At the time of this writing, there is one week to go in the 2005 Legislative Session, and several key issues remain undetermined. Far and away the most important of those is the biennial (two year) Budget that we must have finished by Friday, April 29th. Failure to get this budget passed by the 29th means Special Session, which, one would think, nobody wants. Yet there are groups out there who are hoping that we do have to go into overtime, because then it may mean that their favorite issue, whether that be education, gambling, or Medicaid, are now in play for either new consideration, or more dollars.
Lets look at the current situation as of the 23rd of April. First, we know these facts:
The State continues to have a $600 million dollar deficit. The Governor badly wants to get a balanced budget, which is something we are constitutionally required to produce in Indiana, but have technically avoided through financial gimmicks the last few budgets. We have no more gimmicks left, so the only issue is how quickly we reduce the deficit. As of now, the proposed Budget will reduce the deficit in half by the next Budget.
Indiana’s economy continues to slowly recover from the devastation of the recession, which means that the State is struggling to find the revenue to pay for its budgeting needs.
Our K-12 schools are clamoring for more money, yet despite terrible economic circumstances the past two budgets, we have managed to fund our schools at a level far more generous than most states. This year, we are proposing an average increase of 1.5% per year, which may rise slightly higher by the time the 29th rolls around. We are also proposing to change the way we fund our schools. In the past, the Democrats insisted on protecting Gary’s and Indianapolis’ schools by granting them a guaranteed 2% increase even though they have lost students every year. Meanwhile, fast growing school districts like Hamilton Southeast, and Northwest Allen, have been badly underfunded. This is completely wrong; no other state in the nation rewards schools losing students with more money while refusing to properly fund schools that are quickly adding students. Of course, the Indianapolis and Gary areas are screaming that they are now being treated unfairly. I disagree; we are finally proposing a truly equitable method of funding our schools.
Like most states, Indiana is facing huge annual increases in its Medicaid spending. Costs are rising an average of 10% per year nationwide. Indiana has suffered more than most states because it was hit harder in the recession. This means more people have lost jobs, and thus have become income eligible for Medicaid. As a result, the costs have grown quickly. The faster this expense grows, the more Medicaid takes out of the Budget, meaning we either cut the rate of growth, severely cut other areas of the budget, or find more money. The current plan is to cut the rate of growth, which I believe is the appropriate option. However, this has many Medicaid providers upset, because an already difficult reimbursement process could get even tougher. Also, it means making some tough decisions as to whether to reduce the number of services available. But we absolutely have to reduce our costs, or face tax increases. I believe the people of Indiana expect us to manage our budget the same way they do when we are facing tough times; you tighten your belt and spend only on the essentials. That is what is being done with Medicaid in this year’s proposed budget.
Clearly, there are some tough issues to deal with in this budget. However, this is a clean, lean budget as currently proposed. It has a tobacco tax increase at 19 cents, but no other tax increase. It handles half the deficit, and also begins the process of re-funding Indiana’s empty rainy day fund. It provides an increase for education, a better managed Medicaid process, all while avoiding any increase in gambling.
With that in mind, there is and has been a big push by the owners of the horse race tracks located in Anderson and Shelbyville to allow them to place slot machines in their facilities. This would bring in substantial amounts of money for the state, but would also be a major expansion of gambling for Indiana. For many, including myself, there is a genuine fear that the state has become far too dependent upon gambling. Because of that, the push for slots at the tracks has been thwarted so far. However, if we cannot get a budget completed by Friday the 29th, then everything is back in play, including the slot machine proposal.
Because there are those who would like to have more money, such as the education community, the idea of obtaining several hundred million more dollars, regardless of the source, is attractive as well. It will be a challenge to keep the gambling industry at bay, but I believe it can be done. We’ll see. I’ll report back to all of you in the next article as to why we were able, or unable, to get the budget completed by April 29th.
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