Indiana Gov. Mike Pence

CHICAGO — Indiana Gov. Mike Pence unveiled a $31 billion two-year budget that recommends a modest bump in spending while taking on no new debt and leaving untouched the state's $2 billion surplus.

Pence's budget includes nearly $700 million in capital projects, most of which Pence wants to pay for using cash generated by budget savings from various agency cuts.

Chris Atkins, director of Indiana's Office of Budget and Management presented the $31.1 billion budget to the State Budget Committee on Jan. 8.

Legislators will craft a final spending plan by the end of their session on April 29.

 The governor also wants lawmakers to approve his plan to tap the final $200 million left over from the 2005 lease of the Indiana Toll Road to use to finance highway projects in 2017.

The $31.2 billion spending plan increases state spending by 1.3% over the next two years. Schools would receive the largest increase, a total of 3%, or $201 million, over two years, with about a fifth of the money going to charter schools and a private school voucher program.

"This is an education budget," Pence said in a statement. "It puts Hoosiers first, continues Indiana on a pathway to prosperity, and funds our priority of expanding education opportunities for all our kids."

Under the budget plan, the triple-A rated state expects to have $32.6 billion in revenues through 2017, with spending totaling just under $31.2 billion.

The general fund reserve would total $737 million at the end of 2017 under Pence's proposal.

The state would have three reserve accounts: a Medicaid account expected to total $576 million by the end of 2017, a state tuition reserve account totaling $300 million by the end of the budget period, and a rainy-day fund totaling $379 million.

Together the reserves would total just under $2 billion, or 12.6% of operating revenue, according to budget documents.

Calling education one of his top priorities, Pence wants to add $200 million over the new two years to the school funding formula. Charter schools would receive more per-pupil money than public schools in an effort to attract more charter operators to the state, according to local reports.

Republicans, who are in charge of both chambers, want to shift the school-funding formula to smooth out per-pupil funding across the state. The change would likely mean more money for suburban districts and less for urban districts.

The budget would spend $300 million on highway projects over the next two years, relying in 2017 on $200 million from the Major Moves 2020 fund, set up in 2005 with the toll road lease.

The governor also wants to spend $56 million on the state's bicentennial next year, including on various events, a new archives buildings, a hotel and a plaza.

The House Ways and Means Committee will begin budget hearings Jan. 12. Pence will deliver his state of the state address Jan. 13.

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.