Yes, compromise – real compromise. That word is too often used to stridently insist on an agreement between two groups who have profound philosophical differences on such difficult issues as abortion, gun control and immigration. The only way to find “common ground” in those cases is for one side to turn its back on its fundamental values.
The budget compromise, however, was pure give and take on the same middle ground.
Gov. Mike Pence wanted a 10 percent income tax cut in the budget. The Senate countered with an offer of 3 percent, and the House offered zilch. Then the regularly scheduled revenue forecast came out, showing an increase in expected funding, but only a modest one. So everybody sat down and came up with a budget that includes a 5 percent income tax cut.
That’s enough for the governor to declare a major victory. But it’s not too much for legislators worried about having too little in the rainy day fund if another economic downturn hits.
After the cut is completely phased in after four years, Hoosier taxpayers will get about $250 million a year. That will seem modest to individual taxpayers, but in the aggregate it should be a good stimulant for economic activity. So will the other tax relief in the bill: an immediate end of the inheritance tax instead of the planned 10-year phase-out, repeal of the financial institutions tax and the continued phase-down of the corporate tax. Overall, this is a very good budget for the Indiana economy.
The budget also contains modest spending increases in two critical areas, education and transportation.
It will spend about $330 million more on education over the next two years. It also increases spending on state and local roads by $400 million, and invests another $400 million for major highways expansions.
Those amounts will seem too small to some, especially the education figure. Gov. Mitch Daniels reduced education spending by $300 million during the recession.
But, again, the key word here is balance. Nobody got exactly what they wanted in the budget, but all of us got something. Important areas will be taken care of by the government, and Hoosiers will have a little more money in their pockets.