Three things to watch with one week to go

Indiana lawmakers have just a week to close a staggering $2 billion hole in the state’s next two-year spending plan — plus, bridge disagreements over publicly funded vouchers to private schools, regulations on marijuana-like products and school board elections.

The General Assembly aims to finish its work this week, but technically has until a statutory April 29 deadline to wrap up.

“Our job, one more important than any other legislation that we pass, is to make sure we pass a budget that is balanced and done so with integrity and not gimmicks,” Senate President Pro Tem Rodric Bray told reporters Thursday. “So, it’s going to be hard to do now, but we’re going to get it done.”

The budget, contained in House Bill 1001, is typically the last to cross the legislative finish line. But a crushing revenue forecast last week complicated an already formidable task.

The anticipated shortfall creates a “major” challenge, Bray said, and puts “everything” on the table when it comes to cuts and revenue generators. 

“They’re working through the line items. I think the thing that we want to protect and hold to the longest is trying to protect K-12,” House Speaker Todd Huston told reporters.

Both GOP leaders acknowledged that’ll be a challenge. K-12 is 47% of the budget.

Asked how he’d justify a universal expansion of a “school choice” voucher program amid cuts, Huston replied, “I can justify that we fund students in the state of Indiana. We don’t fund systems. So that’s the way our caucus has always approached it.” 

The voucher expansion would allow wealthy Hoosiers of all income levels to send their children to private school on a state-paid voucher. Right now the cap is 400% of the amount required for a student to qualify for the federal free or reduced price lunch program, equal to about $220,000.

House Republicans put the expansion into their version of the budget, but the Senate GOP stripped it out even before the rough financial news. Democrats in both chambers have long decried the spending of taxpayer dollars on private schooling.

“They’re very important to some people in our caucus, the House as well,” Bray acknowledged. “And so, the idea of having vouchers is certainly a viable option, but we’re going to have to figure out how to pay for it if that’s the case.”

Skipping the expansion is among Democrats’ first choices for cuts.

House Minority Leader Phil GiaQuinta assailed the voucher program as “irresponsible spending,” adding, “I mean, we’re almost approaching, now, a billion dollars there.”

Senate Minority Leader Shelli Yoder also suggested holding off on scheduled income tax cuts, which Bray said was “certainly … on the table.”

But cutting expenses isn’t the only way to plug the anticipated hole in state finances.

Cigarette tax hikes and more under consideration

Indiana’s sobering fiscal outlook may soften the Senate’s traditionally hostile stance against a long-sought increase in the cigarette tax. But is it enough?

The current rate of 99.5 cents per pack has gone unchanged since 2007. A $2 increase could bring in $318 million in new revenue annually, and bring down the state’s high smoking rate.

“Our caucus was slightly more amenable to that than they have been in the past, primarily because of the challenge that Medicaid has created for us,” Bray said.

The House has voted to approve cigarette tax hikes multiple times but Bray indicated his caucus’ resistance hasn’t totally waned.

“That’s still on the table, but it’s not at all going to be the first thing we look at,” he said.

Yoder, his Democratic counterpart, additionally suggested pursuing a managed care assessment fee. If fully implemented, the fee could bring the state $1 billion a year.

“We should be doing this (to) our managed care entities, the insurance companies who are making money off of our Pathways (to Aging program) patients,” she said. “We should be looking there.”

But it would require federal approval. Mitch Roob, who helms the agency overseeing Indiana’s Medicaid program, has expressed doubt that President Donald Trump’s administration would allow the Hoosier state to max it out. 

And despite repeated assurances from leaders that “everything is on the table,” Huston was clear that one thing isn’t: marijuana legalization.

“We’re not going to legalize marijuana in the budget,” he said. He similarly batted away questions about gambling industry expansions.

“Significant public policy things shouldn’t be considered just because you have a revenue shortfall,” Huston told reporters.

Democrats, however, maintain conditions are ripe for a “serious conversation” about the drug.

Regulations for already-available, marijuana-like substances — and an accompanying excise tax — are still up for consideration, but face an uncertain path amid plenty of Senate skepticism.

Marijuana-lite tax could boost revenue, if lawmakers let it

Products with legally low concentrations of delta-9 tetrahydrocannabinol have proliferated in Indiana, alongside those containing delta-8 THC and other isomers. Past attempts to regulate the nascent industry, which is booming on shaky legal footing, have failed repeatedly. 

Senate Bill 478 is the furthest lawmakers have gotten. But it needs to survive closed-door negotiations — despite its sponsor’s attempts to avoid them — before it can cross Braun’s desk.

The measure would task the Indiana Alcohol and Tobacco Commission with overseeing the industry, including approving up to 20,000 retail permits. It sets out advertising, age-limit, licensing, packaging, testing and other requirements over the currently unregulated substances; an excise tax was removed because new taxes must go into House-originated legislation.

The revenue-generating provision is expected to find a new home.

“If it works its way through the process, I do think there’ll be an excise tax on it,” Huston told reporters. He was optimistic, citing “robust discussion” across three House committee hearings.

“There’s (been) a lot of discussion about where we are on the legalization, or, excuse me, the regulation of those products,” he concluded.

His Senate counterpart was more skeptical.

“We’re not gonna do a delta-8 bill to chase revenue. At all. That’s not the policy that we’re trying to pursue,” Bray said. “If we can find a way forward with that bill, then we will.”

Despite a whopping seven rounds of edits, critics still say the language would expand existing loopholes and legalize overly potent drugs.

“The way that it moved out of the House is not acceptable to the Senate,” Bray said. 

Lawmakers are still working on a compromise, he commented, “I have no ability to tell you that that’ll pass the finish line.”

‘Razor-thin’ margins expected for partisan school board compromise

Disagreements between House and Senate Republicans could sink another contentious measure — years in the making — adding political party affiliations to Indiana’s currently nonpartisan school board elections.

Senate Bill 287 originally would’ve required school board candidates to run in partisan primary elections. But, last month, House lawmakers changed it. Now it carries resurrected language requiring partisan designations only on the general election ballot. 

The Senate dissented to the changes, teeing up negotiations.

“(It’s the) same idea, but fairly dramatic changes,” Bray said. “… We’ve got members that are trying to work through that, to see if they can find a path forward that both the House and Senate can accept. I don’t think they’re there yet, but they’re still working on it.”

A Thursday conference committee hearing — when lawmakers usually provide short updates on negotiations or outline their compromises — was cancelled, then rescheduled for Monday.

“We’re still in conversations on how it’s going to go,” Rep. J.D. Prescott, R-Union City, told the Capital Chronicle. He sponsored the Senate bill, and authored the dead House bill.

But, he added, “I think the final version will still look a lot like how it left the House.”

Gaining Senate support could be a challenge, however.

In its original form, the legislation squeaked through the Senate on a 26-20 vote in February. The House, which has historically been friendlier to the concept of partisan school boards, approved the overhauled version with greater leeway in a 54-40 tally last month.

Asked if he’d have enough votes, Bray replied, “You know, that’s a razor-thin margin. So I do not have the answer for your question.”

Senior Reporter Whitney Downard contributed.