Niki Kelly
Most of the talk surrounding the special session that starts Monday is about abortion, but that issue isn’t even the primary reason Gov. Eric Holcomb called lawmakers back to duty. Instead it’s about rebates or refunds or inflation relief – whatever they choose to call it.
And it’s because Indiana is sitting on $6.1 billion in taxpayer dollars – a surplus of enormous magnitude.
To put it in perspective it equals about 29% of annual operating revenue. Fiscally prudent officials advocate to keep between 12% to 15% on hand. The current percentage is the highest it has ever been, according to a state chart that goes back to 1980.
Indiana law already accounts for an automatic taxpayer refund when the surplus level spikes in odd-numbered years – that is the $125 check Hoosiers have been getting in recent months. Almost 2 million Hoosiers are still waiting for the money though.
Holcomb’s $1 billion proposal is another version of that refund – this time for $225. While efficient it leaves some Hoosiers out of the equation. That’s because it only goes to people who have filed an income tax. If you didn’t – such as those on social security or disability – then you get nothing.
This despite the fact that they have contributed to the surplus via sales taxes, such as when they buy shampoo or gas or household cleaners or toilet paper. And Indiana took in about $1 billion more in sales tax revenue than it did in individual income taxes for the fiscal year that just ended.
Senate GOP plan lacks
Say what you will about Holcomb’s proposal not being perfect, but Senate Republicans didn’t even really try. They conceded there is $1 billion available and then proposed Wednesday using less than $300 million to help Hoosiers. The bulk of that would be taking the state’s 7% sales tax off all utility bills for six months – saving Hoosiers about $100 per household over that time. And they propose tinkering with gas taxes so they don’t go higher.
But they would keep the bulk of that $1 billion in state government – putting $400 million to pension debt and $215 million to capital projects that are seeing inflationary impacts. Pension obligations are real but already got a $2.5 billion injection this year.
And as for inflation hitting capital projects, maybe the state should change the scope or take a project or two off the list. That’s what Hoosiers have to do, including myself. My husband and I had to remove some features from our dream garage we are finally building – even hanging insulation ourselves.
And while we are talking about costs, the special session isn’t free. It is estimated at about $280,000. Even sending those refund checks costs money – almost $1 million for the first round of $125 in paper and postage.
Democrat approach
Democrats have sought to help Hoosiers more directly with high gas prices – a holiday on the state gas tax or sales tax applied to gas. But Republicans see a fertile campaign issue there against Democrats in the fall.
The GOP and Holcomb contend targeting the gas tax or sales tax benefits too many people driving through Indiana and buying things who don’t live here. And it is true that out-of-state residents pay a portion of those taxes. But all Hoosiers pay them too.
Then there is a whole other way to look at the surplus – existing taxes are bringing in enough money to support more state spending on items that are lagging. For instance, Indiana remains one of only a few states to make its parents buy textbooks. Teachers continue to make less than their peers. Indiana trails in public health funding. Medicaid reimbursement rates need increases to ensure access in rural parts of the state.
Democrats see increased spending as an investment, Republicans as big government. Here’s hoping there is a middle ground. And, yes, I mean the c-word – compromise.
Niki Kelly is editor-in-chief of the Indiana CAPITAL CHRONCLE.
