Hoosier Economy Budget Brief: House Budget out of Ways & Means Committee

Budget Brief: House Budget out of Ways & Means Committee

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An amended version of House Bill 1001, the state budget bill, passed out of the House Ways & Means Committee on Friday by a party line vote of 15-8. The bill includes the House Republican’s primary amendment and a technical amendment.

The House Democrats presented an amendment which would have removed the Governor’s ability to make discretionary changes during the course of the biennium through budget cuts and reversions. That amendment was defeated by a party line vote of 8-15.

One of the key differences between the Governor’s proposal and HB 1001 as it stands now is a shift in where a $200 million reduction is made. The Governor’s budget proposal recommended that the state could capture an additional $200 million dollars by raiding the PDIF fund. Representative Espich’s version of the bill seeks the funding from four other sources:

1) Collection of L.O.I.T. overpayments from local governments ($88M)

a. Due to the lag between the collection of income taxes and certified distributions, the state  over-distributed $610M of local income tax revenues to local governments over the last three fiscal years.

b. The December 2010 revenue forecast assumed that owed funds will be recaptured over the next four fiscal years, with the bulk of the overpayments being collected in years three and four.

c. Rep. Espich’s plan spreads the collections more equally over the four years, resulting in increased collections in years one and two and $88M additional funds available to redistribute throughout the state budget.

2) Collection of the Quality Assessment Fee ($48M)

a. Rep. Espich’s plan maximizes the Quality Assessment Fee, providing an estimated $48M.

3) Decreased Mass Transit Fund Contributions ($15M)

a. In 2007, the General Assembly increased the percentage of sales tax revenue dedicated to the Mass Transit Fund.

b. Rep. Espich’s plan reduces the Mass Transit Fund back to 2007 levels, redirecting slightly more than $7M per year.

4) Deplete the State’s Surplus Fund ($50M)

a. Under Rep. Espich’s plan, the remaining $50M in funds state’s surplus fund.

To see all of the differences between the Governor’s Proposal>> and the amended HB 1001>> (link available soon), see documents on our earlier post>>.