Indiana Gov. Mike Pence dubbed the latest legislative session as the "education session," but it was dominated by a controversial religious freedom law that sparked a national controversy.


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Indiana lawmakers went down to the wire Wednesday, passing a $31 billion, two-year budget Wednesday just one minute before a midnight deadline.

Despite the last-minute debates, the spending plan largely sticks to expectations for big-ticket items like spending on schools and roads and maintaining the triple-A rated state's reserve fund.

Gov. Mike Pence is expected to sign the budget into law without any vetoes.

The Senate passed House Bill 1001 by a vote of 40-9 and the House approved it 69-30.

The session was dominated by a controversial so-called religious freedom law that critics said legalizes discrimination against gays and lesbians and sparked national attention. Pence took major hits for defending the new law and lawmakers scrambled to amend the law to address concerns.

Lawmakers spent much of what Pence called "the education session" debating the K-12 school spending formula.

The budget, which takes effect July 1, boosts K-12 spending by $460 million. Lawmakers revamped the school funding formula to address what supporters said was an unfair gap for growing districts. The new formula will mean losses for urban districts with a high percentage of poor students and more money for suburban and charter schools.

Pence said in a statement that the budget "includes a historic investment in K-12 education, including performance funding for teachers and a smarter school funding formula that ensures dollars more closely follow the child."

The general fund budget totals $15.3 billion in fiscal 2016 and $15.5 billion in fiscal 2017. The construction budget, which includes capital projects for higher education and other categories, totals $549 million over the next two years. As part of that budget, higher-ed facilities are allowed to issue a total of up to $358 million in bonds over the two-year period.

Indiana does not issue general obligation bonds.

The budget also authorizes the transfer of $200 million from the general fund to the Major Moves 2020 trust fund -- the highway capital fund -- in both 2016 and 2017. That money can also be used by the Indiana Finance Authority and other state entities to make debt payments.

The budget will leave the state with $1.8 billion in reserves. That's down from $2 billion, but still enough to maintain the state's triple-A rating, according to Sen. Luke Kenley, R-Noblesville, chair of the appropriations committee.

Kenley told reporters that Pence's office called ratings analysts to see if the reserves were enough to maintain the top-notch rating. "And apparently they do," Kenley told Indiana Public Media.

Lawmakers also approved a gambling bill that allows riverboat casinos to move onto land and allows live dealers at the state's two racinos, but not until 2021. The measure is one of a series of legislative efforts to boost the state's gambling industry, which generates significant local and state dollars but has taken a hit in the last few years from competition from neighboring states.

In northwest Indiana, the budget provides $6 million a year for the next 30 years to help finance a $571 million an expansion of commuter rail lines that connect to Chicago. Local county tax revenues will kick in another $11.5 million annually to generate enough for a federal match.

A controversial plan for a new bond-funded private soccer stadium in Indianapolis failed to make it in the final budget despite months of debate.

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