CHICAGO – A $32.3 billion two-year state budget, transportation funding, and a takeover of two Indiana school districts are headed to freshman Gov. Eric Holcomb’s desk.

The legislature adjourned late last week after voting on final agreements hashed out in conference committees.

Holcomb, a Republican who succeeded Vice President Mike Pence, enjoys GOP majorities in the legislature. He praised the final budget package as one that shows a commitment to “maintaining responsible reserves” even though it draws down some of the more than $2 billion in various reserve accounts.

The budget funds key provisions in Holcomb’s agenda including increased direct flights at Hoosier airports, freeing up some funds in a $500 million trust to foster entrepreneurship and regional economic development efforts, and providing $9 million for pre-kindergarten education.

Budget and other measures are headed to freshman Indiana Gov. Eric Holcomb's desk.

“These strategic and targeted investments are designed to make our state stand out as the best place to live, work and build a business. I commend Indiana lawmakers for their vision, and I recognize the resolve it took to advance these programs amidst many other priorities,” he said.

The state closed out fiscal 2016 with a structural surplus of $50.6 million, $545 million in its rainy day fund, and $2.24 billion in various state reserve accounts. Indiana holds triple-A ratings from the three largest rating agencies.

Holcomb also praised the road funding package that raises the state’s gasoline tax. It relies on other tax and fee hikes and phases out the diversion of tax revenue from fuel purchases to generate $1.2 billion in new annual revenue transportation spending once fully phased in by 2024. The legislation also allows the state to ask for federal approval to toll its interstate highways.

Legislation allowing for a state takeover of the Gary Community School Corp. and Muncie Community Schools also awaits Holcomb’s review. His office did not respond immediately for a comment on whether he supports the oversight measure.

The bill declares the two to be distressed political subdivisions and paves the way for the appointment emergency managers and financial advisory boards with sweeping control over financial decisions. Both would have to show positive operations for two years before returning to self-control. The bill also provides fiscal help through grants and loans some of which could be forgiven.

The initial bill solely impacted Gary schools but the House added Muncie. Gary officials support the state intervention but Muncie is opposed. Gary faces an estimated $20 million deficit and Muncie is dealing with more than $18 million of red ink.

Gary is struggling with late vendor payments, delayed payrolls, and annual operating deficits as its books are weighed down by a $100 million debt burden. Voters in the Gary school district have twice within 18 months rejected referendums that would have raised property taxes.

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