2010 Legislative Session Roundup: Indiana

Dealing with a $309 million mid-year budget gap and unemployment hovering above 9 percent, the 10-week Indiana legislative session primarily focused on budgetary and economic issues.  Lawmakers reached a bipartisan agreement to only consider bills with minimal to no cost, but still considered a broad range of bills, from property tax caps to energy efficiency initiatives.

Utilizing its reserve fund, the Legislature sought to avoid large education cuts similar to last year's legislative session.  The state is making progress in addressing health disparities and defeated a bill that opposed federal health care reform.  The Legislature also enacted a strong ethics package to tighten gift disclosure and limit the revolving door of legislators turning to the lobbying profession.

However, the state delayed an increase in unemployment payroll taxes and, despite crushing deficits, the legislature placed a constitutional amendment to the ballot to further cap property taxes.  The Legislature failed to approve a bill to tighten restrictions on privatization of social services, while moving forward with a potential public-private partnership to fund a large infrastructure project.  A law allowing gun owners to bring their weapons to work in their cars was also approved, while progressive energy efficiency, redistricting, and voting reform initiatives were defeated.

Tax and Budget:  As of last month, state revenue was "$895 million less through the first eight months of the fiscal year than lawmakers thought when they wrote the two-year spending plan," marking a 10.5 percent dive in revenue from the previous year.  Analysts now forecast that Indiana will likely spend its entire $1.3 billion reserve fund before the end of the biennial budget cycle in June 2011.

Having already cut $760 million from the budget last year, including a $300 million cut in public school funding and severely decreased spending on universities, state agencies, and public health programs, the Governor and legislature sought to avoid further budget reductions.

  • Education:  Following the announcement of steep education cuts, the Legislature made it a priority to find methods to expand revenue available to schools.  HEA1367 will allow public schools to transfer funds to protect and maintain instructional programs.  Schools will have access to "about $40 million statewide, out of various accounts, such as capital projects, transportation, and school bus replacement."  Lawmakers estimate that these funds will save 1,600 jobs.  The legislation also requires the Superintendent of Public Instruction and the State Board of Education to develop proposals to improve students' reading skills.
  • Other Budget Cuts:  The state approved reduced funding for foster parents who provide shelter and care for special needs children and is considering further cuts, including the elimination of the Indiana Tobacco Use Prevention and Cessation Board, the state's anti-smoking agency.
  • Property Tax Cap:  Gov. Daniels and conservative legislators successfully advanced HEA 1001 to put a constitutional amendment on the ballot to restrict property taxes.  The state currently employs a 1.5 percent cap on homes, 2.5 percent on rental property and 3.5 percent caps on business property.  If this ballot measure is approved, property taxes would be capped at 1 percent for homeowners, 2 percent for farms and rental properties and 3 percent for businesses.  The caps would cost the state $465 million in 2010 and $488 million in 2011.  State Rep. Dennis Avery, one of the leading voices in opposition, stated, "There are going to be real problems. There will be an increase in the income tax. We'll continue to see fire stations closing. We'll see layoffs of policemen and other public safety officers."  Matt Greller, Executive Director of the Indiana Association of Cities and Towns, echoed this point and indicated the caps would cause massive budgetary problems as there will be less expenditures for critical programs and cities and towns will be left with limited ability to diversify revenue streams.  Even the Indiana Chamber of Commerce and Farm Bureau oppose the caps, objecting to different rates for different classes of property.  Indiana voters will consider this measure on the ballot in November and recent polling indicates that it will likely pass by an overwhelming majority.
  • Unemployment Insurance:  In response to the weak economic climate, lawmakers approved SB23 to postpone a $400 million payroll tax increase by a year.  While officials argue that the state's unemployment trust fund is in dire need of new funding, the tax delay is necessary to provide tax relief in a time of heightened economic uncertainty.  There are also workers' rights provisions in the legislation that will augment enforcement and increase penalties against employers who intentionally misclassify employees as independent contractors to avoid paying unemployment insurance taxes.

