A slowly improving economy contributed to the more optimistic estimate, even as proceeds from the state's gambling industry decline amid new competition across state borders. All of which comes as good news for Pence, the freshman governor, who has struggled to win support for his tax cut.
House Ways and Means Chairman Tim Brown, R-Crawfordsville, said he sees cuts to the personal income tax, corporate income tax, inheritance tax and financial institutions tax all being included in the final budget. The Senate budget proposed the immediate elimination of the inheritance tax, the cut in the financial institutions tax and a $150 million, or 3 percent cut to the personal income tax.
"We'll continue to have those discussions, again we're still analyzing how those two documents will fit together," Brown said.
The House approved budget calls for roughly $500 million in new roads spending, in addition to the restoration of $331 million in education cuts. The Senate approved a similar budget that instead calls for $400 million to invest in a highway expansion plan, $500 million in a series of tax cuts and the additional education money the House approved.
House and Senate negotiators plan to meet Wednesday to begin work on a compromise.
What exactly counts as a "cut" has become a battle of semantics for House lawmakers and the Pence administration. Brown said there will be no additional corporate tax cut, beyond the phase-in of the 2 percent cut lawmakers already approved. But Pence and his supporters previously said the budget needed to include "new" tax cuts.
Talk of any cut to the income tax marks a minor victory for Pence, from where things stood just a month ago, when House leaders were openly scrapping with the governor. But Pence's staff say they're not ready to give in on the full tax cut just yet.
"We haven't gotten to the point of what we're willing to accept yet," Budget Director Chris Atkins said. "I certainly think this means we can do road and school funding somewhere closer to the House and Senate versions of the budget, alongside our proposed income tax relief."