Indiana Office of Management and Budget (OMB) Director Chris Johnston and State Budget Director Zachary Jackson recently presented Gov. Eric Holcomb’s FY 2024-25 budget plan (HB 1001) to the House Ways and Means Committee. The budget is balanced and provides flexibility in both years for the General Assembly to fund the Governor’s priorities and add in their own.

The plan includes historic increases for K-12 and higher education, Medicaid and completely funds the Governor’s Public Health Commission’s recommendations. In terms of K-12 education, the budget increases K-12 tuition support $1.157 billion (8%) over the biennium and eliminates textbook fees for Hoosier families (an additional $121 million annually on top of the current $39 million). The budget significantly increases higher education funding by $184 million for the biennium and adopts the Commission for Higher Education’s outcome-based performance funding proposal, which focuses on retaining graduating students.

The bill also provides greater flexibility for tax credits administered by the Indiana Economic Development Corporation (IEDC). Specifically, it allows the research expense tax credit to be refundable if certain criteria are met. A $300 million per year IEDC deal closing fund is established and a second round of the Regional Economic Acceleration and Development Initiative (better known as READI) is funded at $500 million. Additionally, a $150 million revolving fund is created for site acquisition and the bill doubles funding for Manufacturing Readiness Grants to $40 million for the biennium.

The plan provides for increased funding for the Indiana Destination Development Corporation by $10 million per year to promote tourism in the state. It also provides $5 million per year for the Statewide Sports Bid Fund and an additional $50 million for Next Level Trails.

Due to inflation, many of the capital projects that were approved in the FY 2022-23 budget were underfunded. The Governor’s budget appropriates $1.25 billion in FY 2023 to fund these projects, including:

  • $97 million for the State Archives building,
  • $100 million for the lodge at Potato Creek State Park,
  • $253 million for the co-location of the Indiana School for the Blind and Visually Impaired and School for the Deaf, and
  • $800 million for reconstruction of the Westville correctional facility.

The budget funds the Governor’s Public Health Commission recommendations at $347 million over the biennium with a large proportion of that funding being distributed to local health departments. Increases in Medicaid expenses are $1.67 billion over the biennium with planned provider rate increases equaling roughly 17% of that figure.

The budget plan also leaves room for the General Assembly to fund a 13th check or cost of living adjustment to state pensioners through the supplemental reserve accounts or general fund. Additionally, the budget requires the transfer of $1 billion from the general fund to the Pre-96 Teachers Pension Fund following the end of FY 2023.

The Governor’s budget plan serves as the introduced version of HB 1001 and will be the focus of the House Ways and Means committee in the coming weeks.

David Ober is the Indiana Chamber’s vice president of taxation and public finance. Ober, a native of Noble County, started with the Chamber in June 2022 and is a former state legislator and commissioner for the Indiana Utility Regulatory Commission.