the financial institutions tax rate to 6.5% over four years and allows for the continued phase‐down of the corporate income tax rate

Invests in Education
• Increases K-12 education funding by $390M over the biennium
o K‐12 appropriations exceed pre‐recession funding levels
o K‐12 tuition support increased by 2% in FY14 and 1% in FY15
• Provides an additional $30M for K‐12 performance funding in FY15
• Provides funding to repay charter school start-up loans
• Invests an additional $190M over the biennium for higher education
• Increase funding for student financial aid by $75M over the biennium

Builds and Maintains Infrastructure
• Provides an additional $215M per year in funding for state and local roads and bridges
o 47% of the funds will be directed to local units with no strings attached
• Reserves $400M in the Major Moves 2020 Fund over the biennium for future transportation infrastructure needs

Boosts the Hoosier Economy
• Increases funding for key workforce development programs such as the Skills Enhancement Fund and adult education over the biennium
• Funds new innovative initiatives such as the Indiana Career Council, Indiana Works Councils, the Work Indiana program and the Indiana Biosciences Research Institute

Protects the Vulnerable
• Provides an additional $35M per year to the Department of Child Services for staff and improved behavioral and mental health services; fully funds the Medicaid forecast; and increases funding for a variety of programs that serve Hoosiers in need

“Our leadership in the General Assembly made tremendous efforts to successfully draft a sound budget for our state,” said Rep. Wesco. “This budget takes a conservative approach to protect Hoosier taxpayers, and we are continuing to uphold Indiana’s track record of fiscal responsibility.”