Health Care:  Indiana took a positive step in addressing minority health disparities by passing SB387, which creates the Office of Minority Health.  One of the office's first priorities is the development of a community-based health system.

While the Senate approved SCR 10, a bill attacking federal health reform, it did not pass the House.  Despite failure of the bill in the legislature, the Indiana Attorney General Greg Zoeller joined other right-wing officials around the country in suing the federal government over the health reform bill.  As PSN noted last week, these efforts are political stunts that lack legal ground and will only serve to waste taxpayer dollars during an economic downturn.

Privatization:  Rep. Gail Riecken's efforts to limit the privatization of social services unfortunately failed this session.  HB1003 came in response to the massive debacle the state experienced after granting IBM a $1.16 billion contract to oversee welfare services where thousands needing assistance, despite being qualified for help, were denied access due to implementation errors.  While the bill passed out of committee, it never received a final vote on the House floor as conservatives pushed back against the initiative by arguing that the Legislature should give the state time to implement a hybrid public-private system touted by the Governor.

The state is also moving forward on another potential privatization scheme to finance the $4.1 billion Ohio Rivers Bridges projectSB382 would permit the Louisville-Southern Indiana Bridges Authority, the agency that oversees the project's development, to authorize the use of public-private partnership or tolls to fund the planned projects, opening the door to privatization of more state infrastructure.  As PSN has detailed in previous work, privatization often leads to the loss of public control, transparency, proper government oversight, inability to set sufficient standards, policy driven by profit rather than public needs, increased costs, the eventual loss of public revenue, and inferior public services and unreliable provision.

Ethics:  The Legislature made important headway on ethics as well by passing HB1001, which will require legislators who leave office after 2011 to wait at least one year before entering a lobbying practice, prohibits lobbyists from funding out-of state travel for legislators, and reduces the threshold for lobbyist reporting on gifts from $100 to $50, and requires legislative liaisons of agencies in the executive branch of state government and of state educational institutions to report annual expenditures.

Firearms:  The Legislature approved a contentious gun rights bill, HB1065, that will allow gun owners to bring their firearms to work, providing they keep them locked in their vehicle.  The bill gained notoriety the day following its passage, after an Indiana man opened fire in his office in response to a poor job review.  The Indiana Chamber of Commerce urged Gov. Daniels to veto the legislation after the incident.  Despite the tragedy and intense opposition, the Governor signed the bill into law last month.

Defeated Initiatives:

  • Several energy efficiency initiatives ultimately did not pass this session.  SB313 would have increased net metering opportunities by consumers who produce power through wind mills, solar installations, and other renewable energy sources to send excess electricity back to the grid in exchange for a credit on their utility bill.  Another bill, HB1063, proposed that certain government buildings be constructed to achieve or exceed efficiency standards established by the U.S. Green Building Council's Leadership in Energy and Environmental Design (LEED).
  • Reform bills intended to impact the redistricting process ultimately failed as well.  SB80 would have mandated that redistricting preserve traditional neighborhoods, protect minority voting rights, remain compact, respect county boundary lines, and prevent voter confusion.  SB136 would have established a Redistricting Study Committee to create an independent commission to draw legislative and congressional district boundaries.
  • HB1106, introduced by Rep. Kreg Battles, would have permitted any Indiana voter to cast an absentee ballot without providing a reason for needing to vote absentee but did not make it out of the House.
Capitol Watch Blog - Poll Watching
The Evansville Courier & Press - Gov. Daniels signs divisive guns-at-work bill into law
The Journal-Gazette - Lawmakers tout session; Daniels blasé
Kokomo Perspective - Indiana General Assembly week in review
The Ohio River Bridges Project of Kentucky and Indiana
Progressive States Network - Privatization During an Economic Downturn: Still Inefficient and Problematic