Indiana Gov. Eric Holcomb’s proposed a $34 billion two-year budget proposal includes modest increases for Medicaid, education and children's services while holding the line on most other spending and boosts the states rainy day fund to $2.2 billion from $1.8 billion.
Holcomb presented the budget to the state's Budget Committee Thursday. About half the annual spending will go toward kindergarten through 12th grade education, with student tuition support set to receive a 2% funding increase in each year of the biennium, for an overall increase of $289 million.
The budget however does not designate specific funds for teacher pay, a hot topic ahead of this year’s legislative session. Legislation has been introduced that would increase teacher pay by 5%.
“That money goes to school corporations as they work with their teachers,” Indiana Office of Management and Budget Director Micah Vincent said during Thursday’s presentation. “We would be hopeful and expect that we would see an increase to teachers through that.”
"We've been calling for teacher pay increases,” State Sen. Karen Tallian, D-Ogden Dunes, a member of the State Budget Committee, said. “We all know that we need them, and this budget doesn't do anything to get there."
Holcomb is a Republican and the GOP controls both houses.
The Department of Child Services will receive an additional $286 million, giving the agency more than $900 million in total funding to handle the surge of child abuse and neglect cases associated with the opioid epidemic.
Another $207 million in additional spending will be used to cover increased Medicaid spending due to scheduled reductions in the federal share of Healthy Indiana Plan and the Children's Health Insurance Program expenses.
Overall, the budget proposal calls for spending $16.76 billion in fiscal year 2020 and $17.11 billion in fiscal year 2021. That would generate a surplus of $45.6 million in fiscal year 2020 and $95.8 million in 2021.
State fiscal analysts project tax revenues will grow by about 2.5% each year for the new two-year budget starting in July. The state would collect and extra $1 billion in revenues with increased spending in DCS and Medicaid consuming most of that revenue.
The House of Representatives will take up the budget next and then the Senate will act on it. The legislative session is scheduled to wrap up by the end of April and the new budget goes into effect on July 1.
Indiana maintains a triple-A rating by the three major credit rating agencies and Holcomb, along with fellow Republicans have stated they want to protect the state's $1.8 billion budget surplus.
