INDIANAPOLIS (AP/WANE) -- Indiana Gov. Mike Pence and legislative leaders reached a budget deal Thursday that will cut the state's personal income tax rate by 5 percent over the next four years while giving small increases to school funding.
The tax-cut plan would reduce the state's current 3.4 percent tax rate to 3.3 percent in 2015 and then reduce that to 3.23 percent in 2017.
Pence issued a statement calling the cut "a great victory" for taxpayers even though it is half of what he proposed and is phased in over a much longer period.
Republican legislative leaders had resisted Pence's push for a 10 percent tax cut to be fully implemented by July 2014. The House approved a budget plan in February without an income tax cut and the Senate this month had backed just a 3 percent cut.
Republican House Speaker Brian Bosma said his priorities had always been that the state's budget be strong enough to avoid big spending cuts or the need for tax increases in the future.
"We believe this blend is the right blend, it's at the right amount, it's at the right time to be sustainable for the future," Bosma said.
The Republican-dominated House and Senate are both expected to vote on the two-year budget plan on Friday, which is expected to be the final day of this year's legislative session.
The proposed budget also calls for repealing the state's inheritance tax retroactive to Jan. 1 of this year, which will reduce state revenue by about $150 million. Legislators last year had approved a 10-year phase out of that tax.
The spending plan gives 2 percent and 1 percent increases for school funding over the next two years, for about a $330 million hike.
Democrats have criticized the school funding increase as inadequate after former Gov. Mitch Daniels cut some $300 million from school spending during the recession.
The budget plan would also increase state funding for road and bridge projects by $215 million a year.
Pence said in his statement that the tax cuts put the state's taxpayers first.
"The combination of a 5 percent individual income tax cut, inheritance tax repeal and additional tax relief for businesses is the right tax relief at the right time and will give a much needed boost to working families, small businesses and family farms," Pence said.
Senate President Pro Tem David Long (R-Fort Wayne) and House Speaker Brian Bosma (R-Indianapolis) made the following statements regarding the agreement:
Statement from Senate President David Long:
"When fully implemented, this is the single largest tax cut in the history of our state," Long said. "We believe these tax cuts are responsible and will have a positive impact on every Hoosier taxpayer and provide a meaningful boost for the Hoosier economy. I appreciate the hard work of the House and Senate fiscal leaders in putting this tax package together and thank the Governor for his willingness to find common ground and embrace a winning tax cut package for all Hoosiers."
Statement from Speaker Bosma:
"Through hours of important discussions, we have reached a budget that reflects the goals that House Republicans set out to achieve this session. Our budget meets our goals of prioritizing education and road funding while maintaining strong fiscal reserves. In addition we integrated a conservative concept for state budgets of paying cash for projects and reducing the state's debt burden.
"After meeting each of these goals and with a proven track record of fiscal integrity, we are in a positive fiscal environment to give Hoosiers the largest tax cut in the history of Indiana. This blend of tax relief will have a positive impact on Hoosiers across the state and will result in a tax cut for every Hoosier."
Governor Pence issued this statement:
"Today Hoosier taxpayers won a great victory. The agreement reached between our administration and legislative leaders will be the largest state tax cut in Indiana history. The combination of a 5 percent individual income tax cut, inheritance tax repeal and additional tax relief for businesses is the right tax relief at the right time and will give a much needed boost to working families, small businesses and family farms.
I am grateful for the leadership of Senate President Pro Tem David Long, Speaker Brian Bosma and other key fiscal leaders for working diligently with our administration to craft this historic package of tax relief. Their efforts demonstrate the commitment of the General Assembly to put taxpayers first."
Statement from Indiana Republican Party State Chairman Eric Holcomb
Thanks to Republican Statehouse leadership, Indiana will continue to be a jobs magnet. Governor Mike Pence, Speaker Brian Bosma, Senate President Pro Tempore David Long and members of our Republican majorities should all be commended for keeping their promise to put Hoosier taxpayers and their families first.
No other State Party Chair in the country can make the claim that their state cut taxes by a billion dollars, but I can, only because of Republican leadership. And, because
of their hard work, Indiana will have more jobs, less debt and lower taxes well into the foreseeable future.
In addition to cutting taxes, Indiana Republicans were able to significantly increase funding for education and infrastructure projects, while at the same time protecting our rainy day fund. Indiana's torch continues to burn bright evidenced by our AAA credit rating and attractive low cost business climate. These are the fundamentals that foster economic growth.
Thanks a billion on a job well done, and for closing session out early.
Copyright 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
Fort Wayne Animal Care and Control was busy Thursday afternoon responding to complaints of pets outside. Crews respond to every complaint in the hopes of preventing pets from freezing.
U.S. Census data shows that one Fort Wayne neighborhood is among the poorest in the state, and it the poverty rate has a direct correlation the rising crime statistics.
It was something that was never supposed to happen. A veteran who killed a woman in Indianapolis then took his own life was buried with full military honors. Since that day, the victim's family has been advocating against it.
The house fire affected traffic on U.S. 33 just north of Churubusco for over an hour. All lanes were back open less than two hours after the fire was called in.
Police said speed appeared to be a factor in a crash that all the occupants of the car seriously injured.
Three intersections on the north side of the city will have new left-turn signals that with a flashing yellow arrow. The new signals will be activated in January.
A plan is in the works to move Cindy's Diner from its current location in downtown Fort Wayne to another location one block northwest from its current location. The iconic restaurant has been a fixture downtown since 1990.
Former Komets executive, owner, general manager and coach Ken Ullyot passed away Thursday, Dec. 12, 2013, in Fort Wayne, Indiana, at the age of 92.
The organization claims such legislation would hamper the city's ability to grow economically and that Fort Wayne should be "competitive on a national level and be recognized as a community that thrives on diversity, innovation, and inclusion,”
A state commission seeking ways to improve the lives of Indiana's most vulnerable children is forming a task force to investigate whether there's a link between methamphetamine arrests and child welfare cases.
Scammers are claiming to be from a law enforcement agency and are threatening to arrest victims if they don't pay the fine for an alleged crime or debt.
The free course will go over the laws and regulations about squirrel hunting and will teach attendees how to field dress and prepare squirrels for the table.
The Allen County Sheriff's Department arrested two people for having and making meth on Monday and Wednesday.
People across Indiana are bundling up against colder temperatures than parts of the state saw in either of the past two winters.
Tesla has opened two charging stations in northern Indiana, one of them at a hotel in Angola, as it works to establish a network of such stops across the country for its electric cars.